- Net Price Comparison, Penn vs Public University
For six years I’ve been pounding a not-so-popular public policy position, and after six years it looks like the Governor, various civic “leaders” and possibly even the Legislature are about to embrace it. So I guess I should be feeling pretty good about myself for being so far out in front on this High-Tuition/High-Financial-Aid model, right?
Um… not exactly. In fact, you may want to chalk this one up in the be-careful-what-you-wish-for category.
The chart on the right compares the net cost of my very expensive alma mater, the University of Pennsylvania, to the net cost of a typical public university, and as you can see, once financial aid packages are factored in, Penn can turn out to be just as affordable to working and middle class students as a public university. In fact, more so, as Penn’s aid comes entirely in the form of grants, meaning its students no longer graduate with tens of thousands of dollars in loans.
That’s the way the High Tuition/High Financial Aid model is supposed to work. Those families that can afford to pay full price do, those who can’t, pay what they can afford. At Penn, students from typical families earning less than $90,000 a year receive grants equal to full tuition and fees; students from families earning less than $40,000 have their room and board covered too.
From each according to their ability, to each according to their need. Yeah, sure, that’s socialism, but if it’s good enough for the Ivy League, you’d think it’d be good enough for everybody else.
But the real appeal is that it makes for a very efficient allocation of resources. At Ivy League schools like Penn, students are admitted based on merit only, while financial aid is awarded based solely on need. Compare that to the University of Washington, where all in-state students essentially receive the same flat subsidy, but some, like say, a star football player, receive a free ride, whether they need it or not. Meanwhile, the UW has expanded slots recently, but only for out of state students, because they pay the full, unsubsidized tuition price. Kind of a crazy way to fund a state university system, huh?
So when Eli reported that Gov. Gregoire’s higher education task force has recommended allowing state universities to set their own tuition, allowing both in and out of state costs to rise toward the national average, you’d think I might’ve been celebrating… until I read the fine print:
To make up for the fact that her proposal for solving this challenge means making tuition less affordable for many current and future college students—like, oh, the ones lined up behind her this morning as photo-op props—Gregoire noted that her task force also proposes the creation of a $1 billion fund, fed mainly by donations from major Washington businesses, that would offer more scholarships to needy students.
Unless I’m missing something, the task force isn’t recommending that the state’s subsidy to four-year universities be dedicated solely to providing need-based financial aid, nor is it suggesting that in exchange for tuition setting freedom, the universities guarantee their schools become no less affordable. Nor does the task force call for any additional state funding for financial aid. No, they just seem to be proposing a totally free market approach, or something I’ve dubbed the High-Tuition/Eh-Maybe-Wealthy-Individuals-and-Corporations-Will-Contribute-What-They-Want model.
And if that’s the model we end up with, then I’m ashamed of my advocacy.
Part of the realization that there is no more middle class — as in a broad base of households among whom “the wealth” is shared is that all of our taxation systems are garbage.
What’s the point of taxing a guy with two pennies to give another guy a penny when the cost of living is a dollar, and 3 percent of the people have a hundred dollars?
Well the Baby Boomers had the advantage of cheap state universities, paid for by the sacrifices of their parents and grandparents taxing themselves to pay for it. Then in typical fashion we( sadly I am one of this no account generation) couldn’t stand to pay taxes ourselves and cut future generations out of that deal.
@3 Thanks for that.
You’re right Goldy. It is High Tuition and Maybe We’ll Get Around to Increasing Financial Aid, and if it is passed into law, our universities will lose the few middle class students they have left, as well as many of the lower class students who still won’t receive enough financial aid to cover the costs of university.
Right now, Washington State has something like a 19% participation rate in higher education, meaning 80% of our kids don’t go into any kind of higher education. Now, we’re going to make it even more expensive, driving that number into even worse territory.
The other thing is Governor Gregoire called for this same thing last year in her State of the State address. Then, she called it Tuition Flexibility.
The Legislature can’t fund the Financial Aid our state currently offers. They cut almost half of the Financial Aid programs we offer last year, and most are on the chopping block for this year. Why on earth would anyone think we could increase financial aid to meet this coming increase in tuition?
I’m curious about the number of out-of-state residents enrolled in Washington schools and if those numbers have stayed steady or increased since the mid-90s.
The best financial aid is low tuition. The high tuition/high aid model leaves out too many students, especially in areas with higher cost of living, like, oh, Seattle. And it erroneously presumes that all parents are eager to pay what they can to educate their children. Many parents can’t afford the estimated family contribution or could care less, leaving their children to either take out huge loans, live like paupers or both.
The costs are too high if a summer job and part-time employment during the school year can’t cover tuition, fees, books and reasonable room-and-board at a state school. Bring back the huge subsidies for higher ed. The poor and middle-class students deserve them, and the wealthier parents should get a chance to recoup a little of what they pay in taxes.
@5 the UW student news paper has an article about 2010 applicants only, but it’s a bit telling.
http://dailyuw.com/2010/3/12/undergradua…
Oh, God! Another post from this insufferable windbag!
Hmmm. Does this model he proposes survive engagement with reality?
That is, do students who enter school debt-free and at the same socioeconomic level graduate with the same amount of student loan debt, whether they go to Yale or Michigan State?
My guess is no, the former carry much higher debt burdens than the latter. But why actually, you know, look at results in the form of data when neat models are available, allowing you to wind into a post some really absurd point about socialism?
“Bring back the huge subsidies for higher ed.”
Um, when did they end?
NEXT! @9,
You can presume all you want, but as of 2009, Penn (and I believe the other Ivy League schools) has eliminated student loans from its aid portfolio. Thus, regardless of income, students will not graduate with debt. The facts are the facts.
But, all this comes with a huge caveat. This model can only work if it comes with an adequate commitment to funding financial aid.
@6 – Thanks, that is interesting. When I was at Evergreen, it sure seemed that, as a freshman, most of the students were from out of state, and most of the resident students were from small towns. I imagine that depends on the applicant pool.
The problem with college is that the costs keep skyrocketing, largely due to the ability to get people to foist larger and larger student loans upon themselves (@ 12, wall street was a big part of this problem). As the willingness of students to come out 100k in debt for a poli sci degree decreases, colleges will be forced to get there cost structures in order. (See the UC system’s pension programs for 100k+ administrators profiled in the SF Chron last week). I’m afraid that a big aid program would only delay the necessary cost containment measures.
@14- A very good point. The limitless student loan credit available to students means there is very little reason for schools to do anything to control costs. And it means banks get access to permanent income supplies in the form of people who can not go bankrupt. Everyone (who’s a banker, tenured professor, or college administrator) wins.
Here’s a suggestion: Instead of chasing athletic scholarships with endless select sports teams, tell your kids to work hard in high school, get great grades and get into a top-tier private college — and not just the Ivies. A lot of those schools have aid to give, and you can end up getting a top-notch education (without the 600-student lectures and overcrowded dorms of large universities) while paying no more than you would to go to WSU or Western.
The continued hollowing out of the American Middle Class is just going to accelerate.
Few among us have the fiscal discipline needed to do what you have to so that your kids and yourself stay in the middle class – live in a cheaper neighborhood than you can afford, save and invest (not bonds or money market, but stocks at the cheapest expense ratio like 0.2 pct) 10 to 20 pct of your income, and put your kid(s) thru college without burdening them with debt for the first four years (grad students can get jobs to pay for their education).
When I will look back on this failed century of the American Fall, from my retirement homes in Vancouver BC and Paris, it will be with sadness that Americans are such sheep.