Making College Pay Off

January 8, 2014

Rising higher education costs are unsustainable and colleges need to make reforms, says Glenn Harlan Reynolds, a law professor at the University of Tennessee in Knoxville.

The higher education bubble began in the 1970s, when Congress began federally funding student aid in the form of Pell Grants and student loans. With this financial assistance in place, colleges and universities raised their tuition costs.

  • Between 1978 and 2011, tuition for all universities increased at an annual 7.45 percent rate. This is higher than the 5.8 percent increase in health care costs and the 4.3 percent increase in housing costs, and it is higher than the increase in family incomes.
  • On average, student debt today is $29,400. Some students owe more than $100,000 after college.
  • According to a Gallup study, 4 in 10 college graduates end up in positions that do not require a college degree.

Higher education is in need of reforms to combat these cost increases:

  • To save money, some colleges have begun using adjunct faculty (who do not have benefits or job security) to teach certain classes. This approach could be used for administrators as well, who have grown at more than twice the rate of instructional staff.
  • Budget transparency could also lead to cost savings. The state of Oregon created a website that shows where every state dollar is spent, and anyone can log on and see where its state colleges are spending their money.
  • Online courses make sense for a number of subjects, especially classes that would otherwise be large lectures without student-teacher interaction. The Georgia Institute of Technology is offering an online master's degree in computer science for only $7,000.

Source: Glenn Harlan Reynolds, "Degrees of Value: Making College Pay Off," Wall Street Journal, January 7, 2014.

 

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