Posted by: bkivey | 5 February 2010

Cost and Value in Higher Education

Washington State University made the news this week when students and sympathetic faculty staged a walkout to protest a substantial increase in fees. Every time a university system announces tuition and fee increases students and their parents protest and every Fall a new class of students enrolls, usually in greater numbers than the year before.

Now, most people realize that if they attend a public school that the taxpayer’s are footing a good portion of the bill and the percentage of people who pay for their education in any type of institution without some form of assistance is very small. Still, it’s hard to understand why university systems seem to need to raise the cost of going to school by double digits on a regular basis, far outstripping the rate of inflation.

That said, I would venture to say that the majority of people attend a particular institution of higher learning for reasons other than cost and that cost is not often the driving factor in deciding where to go to school. Most people decide to go to school in general and to a certain school in particular because of the perceived value of a post-secondary education.

As someone who worked a full-time job while attending school full-time I appreciate the financial pressures when a school raises it’s prices. Generally you just go deeper into debt. But really, when you look at the value, the cost is really quite reasonable.

To illustrate this, I looked up the current tuition and fees for three schools: Washington State University (remember those students?), my alma mater Oregon State University, and the local 2-year institution, Portland Community College. For all schools I took the cost of tuition, fees, and books for an academic year for a person taking fifteen hours per term.

Washington State University: $9500/year or about $38,000 for four years.

Oregon State University:           $8000/year or about $32,000 for four years.

Portland Community College:  $6000/year or about $12,000 for two years.

If you want to take care of your first two years of college at PCC and then transfer to OSU (as many do) you can save about $4000 on your education, which is fairly significant. You will note that at both four-year institutions the total cost is less than one year at many Ivy’s. Are the Ivy’s four times better? I suppose if you want to be a lawyer or politician, maybe, otherwise, maybe not.

The rule of thumb when taking on student debt is that your first year’s salary should be more than or equal to your total student debt. For many majors this is quite achievable. If you major in a non-renumerative field of study, well, that was your choice and you shouldn’t complain. However, for many people a university degree takes them from a minimum wage job in high school to a middle-class professional job in four or five years. That’s not bad.

A few years ago a friend and I were watching news coverage of a student protest over a college tuition increase (I believe it was also at Washington State). My friend remarked that none of the protesters could be engineering students because all of them were in the library (I can vouch for this). I truly hope that none of the current protesters are business students, because if so they have much to learn about the differences between cost and value.

The Body Corporate

Because of the recent Supreme Court ruling concerning the free speech rights of corporations, there have been many Letters to the Editor in the local paper decrying the new standard, which is in reality the restoration of the old standard. Many of the letter writers stated that corporations are not ‘people’ which probably comes as a surprise to those that practice corporate law. As legal entities, corporations have many of the rights and responsibilities of human beings, including liability for crimes.

As is often the case, people’s prejudices and ignorance (Corporations bad! Living in a subsistence society good!) cause them to reach completely erroneous conclusions based on unsubstantiated premises. What is amazing is that in a time when shed loads of information on just about any conceivable subject is available cheaply and easily that some folks just can’t be bothered to find out if what they believe has any basis in fact. It is impossible to take those people seriously.

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