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The Real Cost of Education

The majority of studies show a marked, uninterrupted trend that an undergraduate degree will significantly boost one’s income. However, an editorial by Paul Krugman in The New York Times suggested that a good post-graduation income cannot necessarily be taken for granted.

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For most of us, college will be the only time in our lives where we race through $178,278 in a little over four years without owning at least some percentage of a house at the end of it. Budget recommendations from the School of the Art Institute of Chicago (SAIC), however, suggest that students should expect to spend around $40,620 per 15-credit semester on tuition, room, board and other tuition related expenses. Never mind the cigarettes and alcohol that most of us would like to think we don’t spend that much money on. With these figures, one’s looking at purchasing a significant, but relatively intangible, asset by opting for a college education.

So here’s the good news: tuition at SAIC for the 2006-2007 academic year is still lower than the average four- year private college, but only just. The Chronicle of Higher Education found that for the first time ever, the average cost of a private college education topped $30,000 per year. SAIC, assuming that one takes 30 credits per year, costs $28,950 in tuition for the 2006-2007 academic year. George Washington University recently became the most expensive educational institution in the country; The Los Angeles Times reported that “George Washington trustees set tuition for students enrolling in September at $39,210, an increase of 3.8 percent … Mandatory fees including housing will push that cost to $50,660 [per year].”

More staggeringly, George Washington’s tuition increase was incredibly modest, by national standards. Tuition rates across the country increase steadily each year, usually at a rate that is about twice that of inflation; private college tuition increases averaged 5.9% for the current academic year. As the National Center for Public Policy and Higher Education pointed out in its recent report, Losing Ground, these increases are higher than the increases in the average family income; “From 1992 through 2001, tuition at four-year public colleges and universities rose faster than family income in 41 states.” A study by found that between 1979 and 2001, national tuition costs increased by an average of 7.37 percent, as opposed to an average general national inflation rate of 3.96 percent. SAIC is no different from the majority of private U.S. educational institutions, with increases of around 6 percent each academic year.

Some schools are opting to freeze tuition rates, though this is a rare and often financially impractical maneuver for most institutions. Princeton University has chosen not to increase tuition for 2007-08 beyond the basic $33,000 they are charging for this academic year. In a press release the University stated, “This is the first year since 1967-68 that the annual tuition rate has not increased,” also mentioning the “strong performance by the University’s investments and generous giving by alumni.” The vast majority of academic institutions are not quite so fortunate.

The costs of maintaining educational institutions are huge, and some argue that it cannot reasonably be contrasted with national interest rates. Alongside this, many educators are still vastly under-compensated. The Bureau of Labor Statistics reported that in 2004, “The middle 50 percent [of post-secondary teachers] earned between $36,590 and $72,490” a figure including the pay of tenured faculty, at the higher end of the spectrum.

A 2004 report by the American Association of College Professors, titled “Don’t blame the faculty for the high tuition,” highlighted the problem of providing benefits for college educators: “Typically, employer cost increases are accompanied by increasing costs for faculty members in the form of higher health insurance premiums, higher deductibles, and higher co-payment rates, without any improvement in the benefits provided.” And that’s only in the case of faculty members of a high enough ranking to receive benefits.

Realistically, the majority of students are not covering the whole cost of tuition on their own. Many rely on grants, loans, scholarships, and of course, family support. However, government aid, which provides much of the support for college students, has been in decline. While Democrats are attempting to cut interest rates of student loans, other government programs are falling apart. One program, which allows parents to prepay their child’s college tuition prior to the college candidate’s graduation from high school, thus protecting families from the annual increases in tuition, looks set to be brought to an end in several states due to massive budget deficits. The prepaid tuition program in Texas announced in February that it was $3.3 billion in the red. George W. Bush has made massive cuts in financial aid over the course of his presidency, by adjusting the guidelines used to determine a student’s ability to cover the cost of their tuition.

There is, underneath of all of this, the argument as to whether a college degree is really worth it. The majority of studies show a marked, uninterrupted trend that an undergraduate degree will significantly boost one’s income. However, an editorial by Paul Krugman in The New York Times suggested that a good post-graduation income cannot necessarily be taken for granted, “Highly educated workers have done better than those with less education, but a college degree has hardly been a ticket to big income gains. The 2006 Economic Report of the President tells us that the real earnings of college graduates actually fell more that 5 percent between 2000 and 2004. Over the longer stretch from 1975 to 2004 the average earnings of college graduates rose, but by less than 1 percent per year.”

However, BFA degrees are far less marketable for the student just out of college and deep in debt. Art students make up the minority of incoming freshmen; a survey published by The Chronicle of Higher Education found that while 17.9 percent of incoming freshmen expect to major in Business, 2.5 percent expect to major in fine or applied art. In lieu of becoming Jeff Koons, a BFA does not pay for itself so quickly as one of those boring degrees.

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