Posts Tagged ‘debt’

Higher-Ed Ladder Fig. 6

According to a new study by Demos, the major cause of the rise in college tuition costs is not, as is often believed, administrative bloat or construction binges, but the decline in state funding for higher education.

In the past, state funding for education often rose and fell along with the economy: since higher education funding is viewed as “discretionary” spending, it is often a target for cuts when states are forced to close recessionary holes in their budgets. However, in the past decade, state funding for higher education has diverged from that trend. Six years after the great recession, state higher education funding per student remains 27 percent below its pre-recession level. Unfortunately, declining state support for higher education means that many students today have no choice but to take on significant debt to finance their educations, the negative effects of which are increasingly evident in young people’s lives.

The fact is, public higher education in the United States no longer exists. Because more than half of core educational expenses at “public” 4-year universities are now funded through tuition, a private source of revenue, they have effectively become subsidized private institutions.

Addendum

Higher-Ed Ladder Fig. 2

The other interesting piece of information in the Demos study is the enormous increase in part-time faculty. As Figure 2 shows, the number of employees per thousand students changed little between 1991 and 2011. But the composition of universities’ staff has changed dramatically. At both types of institutions, the relative number of full-time faculty has remained approximately constant and the number of executives and administrators has actually slightly decreased relative to the size of the student body. However, both types of institutions are employing substantially more part-time faculty (as well as professional staff—admissions and human resources staff, IT workers, athletic staff, and health workers). At the same time, the relative number of non-professional staff—workers providing clerical, technical, skilled craft, or maintenance services—shrank dramatically.

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Student-debt

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The largest university in the United States—the University of Phoenix, part of the Apollo Education Group [ht: ja]—has been given an F by Wall Street investors. Its stock tumbled almost 30 percent in today’s trading.

A key problem is that, while for-profit colleges only enroll roughly 12 percent of the nation’s students, students at those colleges accounted for about half of student loan defaults in 2013. And, as we know, the quality of education continues to be dismal.

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Student enrollments and revenues have thus been falling in recent years. Degreed enrollment in the Apollo Education Group was most recently 227,400 students, less than half its own peak five years ago and down 13.5 percent from the first quarter of fiscal 2014. This year it will be lucky to take in $2.7 billion, although it had revenues close to $5 billion in 2010.

This would be the perfect time for public colleges and universities to attract many of the students who are leaving the for-profit sector of higher education. The problem is, public institutions are behaving more and more like their for-profit counterparts, being forced to rely more and more on tuition payments from students, who are taking on increasing levels of debt, instead of public financing.

In that sense, the country as a whole deserves an F for its failure to provide high-quality, affordable higher education to its citizens.

March 7, 2015

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sisyphus-fix

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Recovery: New Job, Day One