The Education Bubble
Nov. 24th, 2011 08:15 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
rowynHigher education is in a bubble.
Tuition cost has been increasing faster than general inflation for as long as the FinAid office has existed. The FinAid table puts tuition costs at twice general inflation from 1999-2005. I could not find a handy chart from the Bureau of Labor Statistics, so I looked at their year-end reports for 2006-2010:
*** Left off because the ratio of a negative number to a positive one is crazy.
The trend is not improving.
Enrollment rates are likewise up. From the National Center for Education Statistics: "Enrollment in degree-granting postsecondary institutions increased by 9 percent between 1989 and 1999. Between 1999 and 2009, enrollment increased 38 percent."
What I really want to know next is how much supply has increased -- how many seats are available for students and how much has that number risen? Are college class sizes growing overall? (Ie, is the growth in enrollment accompanied by a growth in infrastructure, or are more students being placed in the same number of classes?) My Google-fu has failed me here; I can't figure that out.
But the demand-side numbers suggest that supply is unable to keep up: prices keep rising, but that doesn't deter more people from wanting the product.
The government response to rising prices has been to increase student aid, in the form of grants and loan guarantees and low interest rates.
If rising prices are the problem, this is exactly backwards for solving it.
Making more money available more people to purchase a resource doesn't make that resource cheaper. It makes it more expensive, as the pool of people able to purchase it and the amount of money they have increases. Yes, eventually supply should increase, but it's easier to increase prices than to increase supply, so which is going to happen first?
Assuming the goal is to increase the supply of skilled labor, and that the government should play a role in doing so*, it would make more sense to increase the education supply. For example:
* Build more public universities
* Add more capacity -- classrooms and staff -- to existing public universities
* Offer incentives (subsidies or tax breaks) to private colleges for increasing their capacity
* Tie the above to performance & cost (you want to incentivize inexpensive high-quality schools, not costly low-quality ones).
* Improve career counseling to high schoolers (not everyone benefits from a 4-year degree and different majors effect your economic prospects differently)**.
* Offer incentives (subsidies or tax breaks) to businesses to do their own training instead of looking only for applicants with 4-year degrees.
I'm pretty sure we do some if not all of this already, but given the comparative lack of attention the supply-side of education gets, it feels like government efforts are badly lopsided on the subject.
* Big assumptions! I am not sure I agree with them, even.
** As a holder of an MA in English literature, I want to emphasize that there is nothing wrong with getting a degree in a field that is in low demand. But you really need to be aware that (a) your field is in low demand (b) thinking "it's so unfair it's not in high demand" is not going to change that and (c) borrowing money to get a degree in a low-demand field is not going to improve your econmic outlook significantly.
Tuition cost has been increasing faster than general inflation for as long as the FinAid office has existed. The FinAid table puts tuition costs at twice general inflation from 1999-2005. I could not find a handy chart from the Bureau of Labor Statistics, so I looked at their year-end reports for 2006-2010:
| Year | General Inflation (including eduction) | Education | Ratio |
| 2010 | 1.6 | 4.4 | 2.75 |
| 2009 | -0.4 | 5.3 | *** |
| 2008 | 3.8 | 5.8 | 1.53 |
| 2007 | 2.8 | 5.7 | 2.04 |
| 2006 | 3.2 | 6.2 | 1.94 |
*** Left off because the ratio of a negative number to a positive one is crazy.
The trend is not improving.
Enrollment rates are likewise up. From the National Center for Education Statistics: "Enrollment in degree-granting postsecondary institutions increased by 9 percent between 1989 and 1999. Between 1999 and 2009, enrollment increased 38 percent."
What I really want to know next is how much supply has increased -- how many seats are available for students and how much has that number risen? Are college class sizes growing overall? (Ie, is the growth in enrollment accompanied by a growth in infrastructure, or are more students being placed in the same number of classes?) My Google-fu has failed me here; I can't figure that out.
But the demand-side numbers suggest that supply is unable to keep up: prices keep rising, but that doesn't deter more people from wanting the product.
The government response to rising prices has been to increase student aid, in the form of grants and loan guarantees and low interest rates.
If rising prices are the problem, this is exactly backwards for solving it.
Making more money available more people to purchase a resource doesn't make that resource cheaper. It makes it more expensive, as the pool of people able to purchase it and the amount of money they have increases. Yes, eventually supply should increase, but it's easier to increase prices than to increase supply, so which is going to happen first?
Assuming the goal is to increase the supply of skilled labor, and that the government should play a role in doing so*, it would make more sense to increase the education supply. For example:
* Build more public universities
* Add more capacity -- classrooms and staff -- to existing public universities
* Offer incentives (subsidies or tax breaks) to private colleges for increasing their capacity
* Tie the above to performance & cost (you want to incentivize inexpensive high-quality schools, not costly low-quality ones).
* Improve career counseling to high schoolers (not everyone benefits from a 4-year degree and different majors effect your economic prospects differently)**.
* Offer incentives (subsidies or tax breaks) to businesses to do their own training instead of looking only for applicants with 4-year degrees.
I'm pretty sure we do some if not all of this already, but given the comparative lack of attention the supply-side of education gets, it feels like government efforts are badly lopsided on the subject.
* Big assumptions! I am not sure I agree with them, even.
** As a holder of an MA in English literature, I want to emphasize that there is nothing wrong with getting a degree in a field that is in low demand. But you really need to be aware that (a) your field is in low demand (b) thinking "it's so unfair it's not in high demand" is not going to change that and (c) borrowing money to get a degree in a low-demand field is not going to improve your econmic outlook significantly.
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no subject
Date: 2011-11-25 06:29 pm (UTC)The feds can't subsidize student loans for any more than the lowest 20%, we know that, or at least we're accepting it for the sake of discourse. Can they drive down prices by hiring more professors and making more classrooms and trying to lure students away from the wealthy private colleges? That's what I'm trying to understand, and what I'm worried about. If that's what we're trying for, it's a tough trick to pull off. The public institutions can't even afford what they've currently got. I don't know if getting up to snuff and then taking on a bunch more infrastructure, in the hopes that they'll pull enough students away from private schools to cover it all, even with federal help, will lower costs enough that the 80% who do apply for government financial aid but don't get it, can still go in too.
I really do think it's getting harder and harder for the less affluent to get a quality education. I agree with you that the fed might/could/should help a chunk of them. I just think more of the rest are going to get kicked to the curb, and that with the increasing state of inequality it's just going to get worse. It really does look to me like a repeating history of monarchs, merchant princes, and powermongers taking up more and more of what's available until they can no longer convince the lower classes to accept less and less. I'm not sure where the breaking point is, but with all the protests it seems like there's some cracking, y'know?
Sorry I'm talking so much. I'm not getting out much these days. :I