6.29.09
Reading the headlines this morning I saw this article on Bloomberg:
Bloomberg – Tuition Rises 4.3%
Apparently, despite the fact that the government is reporting deflation in our economy, the word didn’t get out to universities who continue their endless march of tuition hikes. This is however, the lowest increase since the start of keeping these records in the early 1970’s according to the article, but that is small consolation.
Universities don’t want to do their part to help lower costs. And I never figured this out – many universities now use teaching assistants to run classes, very low paid teaching assistants. They are laying off people. Many have outsourced their dining services and landscaping. Why do costs need to rise 5, 6, 7 percent or more every year?
The main reason is that these are not “non-profit” universities per se – they are businesses: the business is in research and competing for academic reputation, and the prize is being highly ranked in some magazine survey. Tuition had increased 5.9% the year before, but according to one source in the interview, it would not “look good politically, but does raise a lot of money” so it seems many schools chose to go with a smaller increase, instead of no increase (the inflation adjustment for social security recipients!) or a decrease.
Of course, this will be another increasing cost for a government program. With incomes down, and tuition up, the ability to pay (ATP) for the average family will drop which may lead to further need for federal financial aid. And with university endowments down 25% or more, and with some losing millions to Bernie Madoff, it may be likely that we see less aid from the universities themselves next year.
All in all, universities are another part of our economy that live in Fantasyland (just like California – put “Fantasyland” into the search box if you’re interested), as they think they can continue to increase costs ad infinitum and that no one will protest. The advantage for universities, however, is that US universities are desired destinations for many students worldwide. There will be no problem attracting students who can pay the (higher) international tuition rates and who don’t need financial aid. This will be to the detriment of American kids who will have to settle for cheaper and possibly less prestigious schools in the future (FYI: in all fairness, some of the best schools in this country are on the lower end of the cost scale including some excellent state universities in Virginia, California, Michigan, Texas, North Carolina, and others).
Chris Grande
