hank: good morning, john. since 1980, thecost of college in the us has more than tripled, rising faster even than the cost of medicalcare. around 70% of students in the us will graduate with some amount of debt, and theaverage amount for those students is $29,000, that's $312 a month for ten years of studentloan payments. now, there are some ways in which you can pay less, and if you're interestedin those, i put a link in the description, but it's an undeniable fact that the costsof education in america have increased greatly and that student loan debt is becoming a burden,so what are colleges spending that extra money on? well, it's complicated. let's start with thefact that since 2008, colleges have actually
been spending less money per student, butstudents have been spending more money per student. how's that possible? well, you mightremember than in 2008, there was something of a financial crisis. state budget shrank,and so did some institutional endowments, meaning that students paid more and got less.that trend actually stretches back even a bit farther, with the top amount being paidper student by states happening in 2001. but of course, these costs have been increasingsince way before 2001, and colleges are spending way more money than they used to, so whatdo schools spend their money on? well, the first thing you think of is academicinstruction, and that is still the biggest category of spending. college professors areexpensive, and in some cases, you're asking
them to come teach when they could be workingin the private sector for pharmaceutical companies or investment banks and making millions ofdollars a year, and you want those really highly qualified amazing professors teachingand so yeah, sometimes they get paid a lot. the average amount of money a college professormakes is around $150,000, but some professors make upwards of a half a million dollars ayear. but during the last 10 or 15 years, during which the college costs literally doubled,the cost of instruction basically kept pace with inflation. part of the way schools havedone that is by now hiring on as many tenure track professors and having a ton of like,part-time and grad student and adjunct professors who do not get paid very well at all. so thecost of instruction overall is definitely
not where this big bump came from. the costs that have definitely increased alot are in a jumble of different categories that different institutions track differentlyand so are very difficult to tease out apart from each other, but there has been some reallygreat and careful research done on this stuff, so here are the increases in a few categories.operations and grounds-keeping, room and board, general administration, academic support,and a nebulous thing which has increased more than any other category among four year bachelor'sdegree programs, "student services", which includes everything from concerts to intramuralsports to marketing to tutors. it appears that what's driving this is, ina word, sales. colleges are acting more like
businesses and treating students more likecustomers. schools compete with each other, and in a world where the costs are reallyhigh anyway, it starts to look like a little fuzzy when a student's deciding between $310payments for ten years and $340 payments. it's only $30 a month, and if one school hasreally nice dorms, a well supported tutoring program, nice athletic fields, a super dopeclimbing wall, a celebrity level professor, cushy mattresses, and local, organic produceand cafeteria salad bar,, then both the parents, who are probably footing a big hunk of thebill, and prospective students are likely to choose the more expensive option. someof those things are worthwhile, others don't have much use beyond, like, looking prettycool on prospective student weekend.
building and running a 30,000 person institutionthat has facilities that outpace the quite nice country club is expensive. over the last10 years, non-academic employees have been hired 50% faster than academic employees atcolleges and universities, and top-level administrators who are responsible for increasing that enrollmentand revenue so that there's money for everybody to spend, their pay raises have been morethan double that of academic employees. the average school now has about one non-academicemployee for every 10 students. there are some private schools where that ratio is morelike 1 to 3. now, the absolutely nutso thing about allof this is that it still works, because even at these juicily inflated prices, collegeis still a good deal. money spent on a bachelor's,
associate's, or professional degree yieldsa higher return than the stock market, even in dropping out of college after 18 monthshas a higher yield than the stock market, though not as high as graduating, so in away, colleges are just working their way up to costing as much as the value they provide. but i think that we can all safely agree thatcollege should not be about maximizing revenue, especially for state schools. the questionisn't really whether college is a good deal, it's whether college could be a better deal.it seems a little like the increase in spending is kind of a natural outgrowth of a capitalistsociety and people making decisions that benefit them, at least in the short term, but it'sworth asking if treating america's students
like customers is, in the end, going to bea disservice to everyone. maybe we shouldn't be selling students anexperience. maybe we should be providing them with as much enrichment and, dare i say it,education as possible. because while it is important that college is a sound monetaryinvestment, it is also important, possibly more important, that students get throughour higher education system knowing more about the world and about themselves, and i don'tthink that that has to be a monetary thing, and i definitely don't think it needs to cost$40,000 a year. i don't know, maybe i'm crazy. john, i'll see you on tuesday.
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