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Paul Streitz

The Great American College Tuition Rip-Off
By Paul Streitz
Mar 3, 2005 - 5:56:00 PM

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“How am I going to pay for my kid’s education?” is a nerve-wracking concern to most middle-class parents. “Why do college tuitions keep going up?” they ask.

College tuitions have risen above the rate of inflation for twenty-years, not because costs have gone up, but because higher education has found that parents will continually pay more for their children’s education. If you are charging a dollar a doughnut at your store, and you double the price, and the line does not go down, you keep raising the price. Eventually, the price will go down by a lower price being charged by the store across the street.

But education is not the same as a free marketplace. Students apply for admissions to a college and the college accepts you or not. You do not apply to buy a doughnut. Each college occupies a unique position on the educational hierarchy, and all parents want their children to go to the “best” school possible. Therefore, there is a constant demand to move up the educational ladder, not the typical marketplace controls that exist with consumer products.

The rankings of U.S. News and World Reports are extremely important in this regard. They give parents the feeling that their child has accomplished something if the student is enrolled in a number ten school as opposed to a number twenty school. The ranking system is composed of many useful pieces of data such as the SAT scores of the students and the student-to-teacher ratios.

What is horrendous is that the USNWR rankings also include faculty salaries and the amount spent per student. While this sounds harmless or positive, the effect is to drive colleges to spend more and more money, and to never be economical. If a college doubled its salary to faculty, making no other changes, it would rise in the rankings. And the rankings are what a used by parents to determine the relative desirability of the schools. Consequently, every college is in a race to raise and spend more money. Tuitions go up because colleges want more money to stay in the rankings game. No administrator or college can charge less or reduce expenditures because their rankings would plummet. Tuitions continue to go up because parents are willing to pay. College tuitions have gone from about 20% of the mean family income in 1960 to over 50% today. It is vicious circle that needs to be broken.

Colleges with universities with higher endowments do not charge less for tuition. The money is simply spent. Williams College, the wealthiest private college, has $1.2 billion dollar assets but it does not charge any less than schools with a tenth of its assets. It simply wastes more. It stays on top of the rankings by outspending everyone else.

The financial tactics of modern private education are akin to the rape and run tactics of U.S. mining companies. These companies have historically stripped the land of all the valuable ore and then run from the billions of dollars environmental damage. The citizens of the state and federal funds pay for the mining companies’ short-term horizons and their denial of the secondary effects of their policies.

In a similar fashion, tuitions are set by the colleges based on how much money they can extract from parents and students. There is absolutely no thought about the long-run consequences to the students, the parents or the society. Colleges and universities regularly expect parents will go into long-term debt, such as a second mortgage, to finance their children’s education. When parents apply for a college aid the question is not just “How much have you saved for college?” The question is “What is the value of your house?” Higher education is engaged in financial asset stripping of both parents and students.

The secondary effect of the rapacious policies of higher education is the impoverishment of the middle-class family, which leaves many students with a mountain of post-college debt. It further destroys the middle-class with young families deciding to have fewer children because of the “high cost of a college education.”

Eventually, the rapacious policies of the mining companies were changed by enraged environmentalists, who brought the situation to the public’s attention. Eventually the public changed its mining practices because of stringent environmental laws. Similar corrections are now needed in the world of higher education.

In order to correct the financial, social and educational faults of modern education, the boards of trustees must be removed from operational and financial control of private colleges and universities. Without the later, the former is impossible.

Control of colleges and universities must go into the hands of Parent-Student-Alumni Associations. Tuition would go into an escrow account. The associations would then collectively bargain with the administration as to levels of tuition, staffing, social and academic issues.

Parents and students pay million dollars a year in tuition, alumni contribute thousands, but they have no voice in the decisions of the colleges and universities.

That must be changed.

Mr. Streitz has just published The Great American Tuition Rip-Off. (Available on Amazon.com) This fall his Bring Back The Jobs will be published. He was a candidate for the Republican nomination in Connecticut for U.S. Senate.

"The Great American College Tuition Rip-Off" by Paul Streitz
Buy "The Great American College Tuition Rip-Off" from Amazon.com


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