NBC News: Tuition, fees, continue to rise

[Wahoo Redux]

Tuition, fees continues to rise as pandemic inflation woes hit colleges

Inflation is pushing up college tuition and fees while staff shortages are forcing wages and benefits higher. The squeeze comes at the worst possible time for higher education.

In an annual national survey of first-year students conducted by an institute at UCLA, more than half said the cost was a very important reason they picked the college they're attending; only a school's academic reputation and job-placement record mattered more. A separate survey by the College Board and the consulting firm Art & Science Group found that more than half of high school students ruled out colleges because of the published price.

[dismalist]

Tuition, fees continues to rise as pandemic inflation woes hit colleges

Inflation is pushing up college tuition and fees while staff shortages are forcing wages and benefits higher. The squeeze comes at the worst possible time for higher education.

If prices go up at the same rate as wages -- an open, or expected, inflation -- there is no new problem. Nothing real would have changed.

In the economy overall prices are rising slightly faster than wages, so that real wages are falling. This is consistent with the employment boom and the observed decline in labor force participation and job hopping.

I expect the same is happening in education. So that's the opposite of a squeeze. But that's only very short run.

To the extent that tuition and such is rising faster than overall inflation, that's nothing new and has nothing to do with inflation.

[Hibush]

Since so much of the cost of education goes to pay for people, tuition really needs to follow wage growth. While some colleges seem to think they live in an economy apart, those intent on keeping quality staff and faculty will raise wages.

Wahoo, do you see this as the "worst possible time for higher education" because your school is one of the former?

[RatGuy]

Wait. People are getting raises to keep up with inflation? Really? I haven't had a cost of living adjustment since 2014. When asked, my dean suggested that it won't ever happen.

Those of us in my college who are both NTT and on renewable contracts are currently proposing a salary increase. Knowing the number of students I have and the cost of a 3-credit hour course, I can calculate the amount of money all of my students pay in tuition for just my courses this term. Multiply that times 2 for the full year, and I learn that I'm getting paid about 6.9% of what my students pay in tuition for my course. By the same formula, a friend at another public school in the state gets around 12% of what students pay. I'll keep this in mind the text time I read "I pay your salary" in an angry parent email.

[Aster]

CNN recently posted an article about this. The numbers are pretty depressing.

"These workers are the only ones really seeing higher wages"

https://www.cnn.com/2022/02/04/economy/workers-higher-wages-inflation/index.html

[Wahoo Redux]

Wahoo, do you see this as the "worst possible time for higher education" because your school is one of the former?

Well, I directly quoted the subhead from the NBC article which talks about the "worst possible time."  Those are the editor's words, not mine.  I just pasted it over.  Sorry, I should have made that clearer.

But yeah, where I work is in some trouble----how much trouble we do not know since the admin is not talking.  We are not raising tuition, however.  I think that would be disastrous to us.

[Anon1787]

Wait. People are getting raises to keep up with inflation? Really? I haven't had a cost of living adjustment since 2014. When asked, my dean suggested that it won't ever happen.

Indeed. Our recent contract gives faculty an increase of about half of the current rate of inflation, which means a 3-4% cut in real wages.

[Stockmann]

Tuition, fees continues to rise as pandemic inflation woes hit colleges

Inflation is pushing up college tuition and fees while staff shortages are forcing wages and benefits higher. The squeeze comes at the worst possible time for higher education.

If prices go up at the same rate as wages -- an open, or expected, inflation -- there is no new problem. Nothing real would have changed.

In the economy overall prices are rising slightly faster than wages, so that real wages are falling. This is consistent with the employment boom and the observed decline in labor force participation and job hopping.

I expect the same is happening in education. So that's the opposite of a squeeze. But that's only very short run.

To the extent that tuition and such is rising faster than overall inflation, that's nothing new and has nothing to do with inflation.

Yes, but it seems to me that reaching a tipping point eventually is inevitable - that at some point a critical mass of prospective students will decide that the college experience isn't worth that kind of money and that a degree isn't a good enough financial investment (objectively, dropouts surely would've been better off using the college fund to invest in the stock market, go to trade school, etc? -  students do tell pollsters that jobs are the main reason to go to college). The current labor shortage in the US probably brings the tipping point closer, and more moderate options than foregoing college altogether are already being taken (commuting from the parental home instead of living in dorms, doing gen-eds at CCs, etc). Not sure what continues to drive inflation-busting cost increases (there can't be all that state funding left to cut, surely?), but it's not a sustainable trend.

Wait. People are getting raises to keep up with inflation? Really? I haven't had a cost of living adjustment since 2014. When asked, my dean suggested that it won't ever happen.

Indeed. Our recent contract gives faculty an increase of about half of the current rate of inflation, which means a 3-4% cut in real wages.

Interestingly, in my non-US location, with a very different funding structure for HE, our "raise" was also about half of inflation so, a wage cut.

[dismalist]

Not sure what continues to drive inflation-busting cost increases ...

Ah, new regulatory impositions aside, education is another example exhibiting Baumol's Cost Disease. Labor productivity growth in education lags well behind the economy wide average. We can't just teach twice as fast! [Well, I can't. :-)] This means costs will rise more than average. The higher ed sector will shrink. We're already there.

[Aster]

A lot of the problems stem from contemporary U.S. politics.

Over the last 20+ years, many local and state leaders have chosen to "side with students" by directly interfering in the autonomy of public universities. To be specific, political interference in the form of hard tuition caps, and fee caps.

Without the ability to raise tuition and fees to at least keep up with basic COLA and/or inflation, public universities steadily lose net revenue.

Higher Education has routinely served as political low-hanging fruit. And too many leaders have been picking at that fruit for their own self-benefit.

[dismalist]

A lot of the problems stem from contemporary U.S. politics.

Over the last 20+ years, many local and state leaders have chosen to "side with students" by directly interfering in the autonomy of public universities. To be specific, political interference in the form of hard tuition caps, and fee caps.

Without the ability to raise tuition and fees to at least keep up with basic COLA and/or inflation, public universities steadily lose net revenue.

Higher Education has routinely served as political low-hanging fruit. And too many leaders have been picking at that fruit for their own self-benefit.

That can't be correct. Between 2000 and 2018 tuition at two year and four year publics approximately doubled, whereas the overall price level increased by just under 50%.

This is the cost disease in action.

[Parasaurolophus]

Not sure what continues to drive inflation-busting cost increases (there can't be all that state funding left to cut, surely?), but it's not a sustainable trend.

One factor that doesn't help is the ranking race started and perpetuated by the US News & World Report. The rankings don't count tuition against a university's ranking, which ultimately incentivizes raising tuition to pay for projects which will have an impact on an institution's ranking, such as a big football or basketball win, a lazy river, etc. (among other things such as student experience metrics, these kinds of things increase applications, which allows the institution to increase rejections and thus boost its 'selectivity').

Ah, new regulatory impositions aside, education is another example exhibiting Baumol's Cost Disease. Labor productivity growth in education lags well behind the economy wide average. We can't just teach twice as fast! [Well, I can't. :-)] This means costs will rise more than average. The higher ed sector will shrink. We're already there.

I'm not sure that's right. Productivity in higher ed has increased on some fronts; most notably, in the research expectations and requirements of faculty and new hires, but also in the numbers of students crammed into classrooms. And with the LMS, we can actually increase the pace of our grading outputs. But while tuition has increased more than 500% in the last forty years, my understanding is that those gains have not been realized at the level of faculty salaries. Indeed, at the faculty level, increased productivity means hiring adjuncts at much lower costs to teach many more courses.

So: productivity is higher, real wages are lower, but overall costs are much higher. That sounds more like a counterexample to Baumol's cost disease, at least as I remember learning it.

[Stockmann]

Not sure what continues to drive inflation-busting cost increases ...

Ah, new regulatory impositions aside, education is another example exhibiting Baumol's Cost Disease. Labor productivity growth in education lags well behind the economy wide average. We can't just teach twice as fast! [Well, I can't. :-)] This means costs will rise more than average. The higher ed sector will shrink. We're already there.

I don't doubt new regulations are part of the problem, but surely instructor pay (as distinct from football coaches' and admincritters' pay) has surely risen far, far more slowly than college costs (has it even kept up with inflation?), so unless we're teaching several times more slowly, that surely can't be the driving force behind ballooning costs.

[dismalist]

So: productivity is higher, real wages are lower, but overall costs are much higher. That sounds more like a counterexample to Baumol's cost disease, at least as I remember learning it.

Productivity in education today is of course higher than say in 1950, but not nearly by as much as in say automobile manufacture or clothing manufacture. This is the cost disease.

Salaries of regular faculty have done nicely, thank you. https://www.highereddatastories.com/2014/07/changes-in-faculty-salaries-over-time.html

The adjunct share is a response to the cost disease -- an attempt to ameliorate it, made possible by the vast army of people with graduate degrees, who didn't exist in say 1950.

[There are of course additional cost drivers. I mentioned regulation, the source of administrative bloat. In addition, one can expect that consumers -- students -- are willing to pay for more amenities than earlier students.]

[Parasaurolophus]

Salaries of regular faculty have done nicely, thank you. https://www.highereddatastories.com/2014/07/changes-in-faculty-salaries-over-time.html

The brute number is higher, sure. But the purchasing power isn't: that 20k in 1975 is equivalent to 103k today; the all-faculty 32k in 1985 is 82k today; 50k in 1995 in 91k today; 66k in 2005 is 94k today; and the 77k in 2012 is 93k today. You might expect that the increased productivity drove wages down, as here; but then that's decoupled from the cost of the service to the consumer, which has increased dramatically.

[There are of course additional cost drivers. I mentioned regulation, the source of administrative bloat. In addition, one can expect that consumers -- students -- are willing to pay for more amenities than earlier students.]

Sure, but it doesn't look like the increased cost of the service is due to stagnant productivity at the instructional level, since that doesn't seem to be where the money is going.


Or am I misunderstanding something?