When will the cost of college flatten out?

[Anonymous]

Anonymous wrote:

Anonymous wrote:It probably won’t. There are no cost controls in higher ed, and that shows in their relentless administrative and facilities spending. All of this is made possible by the federal government backstopping student loans with no oversight on outcomes, etc.

Undergrads are now capped at $27K for the entire four years. This may have an impact on rising costs at most schools that don't have large endowments to meet 100%/ make up the gap.

No cap on parent plus loans, though. And a huge industry devoted to convincing parents to mortgage their homes and/or retirements, and/or forego other purchases and investments, because “it matters where you go to school!!”

[Anonymous]

I think about this a lot. I have a 6 yr old and based on current trends, a single year at a good-not-great in-state university could cost over 50k by the time he's in college. Potentially more.

One thing we think about is that since we have only one child (a choice we made in part due to the cost of college), we can save pretty well for his college despite not having a huge income (HHI 140k). But it's hard to keep up with those costs, and while our income could go up some int he next few years, it's not going to go that much higher.

All of which is to say: it sometimes feels like saving for college at our income in futile, because no matter how much we save it won't be enough, but college will take every penny of it. So say we really scrimp and save and have 120k in the 529 by the time he goes to college. They'll take every bit of that and we'll still need more on top of that. All that sacrifice and then *poof* it's gone and the hand is still out for more. And this is for something our child will need to WORK for. We're not even buying a degree, just an opportunity. No guarantees.

It doesn't make sense.

[Anonymous]

Anonymous wrote:Never. Why would it? They keep raising the prices and the kids are applying in droves. There is no reason to keep tuition reasonable. None.

All true. And even if the American market decreases due to population changes or parents making alternative arrangements, the institutions who are bleeding us will just turn to the massive international market. That slice of student population has been surging and those students are willing to pay anything to go to college here.

[Anonymous]

Yep, simple supply and demand. Until the demand goes down, nothing will change. Free market capitalism at work, folks.

[Anonymous]

Anonymous wrote:Yep, simple supply and demand. Until the demand goes down, nothing will change. Free market capitalism at work, folks.

Not really. The government is both underwriting some of the costs and altering the rules on loans for the rest

[Anonymous]

Anonymous wrote:

Anonymous wrote:Never. Why would it? They keep raising the prices and the kids are applying in droves. There is no reason to keep tuition reasonable. None.

All true. And even if the American market decreases due to population changes or parents making alternative arrangements, the institutions who are bleeding us will just turn to the massive international market. That slice of student population has been surging and those students are willing to pay anything to go to college here.

Undergraduate student visas need to be capped

[Anonymous]

It might flatten out a little because no one wants to be the first school to charge $100K/year, but once they hit that number it will keep climbing.

Even if demand goes down, costs won't. Because where would schools cut -- faculty? Majors/programs? Facilities? Financial aid? Technology? Mental health services? These are all things that students and families demand, and there's not much incentive to cut these areas.

[Anonymous]

Anonymous wrote:It might flatten out a little because no one wants to be the first school to charge $100K/year, but once they hit that number it will keep climbing.

Even if demand goes down, costs won't. Because where would schools cut -- faculty? Majors/programs? Facilities? Financial aid? Technology? Mental health services? These are all things that students and families demand, and there's not much incentive to cut these areas.

Princeton's endowment generates more than enough to fund the entire university tuition free in perpetuity. We're far past the point where the schools with the highest tuition need to money to support the school. I do love that you listed mental health though. I wonder if the kid maxing out loans and knowing that their parents mortgaged the house appreciates having someone to talk to about the stress

[Anonymous]

Costs will not flatten out at say maybe the top 150 - 200. However, beyond those schools, you will definitely see schools go bankrupt, will increasingly offer higher merit discounts such that the net cost is lower in both inflation-adjusted and nominal dollars, or you will see schools like Bridgewater College in VA, just outright slash tuition. They dropped tuition from $43,000 to $15,000 and in theory will stop playing the game if a very high rack rate, but a much lower actual rate.

Folks, there are 3MM fewer college students today compared to 10 years ago. The number will keep dropping. Schools like Indiana University of PA and Shippensburg are 40% smaller today compared to 20 years ago. There are literally hundreds of schools like those two.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It might flatten out a little because no one wants to be the first school to charge $100K/year, but once they hit that number it will keep climbing.

Even if demand goes down, costs won't. Because where would schools cut -- faculty? Majors/programs? Facilities? Financial aid? Technology? Mental health services? These are all things that students and families demand, and there's not much incentive to cut these areas.

Princeton's endowment generates more than enough to fund the entire university tuition free in perpetuity. We're far past the point where the schools with the highest tuition need to money to support the school. I do love that you listed mental health though. I wonder if the kid maxing out loans and knowing that their parents mortgaged the house appreciates having someone to talk to about the stress

I am convinced a Bezos of Musk or Zuckerberg, etc. will follow the lead of Frank Langone and donate $20BN or something crazy to their alma mater and require tuition to be free (up to some level that everyone would agree is truly rich). Langone donated to NYU Medical school so it is now tuition-free and received a lot of great press.

Once that happens, the top schools will follow suit. Of course, then it will be insane to get accepted to those schools.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The college income premium is shrinking and thanks the the enormous cost of college and the debt requires, the wealth premium is shrinking even faster.

https://www.stlouisfed.org/on-the-economy/2021/january/college-degrees-more-wealth

I think the "everyone needs to go to college" mantra goes away and more people start to focus on cost it will either come down or expensive schools will have even more exaggerated barbell distributions as the middle and upper middle class opt for more affordable options

we need to return to offering more VoTech options in HS---let the kids who would do better on a HVAC/Electrical/AutoMechanics/Etc explore those options for half their days in HS. Stop making them take thru Algebra 2 and let them take a more practical Statistics/math class that they might actually use (an intensive course in excel and stats perhaps). They kids would be happier, better self esteem and more importantly starting on a path to what they ultimately will do.
We need people in these areas and not everyone is college material. Many kids are frustrated in HS with the academics and would do much better with hands on courses like this. If they did this, then they might be 1 year of training away from a great job when they graduate HS

If they can't figure out basic Algebra 2, they can't figure out basic stats either. Schools have "how to use a computer" classes, but the tech changes faster han curriculum can.

Also VoTech and carrer-oriented Dual Enrollment programs exist and are available to people who want them.

They don't exist everywhere and are definately not as accessible as they were in the 80s/90s for HS students. We need to bring it back as it's a very useful program for many students.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The college income premium is shrinking and thanks the the enormous cost of college and the debt requires, the wealth premium is shrinking even faster.

https://www.stlouisfed.org/on-the-economy/2021/january/college-degrees-more-wealth

I think the "everyone needs to go to college" mantra goes away and more people start to focus on cost it will either come down or expensive schools will have even more exaggerated barbell distributions as the middle and upper middle class opt for more affordable options

we need to return to offering more VoTech options in HS---let the kids who would do better on a HVAC/Electrical/AutoMechanics/Etc explore those options for half their days in HS. Stop making them take thru Algebra 2 and let them take a more practical Statistics/math class that they might actually use (an intensive course in excel and stats perhaps). They kids would be happier, better self esteem and more importantly starting on a path to what they ultimately will do.
We need people in these areas and not everyone is college material. Many kids are frustrated in HS with the academics and would do much better with hands on courses like this. If they did this, then they might be 1 year of training away from a great job when they graduate HS

They offer it in most school systems but few kids the it. Did you have yours do that?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Yep, simple supply and demand. Until the demand goes down, nothing will change. Free market capitalism at work, folks.

Not really. The government is both underwriting some of the costs and altering the rules on loans for the rest

And how does that make the market any less free? No one's being forced to do anything.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yep, simple supply and demand. Until the demand goes down, nothing will change. Free market capitalism at work, folks.

Not really. The government is both underwriting some of the costs and altering the rules on loans for the rest

And how does that make the market any less free? No one's being forced to do anything.

Government intervention distorts markets which is the opposite of a free market

[Anonymous]

Anonymous wrote:

Anonymous wrote:The college income premium is shrinking and thanks the the enormous cost of college and the debt requires, the wealth premium is shrinking even faster.

https://www.stlouisfed.org/on-the-economy/2021/january/college-degrees-more-wealth

I think the "everyone needs to go to college" mantra goes away and more people start to focus on cost it will either come down or expensive schools will have even more exaggerated barbell distributions as the middle and upper middle class opt for more affordable options

we need to return to offering more VoTech options in HS---let the kids who would do better on a HVAC/Electrical/AutoMechanics/Etc explore those options for half their days in HS. Stop making them take thru Algebra 2 and let them take a more practical Statistics/math class that they might actually use (an intensive course in excel and stats perhaps). They kids would be happier, better self esteem and more importantly starting on a path to what they ultimately will do.
We need people in these areas and not everyone is college material. Many kids are frustrated in HS with the academics and would do much better with hands on courses like this. If they did this, then they might be 1 year of training away from a great job when they graduate HS

In theory, this sounds like a great idea. However, if you read various articles about the rise of AI and tech, even these jobs are not as safe as you might imagine.

Electric cars have way fewer moving parts and no oil changes, so there is no need for any routine maintenance. The demand for auto technicians will drop, however, the auto technicians needed will now need much higher skills. They will need to understand electric battery technology and chemistry, understand the computer systems driving the cars, etc. About the only "old" technology will be the tires...although even tires are being improved so that you almost never get a flat.

Supposedly, only like 10,000 new plumber jobs will be created over the next 10 years. I gather that is completely new jobs, but doesn't take into account that the average age of existing plumbers is high and all those folks will need to be replaced. Still, 10,000 over 10 years is really nothing considering the economy creates millions of jobs each year.

Supposedly new HVAC systems will have AI and IoT technology embedded. Many existing problems that you currently need an HVAC technician to fix will be diagnosed and sometimes self-corrected and / or the homeowner will be provided instructions on how to fix the systems themselves.