Story on cost of attendance stipend

[Arkstfan]

Here is what happened to higher education.
Many elected officials wanted to bring "market" concepts to higher ed. The real motivation for some was adherence to principle, others expected students would punish those loud mouth liberal professors by going elsewhere and some wanted to just find a way to funnel government money to religious institutions.

So money was put in student hands with scholarships, grants and loans.

Students are generally ill equipped to assess if a school offers a good education but they are able to determine if they have to walk down the hall to take a dump or get an apartment like experience in a dorm, they can determine whether is a nice workout center and what fast food they can buy at the student union, and see whether or not there is good, fast, stable wifi or a an entertaining athletic department.

So schools divert resources to amenities to attract students and compete in the market.

Those have to be paid for and the student is now less price sensitive thanks to the funds in hands. So tuition and fees rise to pay for things that have nothing to do with educating.

The government outlay really hasn't changed in most states or grown slowly all that changed was who got the money first.

 

[Cerebus]

3 hours ago, oldguystudent said:

But it's there.  And I'll circle back to my original theories -- how would any of that have even begun without a massive influx of student debt funding?  Is this a financial chicken and egg? 

 

2 hours ago, Arkstfan said:

Many elected officials wanted to bring "market" concepts to higher ed. The real motivation for some was adherence to principle, others expected students would punish those loud mouth liberal professors by going elsewhere and some wanted to just find a way to funnel government money to religious institutions.

So money was put in student hands with scholarships, grants and loans.

 

[Arkstfan]

4 hours ago, Cerebus said:

Universities are MORE efficient now than they were in the 90s, it's just that state input has collapsed.

Here is a though experiment:

• Lets say in the 90s it cost $100 to educate a student.  You need to pay for professors of course, but that also includes lab space, advisers, parking lots, heating/cooling buildings, pay for employee insurance, information systems to keep track of it all, etc. 
• Of that $100, the state paid for $75 of it.  The feds step in and pay about $10 of it.  That leaves about $15 for tuition and fees to cover. 
• The state and federal government over time greatly increase costs like course requirements and administration overhead load.  Both are constantly churning out not only laws, but administrative code and and guidance.   This requires all sorts of people to be hired to cross all those T's and dot all those i's.  
• The state also decided to strength core course, which is a good thing, but now more people have to take lab sciences, which are incredibly expensive.
• Society changes in a such a way computers and computer knowledge become ubiquitous.  That means much more IT needs for universities. IT is expensive.  
• Despite all that, universities manage to reduce the per student cost to $95.
• At the same time, state politicians keep getting elected by promising to lower taxes or at least not raise them.
• At one time, education funding was sacrosanct.  No politician, liberal or conservative, would ever work against education funding.  That time passed.
• Now the state pays for about $15 of the per student cost.  Feds still pay for $10 of it.  That leaves $75 for tuition and fees.

 

The one place where universities have increased costs in what could be considered wasteful is in amenities.  However study after study has shown that not having these amenities (think rock climbing walls, nice gyms, bigger dorm rooms, etc) hurts you in attracting top achieving students.  No matter what students and families say about the cost, not having them means you lose out on the top students.

The state also incentives getting those top students because low graduation rates hurts your funding.  So in order to keep getting that $15, the university needs to keep graduating a high rate of students.  That means high performing, that means you better have some swag to get them to come here.  

The general switch in funding philosophy has changed the entire business.

A number of colleges had what they considered to be a "comfortable size".

A top or one of the top publics in a state might take the top 5,000 (or 10,000) freshmen applicants each year because their infrastructure was such that they could handle that many freshmen without needing additional classroom space, dorm space, cafeteria space or hiring any additional instructional staff. The school generally broke ties by choosing the in-state kid because they were well supported by the state so fewer worries the in-state kid would have trouble making a tuition payment down the road or leave because of cost.

Whatever your number was you took that many off the top of the applicant pool. If you had a good number and a good endowment, nearly everyone got some scholarship money.

The rest of the state schools would generally just do the same except further down the food chain.

Now you have Alabama and Arkansas admitting more out-of-state freshmen than in-state. They really don't want the in-state kid because the gap between in and out-of-state tuition makes the out-of-state kid more profitable.

They tend to set a combination of GPA and test score for unconditional admission. If you have the infrastructure to take 10,000 freshmen and 12,000 meet unconditional admission standards, bring 'em on in. You go tell the legislature that golly gee we raised our admission standards but the number is increasing and you can usually find money for a new dorm or classroom and if you can't that's OK too because you probably have a plot of land that you aren't using and some private developer will happily take a 30-50 year ground lease to build a dorm and maybe even classroom space for you and take a piece of the action. No need to even get legislative approval, we will build private facilities. If you have enough demand, the developer will buy land next to the school to build those dorms and get a contract with the school and the school will collect the dorm fees out of the student loan check and send it to the developer.

So the schools with a strong brand no longer care about keeping their admissions within the range of their infrastructure. They'll build more. The admission standards create the idea of exclusivity but those top in-state schools are actually becoming less exclusive because they promise meet these criteria and you are in where in the past the school would say meet these standards to be considered to keep up the sham of being open to all state residents but then hard capped the number.