The high cost of college—rising tuition, long-range implications
Go to college. Graduate with a degree
that will help you earn three times
more than someone with a high school
diploma over the course of a lifetime. And
start your career… deeply in debt.
Before they get a job, before they receive that first paycheck, today’s college graduates are likely to owe $20,000 to private lenders, money they borrowed to pay rising tuition costs, room and board and other college fees.
And that may be a conservative estimate. According to the College Board, the volume of private loans taken by students has escalated by 27 percent annually since 2000-01, to a total now of $17.3 billion.
Private loans today total 20 percent of student loan volume; a decade ago that total was 4 percent. These loans also frequently come with higher interest rates and fewer protections for student borrowers.
Nationally, tuition costs have been climbing at rates that exceed the rate of inflation.
In Michigan, where for three years— 2001-02 through 2003-04—state budgets for community colleges and universities were slashed by 15 percent, higher ed institutions were forced to raise tuition to make up for dwindling state appropriations.
Students and their families are paying a deep out-of-pocket price for higher education.
A quick look at Ferris State University helps illustrate the steep price tag students pay through rapidly rising tuition rates.
In 2001, when the Michigan higher ed budgets were sliced by 15 percent, tuition and fees made up 28.9 percent of operating revenue at Ferris; by 2005, tuition and fees amounted to 39.1 percent of Ferris’ operating revenue.
Students struggling
Central Michigan University professors Paul Natke and Pamela Eddy witness the struggle students endure with the higher cost of going to college.
“It’s not uncommon to see students leaving college saddled with loan debt exceeding $20,000,” said Eddy, associate professor in Department of Educational Leadership.
“We see career choices made by students based on how much money they can make, knowing they have to pay off student loans, rather than considering lower paying careers in public service, such as social work.”
Natke, chair of CMU’s Department of Economics, said students are forced to juggle course work with employment,
working full- or part-time minimum wage jobs to help pay college costs. “They work, but they still have to borrow,” he said. “They’re graduating with higher and higher debt loads.”
After several years of funding reductions for higher education, the state Legislature raised state support for universities by 3 percent this year, the first increase in five years.
“The funding cuts really hurt us,” Natke said. “We’ve had some funding restored, but we’re still behind in the amount of dollars we received five or six years ago.”
Gradual decline in state support
Over the last 30 years, state support for higher education has seen a marked decline. Higher education relied on roughly 70 percent of its funding from the state three decades ago. By the early 1990s, that had plummeted to 32 percent.
A change in how politicians and the public view the necessity of higher education has accompanied the funding decline over the years.
“While K-12 education has always been viewed as an essential funding priority, the same can’t be said for higher education,” Eddy said. “We’ve seen a real shift in how higher education is perceived, from a ‘public good’ to an ‘individual good.’”
Natke explained.
“There’s a feeling that if a college graduate is going to make two to three times as much over a lifetime as a high school graduate, then students going to college should be paying their own way, because it benefits the individual,” he said.
“In the starkest terms, why should blue collar workers pay taxes to support someone from the upper middle class to go to college so they can earn three times more than the blue-collar worker?”
Budget cuts painful
Budget cuts over the last five years have taken a toll at Central Michigan as they have at the rest of the state’s colleges, universities and community colleges.
“We’ve seen across-the-board cuts from department to department,” Natke said. “Support service staff have been lost. When employees leave or retire, they’re not being replaced. The number of sections offered has been cut in some classes, and class size has risen. Some sections with few students enrolled have been cut altogether. We’re also hiring more part-time and full-time ‘temporary’ faculty to save money.”
The so-called fat in the Central Michigan budget has been trimmed, Eddy said. “You’re cutting into muscle at this point. Everyone is doing more. We’re serving an increasing enrollment with less. The demands on the faculty keep expanding. It’s a complex situation and the impact is broadly felt.”
Serious long-range implications
The education funding crisis comes at a time when state leaders want to double the number of college graduates in the next 10 years to help Michigan transition from a brawn- to brain-based economy.
“Twenty years ago, a high school graduate could still have a decent standard of living,” Eddy said. “Today, everyone recognizes that higher education is the key for Michigan to compete in the hightechnology, knowledge-based economy.”
Natke and Eddy worry about the long-range implications of the education funding crisis: Middle class and poorer, minority students may be shut out from higher education.
Even now, many current college students are considering dropping out of college until they can afford to come back.
“The upper class won’t be affected—they can afford to send their kids to college,” Eddy said. “The middle class and poorer students may not have the opportunity.”
“It’s about access,” Natke noted. “We may reach the point where middle class and poor students won’t be able to afford to attend college.”