15 Nov Guaranteed Student Loans is an Entitlement for Public Universities, Too
In a recent BLN post, I suggested that student loans used for â€œfor-profitâ€ colleges be dischargable in bankruptcy since they make up only 10% of the guaranteed student loan market but account for 50% of the defaulted student loans. However, lest you think your sacred alma mater is above reproach, the evidence is clear that public universities are ripping off the middle class as well.
We often hear that entitlement programs are out of control and that the middle class can no longer support the elderly and poor. However, guaranteed student loans are the crack cocaine of higher education, and College Boardâ€™s recently released annual study proves it. The 2011 Trends in College Pricing Report lays bare the disturbing trend in higher education – We are getting less for more.
According to the study, in the last year alone, the average in-state tuition rose 8.3% (11.8 % in Florida and 20.5% in California), and during the last ten-year period at public universities (BTW, not much different for private universities):
- The cost of one year of tuition, fees, room and board has risen more than 36% after adjusting for inflation.
- The rate of annual increases of these annual costs has grown 75% over the previous ten year period.
- Populations at these same universities has grown by more than 27%.
- The number of undergraduate degrees has increased by more than 33%.
- Inflation-adjusted faculty salary has grown only 1% with total compensation growing only 4%.
- The number of instructors per 100 students has decreased by 6.8%!
- The percentage of full-time instructors has decreased by 33%!
If the professors are not getting this booty, it must mean the administrators are. Have you been to a university campus recently? I have two children enrolled in Floridaâ€™s public university system, and I have two more entering in the next two years. So, I recently visited the University of Florida and Florida State University, and they are, in fact, amazing campuses.
Modern public universities proudly display beautiful ivory towers that are shrines to elitism and arrogance, and students are footing the trillion dollar bill. While student loans, like mortgages, are necessary evils in a modern society, the carte blanche given to Sallie Mae and other lenders has resulted in an unsustainable crisis that threatens long-term growth of our nation.
This is just another example of how a few get rich at the expense of many, but what do we do about it? My colleague, Kurt O’Keefe, recently discussed that Australia places a dollar cap on its student loan guarantees. Another approach could be limiting government guarantees based upon academic performance, test scores and hardship criteria.
In fact, there are many ways to curtail the flow of easy money to higher education, but we must first identify and recognize the problem.
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