“If you want to pay for one of the top 100 colleges on Forbes Best Colleges list in 18 years, you better start saving early and often. Most of the elite private colleges today are already over $60,000 per year and increasing in total cost at about 4% per year. If you do the math, your child’s projected four-year college costs will be year 1: $121, 549, Year 2: $126,411, Year 3: $131,467 and Year 4: $136,726 equaling $521,153, or to simplify – a cool half of a million dollars!” …
It will be for some full paying parents, but the most selective schools will continue to discount the cost heavily through need based aid. At that level, the top schools will be for the very rich and the very poor.
It will be hard for the true middle class and for the people who plan to save and live within their means. Ultimately, one can expect new models of education to emerge with a lesser dedication to provide 4 to 6 years of 24/7 entertainment peppered with a bit of learning. Academic divas will survive but they will be less numerous. The economics of education have reached a breaking point when salaries and benefits paid to educators and an army of administrators greatly exceed the average worker in their community on a yearly basis, and obscenely so in terms of hours worked.
Forbes isn’t great on prognostication.
In 2008, 2010, 2013, etc Forbes has been talking about the college ‘bubble’ .
http://www.forbes.com/2008/10/22/college-debt-loans-biz-beltway-cx_md_1023schools.html
http://www.forbes.com/2010/12/16/education-college-bubble-opinions-contributors-jerry-bowyer.html
http://www.forbes.com/sites/johnwasik/2013/09/04/three-reasons-why-college-bubble-will-burst/
Hmm…the original was 7 years ago…at what point do we just keep waiting…
And don’t forget it gave Sweet Briar College and ‘A’ financial grade in…2013…
http://www.forbes.com/sites/schifrin/2013/07/24/is-your-college-going-broke/
D’oh!
I remember visiting colleges in 2009 and 2010 and collecting brochures where most were just breaking over 50k. Now there is rarely one under 60k.
Strike that. Some are inching closer to 70k.
http://undergrad.admissions.columbia.edu/ask/faq/question/2501
[quote]
For the academic year 2015-2016, the breakdown of educational costs is as follows:
Tuition and Fees: $53,000
Room and Board: $12,860
Books and Personal Expenses: $3,224
Estimated total cost of attendance: $69,084
Additionally, first-year students are assessed a one-time orientation and transcript fee of approximately $523. The purchase of medical insurance is also required for all students who do not have comparable coverage.
Does the world really need graduates from the Forbes top 100 that much?
Though that’s in nominal terms, not real terms.
Anyway, colleges will price in a way that makes financial sense to them. “Entertainment” evidently is valued by enough families because people are still paying for that.
Something will have to happen between now and then or the cost will simply become too prohibitive to allow the near-inelastic demand to continue. And not enough people will be able to gain admission to the elite schools that provide a lot of need-based aid. The future looks dire if the cost increases continue to outpace inflation by 200%+ (unless wages also begin outpacing inflation…).
In terms of no- or low-coercion (IE, Capitalist) avenues, obvious answers are lower demand or higher supply, or both. But supply is not so easy to increase in this industry, since we are talking about creating additional colleges. It isn’t a production line you can simply turn on for a couple more hours daily to meet demand.
So let’s look at alternative educational methods like online schools. Maybe those can be upgraded (…to feature fully accredited degrees…) and marketed to a point where students and parents will see them as real competition for the traditional brick-and-mortar college education. Imagine if University of Phoenix offered degrees that were fully accredited, or if Coursera offered full degree programs using its hodge-podge approach – imagine getting a BA in History when you have taken classes from seven different major universities, and your diploma says Coursera on it. Or maybe the school on your diploma is the school from which you took the most credits or classes. And then there are schools like MIT, offering many classes online already; maybe you could earn an online degree from MIT for, say, $50,000. A lot more people could afford that than the $200,000+ it costs to attend now, especially those from upper-mid families who have too much money/property to receive enough aid to be able to afford the brick-and-mortar MIT education.
So online school could become a major competitor for serious students, assuming the existing programs, like U of Phoenix, were improved to the point of full accreditation; assuming degrees were granted from sources like coursera (or via a model similar to coursera’s); and assuming that schools like MIT, who currently offer a robust catalog of free courses online, would allow for online students to take enough classes for credit to be able to earn a MIT degree, at a reduced price.
Maybe an increase in interest in low-cost schools overseas will also help to decrease demand for brick-and-mortar education here in the States.
Finally, perhaps an increase in interest in tech schools and trade apprenticeships could also help to reduce demand.
If these things fail to decrease demand to the point where prices stabilize and then drop to satisfy the lowered demand, I fear our government will try to take over our higher ed system, or at least the state schools. This presents obvious quality issues (as we’ve heard is the case in “free” or low-cost European schools…), constitutional issues, cultural/historical issues, etc. In short, it would lower the quality of public education and mess with our nation’s ideals.
That makes a lot of sense because internet companies have doubled in value and house values have increased 30% every year since the 1990s without interruption.
Related to this, I found the following article. Kids from top universities going to code school after graduation so that they can find a job. There needs to be an alternative to a $500,000 education. Maybe it is these code schools or online programs.
http://www.bloomberg.com/news/articles/2015-05-07/coding-classes-attract-college-grads-who-want-better-jobs
I still think there will be a demand for the top schools even if the tuition crosses $100,000/yr.
There would be enough applicants to fill a class in these schools but they would be full pay wealthy students or rich international students. Some people are willing to pay the costs for the name and reputation of a school.
There is. Public, instate Us don’t cost anywhere near that.
I wonder how much would be the average instate tuition at the current rate of increase per year. In state tuition, room and board is about $30,000 in some states now.
What would be the predicted costs for example for an out of state student applying to University of Michigan in the future. It is quite high right now. I’m sure in state and out of state tuition fees for state schools would increase quite a bit as well.
Yabbut just think how much you will make when you graduate.
At some “top colleges”, most students receive need based financial aid, with an average grant that covers most of the net cost; need based aid is given to as much as 99% of applying families with incomes of $150k to $200k; and the average inflation adjusted net cost per student is essentially unchanged during the period for which CDS numbers are available. At such colleges, is sticker price really the relevant metric of what “a top college will cost you”?
It is if you make over $200K or have other assets like home equity that count against you
“At that level, the top schools will be for the very rich and the very poor.”
No, the top schools are extremely generous with need based aid even if one’s income is over $100,000. I don’t think anyone believes that an income in the range of $100,000-$150,000 falls in the very poor category.
I think everyone would agree. It’s that it doesn’t fall into the “very rich” category.
As long as these schools continue to give great need-based aid to the middle/upper-middle class I think that’s great.
"I think everyone would agree. It’s that it doesn’t fall into the “very rich” category.
But the statement was:
“At that level, the top schools will be for the very rich and the very poor.”
I think you folks are starting to get to me. I need to change my attitude some.
I posted, on other threads, that one can work and save and plan ahead and avoid most debt to get a great education. But, after reading what others here have said, and after thinking about it, I realize my plan only works if you go to CC’s first and then to public U’s second. Most people in the middle class, absent serious merit aid, are already cut off. Medical insurance, room and board and transportation and other living costs are not cheap either.
It is outrageous at some level although, if one is dedicated enough, one can get merit aid by making crazy test score numbers and having a high GPA regardless of socio-economic status. I guess that is as fair as it gets. Elite universities can’t be for “everyone” after all. But I must admit, at 50+ or 60+ or 70+ it is just unattainable and probably stupid to even think about schools like that for most folks. That is the sticker price, after this and that discount, you are still on the hook for 30+ or 40+ a year and you might have debt for the rest so you didn’t really avoid the cost you just delayed it. There is something profoundly disturbing and wrong with that picture regardless of what the market will bear.