The Education Bubble

Now that The Spoiled One is in her sophomore year of high school, we are starting to look at colleges and suffering a bit of sticker shock. This is surprising since we went through this three times already with her older sisters. What we were surprised to find is that even though tuition was pretty outrageously high when the older ones went to school, in the 13 years since Darling Daughter #1 graduated from high school , college tuition has increased over 50%.

I’m having the same reaction here as when I sold a house in southern California many years ago. We had received the history of transactions involving our house. About 10 years previously, it had been built and sold for about $50,000. Five years later, we bought the house for $100,000.  When we were ready to sell it and move away, it was appraised at $150,000. Mind you, this is the same house in the same neighborhood. Not only had we not improved it particularly, but the neighborhood was not as desirable. The surrounding area had been built up; the crime rate was up. So, 10 years later, something not quite as good was selling for three times as much. All of our friends told us not to sell the house, that prices would go up and we would make a ton of money. I thought the opposite, that there was no way this house was worth the appraised price. I sold it and shortly after that the market dropped in California and it was many years before the buyer could have sold that house even for what she paid for it, much less made a profit.

Tuition at universities has gone up many times what it was when I graduated 35 years ago. My own alma mater has increased 1,000% . Do graduates make 10x what they did when I graduated? Ha!

Is higher education 10x better? I would argue that it is noticeably worse. When I was an undergraduate, it was rare to have a class taught by someone who was not a full time professor who was on campus before and after class, just in case we might want to discuss something.

Now, more often than not, the professor has a full-time job elsewhere – as I do – and his or her attention is divided between that “real job” and teaching. Yes, I do teach as an adjunct, but I do it once a year, when I can carve out time to give teaching the attention it deserves. When my kids were young and  I needed the money, I taught every extra class I could. I KNOW that the students did not get as much attention as I would have liked to have given them, because I was juggling three jobs. I also know that many more adjuncts are in the position I was then than are in the position I am in now.

As someone asked me on twitter, what am I going to do then?  Check out the University of California campuses, which for state schools are an outstanding value, and look for private colleges that are not insanely priced.

While all of these campuses urge students not to look at the price, asserting that very few people really pay it – I paid well over 90% of the cost of New York University. Darling Daughter # 1 got an academic scholarship that paid 25% of her tuition her first two years, which left us all of her expenses for books, meals, housing in Manhattan, plus 75% of the tuition. We were on the hook for 100% of everything for the last two years. She graduated from high school with a 4.3 GPA and graduated cum laude from NYU. The school’s attitude was that we might not have had the ability to pay the tuition all up front but we had the ability to borrow it.  I paid the last parent loan payment this month, ten years after she graduated.

It will be interesting to see what happens to higher education as more and more people flat refuse to pay for what is increasingly coming to resemble a very expensive union card … but that’s another post.