Friday, July 15, 2011

Cost of Education Is Now Prohibitive -- At the Worst Possible Time

Earlier this week, I noted that the unemployment rate for those with a college degree or higher was very low, and that the unemployment rate increased as educational achievement dropped. So, logic would tell us that we should have a policy of increasing educational opportunities to increase earning potential -- right? No.

The cost of higher education in the US has soared in recent decades while median incomes have stagnated, pushing college increasingly further from the grasp of many Americans and limiting social mobility. Three-quarters of US repondents to a recent survey by the Pew Research Center said college was now too expensive for most Americans.

In the past decade, tuition rates at public universities have risen 5.6 per cent a year above inflation, while fees at private college have increased by 3 per cent a year, the College Board says.

The faster acceleration in fees at public universities is highly significant for those on median incomes. For students from wealthy backgrounds, college may still be affordable. Moreover, thanks to handsome endowment funds, colleges such as Harvard and Yale can afford to give generous financial aid to able-but-needy students.

However, public universities – many of which have been forced to raise fees in recent years because of dwindling support from cash-strapped states – have much less ability to offer financial assistance, even though they are now starting to charge fees comparable with their private-sector peers.

The increase in fees has not stemmed demand for higher education. Applications rose during the downturn, as more Americans deferred the search for scarce jobs and took the opportunity to get training – with what traditionally has been good reason. College graduates generally receive bigger salaries, on average earning $20,000 more a year than workers without higher education, according to the Census Bureau. That translates into career earnings of $1.4m for a worker with a bachelor’s degree – almost twice the $770,000 a non-college graduate can expect, according to Pew.

I have no words for the level of abject stupidity regarding the lack of a response in the US.