Monday, February 06, 2012

Federal Subsidies Fuel College Costs: Up 5 Times the Rate of Inflation

Funds mostly for non-academics

Since 1981, U.S. Bureau of Labor Statistics data show that college tuition and fees have soared by 714.3 percent while all other items consumed by the average household increased by a more moderate 141.0 percent.

Reacting to this shocking trend, President Obama, in his State of the Union address, threatened higher educational institutes with sanctions if they continued to raise tuition at this alarming rate. But recent actions by the President only worsen the problem. Since 2009, the federal government has increased federal financial assistance to college students by almost 20 percent thus permitting colleges to grow their tuition and fees even more with taxpayers picking up the tab.

Moreover the President recently outlined his plan to boost taxpayer support, or subsidization, of higher education even more by: 1) Allowing borrowers to cap their student loan payments at 10 percent of discretionary income and waiving any loan balance remaining after 20 years. 2) Doubling the number of work-study jobs available, 3) Implementing the American Opportunity Tax Credit which provides up to $10,000 for four years of college. 4) Asking Congress to subsidize record low student loan interest rates.

Data show that colleges have used federal government support to underwrite a disproportionate growth in funds for non-academic spending. For example, despite rapidly rising federal support, colleges have increased the share of courses taught by part-time faculty from 34 percent in 1981 to 49 percent in 2009. Furthermore, colleges raised average faculty salaries by a scant 2.7 percent per year over the past six years. During this same time period, the growth rate in outlays for student services (e.g. athletics, counseling) was almost double that of expenditures for instruction. Research has shown that there is a strong correlation over time between federal support for higher education and rapidly rising tuitions. Similar to housing, the federal government is putting air in another bubble—this time it is higher education. Ernie Goss.

1 comment:

Anonymous said...

My oldest child is in the middle of their first year of college. We lost the child tax benefit and gained the student tax benefit. It's not a payout from the government. Income tax and property tax (2/3 to schools) chew up twenty percent of my income. I wholeheartedly agree that tution is breathtaking. For example a young engineer can graduate with $150000 in dept (with some aid given) and secure a position paying 50 to 60 thousand per year. Tuition in adjusted dollars has, at one institution, increased over 600% since the early '80s and starting salaries have DECREASED by 10 to 15 percent. Universities do not see their students as customers recieving a service. And, since it has become neccessary to have that sheepskin just to get a job, it's even worse. It's so bad that Thomas Edison, were he alive, couldn't get a job in the mail room at General Electric! No student or parent wants to make waves and risk not recieving that certification. They have us and they know it.