Why Public Universities Are Now a Bad Bargain for the Middle Class

Campus costs for public collegesHere's a higher education shocker: Thanks to tuition hikes at California's state universities on the one hand, and the generous financial aid policies of Harvard on the other, attending the Ivy League university is actually a better deal for middle-class students from the Golden State, the San Jose Mercury News reports.

The numbers are clear: Between 1997 and 2007, tuition in the U.S. rose by 94% at public four-year colleges, but only by 22% at private nonprofit four-year colleges. College enrollment also rose 38% over that period, and as with any commodity, increasing demand drives up prices.

As the head of the Cornell Higher Education Research Institute, Ronald G. Ehrenberg, notes in the Winter 2012 issue of the Journal of Economic Perspectives, undergraduate tuition has outpaced the rate of inflation by an average of 3.5 percentage points a year.

Public universities, with their shrinking support from state governments, still provide significant tuition breaks to the poor. But they can only do so much. Top private universities, by contrast, have massive endowments to support their educational mission and the wherewithal to spend that money on students who are higher up on the economic ladder.

The result: Prestigious schools long perceived as catering to those with elite pedigrees and family wealth are becoming a better economic bet for middle-class families than the public universities that were founded to serve them.

The Big Squeeze

No longer are public higher education institutions the beacon of egalitarian learning: They can't afford to be.

Whereas private institutions have raised their base tuitions but increased expenditures per student, public higher education institutions have increased tuition mostly as a compensatory mechanism to make up for drops in state support.

Cuts in state funding for education have put an increasing strain on students and their families. According to Ehrenberg, tuition increases have barely compensated for that decline in support for public universities. In constant dollars, state appropriations per student dropped 19% from an average of $7,993 in 1987 to $6,454 in the 2010 fiscal year. The rise in actual tuition income for the schools has mostly picked up the slack.

But it has become a vicious circle: As a result of higher unemployment, state residents have less income, which leaves a diminished tax base pouring less money into state coffers -- at the same time as families trying to send children to college face an increasing need to tap a shrinking pool of financial aid. Add the inflationary trend of tuition to the mix, and a college education becomes less and less attainable.

Richard Vedder, economics professor emeritus at Ohio University and author of Going Broke By Degrees: Why College Costs Too Much, sees the middle class as the true losers in the equation.

"There is no question that, for the typical middle-class applicant, Harvard is far cheaper than many state schools," Vedder said. "But it is even worse: the typical Harvard student graduates in four years, while the typical student at a state university takes five years (and sometimes six) -- if she graduates at all."

(Don't blame those state university students; it's not that they're slacking off, notes the Mercury News: At California's public universities, "cuts have made it difficult to get all required classes in four years," slowing down the graduation rate.)

"The rub, of course, is that most kids cannot get into the elite private schools," Vedder said.

"Nonetheless, increasingly I am seeing role reversal: The private schools are in some respects really more 'public' than the so-called 'public' or 'state' universities," he said. "Moreover, schools like Harvard, Yale, Princeton and Williams are able to offer lower tuition fees because of their vast wealth, which, in turn, was largely accumulated as a result of tax exempt privileges granted by the federal government. Who is more 'public': Harvard or Cal State East Bay? It is a debatable proposition."

The Necessity of Education

High cost or not, a college education still seems like a must for those looking get a significant leg up economically.

"The college graduate vs. high school graduate earning difference has not diminished in recent years, so college still is a great long run investment, although people graduating in the worst economic period since the depression certainly won't feel that way in the short-run," Ehrenberg said.

A recent Brookings Institution study placed the return on investment at 15% -- comparing the income premium accruing to those with a degree against the price tag of a college education.

Still, that plum ROI does not completely offset the financial challenges middle class families will continue to face.

The cost of bringing up children has become exorbitant -- even before factoring in the price of educating them for the modern workforce. The Department of Agriculture, which has a calculator for estimating the expenses of raising kids, predicts that a Midwestern family with an annual household income in the $57,400 to $99,390 range, and a 3-year-old and a 1-year-old, will spend $578,050 on both by the time the first one is college-age.

It Only Likely to Get Worse

Though a top-tier university may be a money-saver, it's not an attainable goal for most: 75% of America's college students are educated in public institutions, which means their increasing tuitions will continue to put a strain on middle class families.

"Absent adequate support, tuition keeps rising and we run the risk of rationing students out of public higher education because they can no longer afford it or because, as the California system is doing, enrollments are being restricted," Ehrenberg said.



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Milan Moravec

Campus Chancellor’s and Provost ‘s tuition increases make it impossible to keep the promise of equality of opportunity: access, affordability is farther and farther out of reach. Self-absorbed Chancellor, Provost are outspoken for elete public UC Berkeley ‘charging Californians much higher’ tuition. Cal. Chancellor Birgeneau, Provost Breslauer leave an indelible legacy on university access, affordability.

Cal. tuition is rising faster than costs at other universities. Number 1 ranked Harvard is now less costly. Birgeneau, Breslauer decision to ‘charge Californians higher tuition’ for eletist Cal. make it the most expensive of the expensive public universities!

Birgeneau ($450,000) Breslauer ($306,000) like to blame the politicians, since they stopped giving them every dollar demanded. The ‘charge Californians higher’ tuition skyrocketed fees by an average 14% per year from 2006 to 2011-12 academic years. If Chancellor Provost had allowed fees to rise at the same rate of inflation over the past 10 years they would still be in reach of most middle income students. Breslauer Berheneau increase disparities in higher education and defeat the promise of equality of opportunity. An unacceptable legacy for all Californians.

Additional funding should sunset. The sluggish economy and 10% unemployment devistate family education savings. Simply asking for more taxes to fund self-absorbed Cal.senior leadership, old inefficient higher education models and fund excessive faculty staff compensation, burdensome bonuses, is not the answer.

UC Berkeley is to maximize access to the widest number of Californians at a reasonable cost: mission of diversity, equality of opportunity. Birgeneau’s Breslauer’s ‘charge Californians higher’ tuition denies middle income families the transformative value of Cal.

The California dream: keep it alive at Cal. Birgeneau resigned; fire (honorably retire) Provost George W Breslauer.

Opinions? UC Board of Regents marsha.kelman@ucop.edu Calif. State Senators, Assembly members.

August 09 2012 at 5:44 PM Report abuse rate up rate down Reply
Milan Moravec

California families getting squeezed out of University of California Berkeley by instate tuition. UCB Chancellor Robert J Birgeneau is outspoken on why elite public universities, like Cal, should charge Californians more. With Birgeneau’s leadership UCB is more expensive (on an all-in-cost) than private Harvard and Yale. Chancellor Birgeneau’s ‘charge more’ tuition to Californians makes Cal. the most expensive public higher education in our country!

Birgeneau ($450,000 salary) likes to blame the politicians, since they stopped giving him every dollar expected. The Chancellor’s ‘charge more’ instate tuition skyrocketed fees by an average 14% per year from 2006 to 2011-12 academic year. If Birgeneau had allowed fees to rise at the same rate of inflation over the past 10 years they would still be in reach of most middle income students. Increasing funding is not Cal’s solution.

As a public university UCB is to maximize access to the widest number of instate students at a reasonable cost with a mission of diversity and equality of opportunity. Unfortunately Birgeneau’s ‘charge more’ tuition to Californians diminishes the equality and inclusion principles which underlie our state and country. Birgeneau’s and Provost George Breslauer’s ($306,000 salary) ‘charge more’ instate tuition denies middle income Californians the transformative value of Cal’s education.

Chancellor Birgeneau’s tenure is a sad unacceptable legacy.
Opinion to: UC Board of Regents marsha.kelman@ucop.edu and Calif. State Senators and Assembly members.

May 11 2012 at 7:08 PM Report abuse rate up rate down Reply
Wayne Bradshaw

The City Council is examining a request to open a Gucci Outlet Store and retail shop at 11502 Middlebelt in the Livonia Crossroads shopping center on the southeast corner of Plymouth and Middlebelt roads.The council heard at a study session on Monday from Taylor Bond, president of Children's Orchard, who wants to open a 7,500-square-foot Gucci Outlets store at the site of the former Family Buggy restaurant, which was closed several years ago.

May 06 2012 at 12:03 AM Report abuse rate up rate down Reply
sgtdjusmc

my MBA is costing me $3300 a term Total from WGU

March 11 2012 at 10:09 AM Report abuse rate up rate down Reply
trnichols17

Don't go Ivy league if you don't want to be indoctrinated by the left wing loons.The Ivy league has a monopoly on left leaning liberal lunatic professors.

March 08 2012 at 1:27 PM Report abuse +1 rate up rate down Reply
trnichols17

Don't go Ivy league if you don't want to be indoctrinated by the left wing loons.The Ivy league has a monopoly on left leaning liberal lunatic professors.

March 08 2012 at 1:26 PM Report abuse +1 rate up rate down Reply
chimayred

glad to see the rampant skepticism here. What a crock. Read Debt Free U by Zack Bissonette if you want a really good take on college from a really bright kid! This article is just garbage.

March 08 2012 at 1:25 PM Report abuse rate up rate down Reply
chimayred

glad to see the rampant skepticism here. What a crock. Read Debt Free U by Zack Bissonette if you want a really good take on college from a really bright kid! This article is just garbage.

March 08 2012 at 1:25 PM Report abuse rate up rate down Reply
wilthoj

This story is a shameless plant by private universities who are no longer capturing either the number of the better students they want to attract - because they have priced themselves out of the market. Top students from non-financial aid qualified households (read that, upper middle class) are able to able to reduce undergraduate tuition/r&b payments by up to 35% OUT-OF-STATE at great public universities, get better options in terms of specific majors, and participate in paid undergraduate research jobs without signing on for loans by going with major public universities. And this B.S. about "more aid from private schools" - really, how much is in grants versus loans, and how many of these so-called scholarships they offer are actually retained for all four years of undergraduate education? There isn't a university out there that will deliver an audited, verifiable number to you reporting the number of "scholarships" that are retained for all four years. Its bait-and-switch. Get you in, knock down your GPA, you lose the scholarship and need to take out loans to stay in the school. Think it doesn't happen? Ask for a number on scholarships retained for all four years? This article tells me that even in the Ivies, there is a question about the sustainability of their business model at these prices. So you get propaganda like this on AOL. An undergrad degree from an Ivy isn't a meal-ticket. A graduate degree from anywhere will be more important in terms of lifetime earnings.

March 08 2012 at 11:42 AM Report abuse rate up rate down Reply
1 reply to wilthoj's comment
Terry

Although I agree that the article is poorly written, your take on it is full of misconceptions. My daughter is a freshman at UC Berkeley. The cost is about $32,000 per year. She received a "middle income grant" of $3500, which reduced our cost to about $29,000. (Our family income would be considered upper middle class...low 6 figures). Her close friend & high school classmate is a freshman at Yale, pretty much the same economic level as us. Cost there is about $52,000 per year. Based on his family's income, they reduced his cost to about $18,000 per year. Contrary to your statement, the Ivies still get the top students, and they do so because they kick in major money to families who earn less than $150,000 per year, and that money has nothing to do with grants or scholarships.

March 08 2012 at 3:08 PM Report abuse rate up rate down Reply
wilthoj

This story is a shameless plant by private universities who are no longer capturing either the number of the better students they want to attract - because they have priced themselves out of the market. Top students from non-financial aid qualified households (read that, upper middle class) are able to able to reduce undergraduate tuition/r&b payments by up to 35% OUT-OF-STATE at great public universities, get better options in terms of specific majors, and participate in paid undergraduate research jobs without signing on for loans by going with major public universities. And this B.S. about "more aid from private schools" - really, how much is in grants versus loans, and how many of these so-called scholarships they offer are actually retained for all four years of undergraduate education? There isn't a university out there that will deliver an audited, verifiable number to you reporting the number of "scholarships" that are retained for all four years. Its bait-and-switch. Get you in, knock down your GPA, you lose the scholarship and need to take out loans to stay in the school. Think it doesn't happen? Ask for a number on scholarships retained for all four years? This article tells me that even in the Ivies, there is a question about the sustainability of their business model at these prices. So you get propaganda like this on AOL. An undergrad degree from an Ivy isn't a meal-ticket. A graduate degree from anywhere will be more important in terms of lifetime earnings.

March 08 2012 at 11:41 AM Report abuse +1 rate up rate down Reply