If you want to understand the way college tuition is structured these days, you could do worse than to read the interview with Drew Faust, the president of Harvard University, in Saturday’s Wall Street Journal.
“Fifty years ago, the annual cost to attend Harvard University was less than $2,500, or about $18,000 in current dollars. Today a year at Harvard costs almost $60,000, including tuition, room and fees.” What does Faust have to say about this? She claims that students have many more opportunities today, including the opportunity to do research. She also notes that the class sizes are much smaller than they used to be. These two examples, even if someone thought they were worth an extra $40,000 annually, could not possibly account for this kind of price increase.
It is rather a lot of Harvard’s extras (every top university’s extras, really) from luxurious facilities to the expansion of administration that has cost all this extra money.
It is also the use of tuition as an income redistribution plan.
So let’s move on to the other interesting statistic. Faust reveals that 60% of the Harvard undergraduate student body is on financial aid. And that those on financial aid pay an average of $12,000 a year. Which means that all students on average are paying about $30,000. Still a lot of money but somewhat more reasonable. And it makes clear how vast the gulf is between those paying the full ride—middle-class Americans and wealthy foreigners—and those on financial aid.
Now you might say, good for Harvard, allowing even kids who would never have a shot of affording tuition of attending. But the fact that it has made college an impossible debt for many other deserving students is a problem.
Glenn Reynolds, who has written extensively on the higher education bubble, insists that the way tuition has climbed faster than the rate of inflation for the past few decades simply cannot continue. As he recently argued in the Journal:
When you could pay your way through college by waiting tables, the idea that you should "study what interests you" was more viable than it is today, when the cost of a four-year degree often runs to six figures. For an 18-year-old, investing such a sum in an education without a payoff makes no more sense than buying a Ferrari on credit.
You won’t get to $30,000 waiting tables either, but you might make a small dent in that sum. Recently, I saw Reynolds at the Manhattan Institute and I asked him, “hypothetically speaking,” how much money he would save up for college for a kid who is now seven years old. He didn’t have a very clear answer beyond, “saving is always good.” But here’s hoping he is right that this skyrocketing college tuition really is unsustainable.