The College Tuition Trap

Why your kids don't need a fancy college

October 1, 2010

Source: Holt/Times Books

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It's no secret that the cost of college has skyrocketed, even as IRAs and stock portfolios have withered. According to the College Board, tuition at a top school can set you back $35,000 or more per year in tuition and fees. Will you be mortgaging your kid's future if you don't pay for a four-year degree from a prestigious school?

Maybe not. The authors of Higher Education? How Colleges Are Wasting Our Money and Failing Our Kids — and What We Can Do About It argue that students at the nation's most expensive schools may not get commensurate value from their educations.

Authors Andrew Hacker and Claudia Dreifus pose a simple and compelling question: College costs are more than two and half times higher than they were in the 1980s. Is college two and a half times better?"

Their answer, of course, is no. They say, "it's hard to argue that students are getting a lot of extra value for all that extra money. Why? Colleges aren't spending their extra revenues, which we calculate to be about $40 billion a year nationally over 1980 revenues, in ways that most benefit students." Instead, they're spending the surplus revenue on sports, on extra layers of administration and on highly paid "star" faculty and staff.

But Hacker and Dreifus think that students don't directly benefit from having a super-professor on campus, because few will actually get to be taught by them. They point out that at the prestigious Wharton School, one of the nation's top business programs, freshmen in Management 100 are taught, in part, by other undergrads.

Their bottom line:

The travesty of high tuition is that most of the extra charges aren't going for education. Administrators, athletics and amenities get funded, while history departments are denied new assistant professors. A whole generation of young Americans is being shortchanged, largely by adults who have carved out good careers in places we call colleges.

In a review in Bloomberg Businessweek, Paul Barrett writes, "Authors Andrew Hacker and Claudia Dreifus report that, with an open mind, teenagers and their parents can find any number of surprisingly high-quality, reasonably priced colleges and universities. Forget Harvard. Arizona State, anybody?"

Next week, the White House will host the first White House Summit on Community Colleges to look at ways to make a college degree available to every American. The community college system could be an excellent alternative for some kids — and not only those who don't have excellent grades.

My parents packed me off to a top college, where, thrilled to be out from under their rather old-fashioned rules, I partied for two years before dropping out. I did go back to school, and paid for it myself — which was feasible in the 1970s, when going to a state university didn't cost as much as a luxury car or a down payment on a house.

College ratings inflation is fueled in part by the annual ranking published by U.S. News & World Report. The media report on the results, driving up demand for the top schools on the list, which always seems to be led by Harvard, Princeton and Yale.

If your highschooler is starting to make a list for college applications, help him or her use the same savvy you'd bring to shopping for a car or a cashmere sweater. Look beyond the pricey brand for real value.

In Higher Education?, Hacker and Dreifus include examples of lesser-known colleges that provide excellent education at a good price. And even U.S. News now includes a list of Great Schools, Great Prices, with a simple criterion: The higher the quality of the program and the lower the cost, the better the deal.

You can use CNN's College Cost Finder to quickly estimate how much a diploma will set you back.

So, look beyond American Idol-type college rankings and help your kids find a school that will pay off in terms of intellectual and emotional growth — without bankrupting you.

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Anonymous | Oct 3, 2010

This article is one sided & does not tell the whole story. It represents poor journalism. A more accurate article would have included available financing to students i.e. scholarships, grants, merit & need based aid. As for college revenue, colleges have spent millions on capital improvements, financial aid, safety, technology & student services. I went to college in the early 1970's & my son just graduated this year. Colleges & universities are forced to improve & keep up with technology if they want students to be up to date & successful in their chosen field. As much as highly rated universities may be over hyped, they do provide the greatest opportunity for select students who are financially disadvantaged but who have achieved extraordinary success in high school. These poor students would never be able to achieve success without the "brand name" university on their resume because unlike their wealthier counterparts, they don't have network connections. I know this firsthand because my son is one of them. He was able to use his college's career center to land his first job in a recession with high unemployment. If he attended a lesser known college, this would never happen.

Joe P | Oct 8, 2010

I agree that this article is one-sided — but I also feel like it is purposefully so. The point here is to illuminate an issue that requires attention.

We're all aware of aid and scholarships. Heck, if they were to cover that though, I'd expect to hear more about the lack of them. After all, more and more students are going to college every year, but aid opportunities aren't increasing at a relative rate. It's cut-throat.

Yes, I agree that most universities funnel a lot of their money into capital improvements and the such, but it's also quite obvious that this is also not up to par with the amount of money they are charging for tuition.

If that was the case, every student at WPI should be riding around in a Segway!

If you ask me, it's a simple if you look at the education sector as a market. Universities weren't AS disparate regarding the levels of education quality - among other values - decades ago, and college educations weren't so much a necessity as they were an option.

Now, today, that has all changed. If you don't go to college, you're an idiot. It seems you need a degree to even wait tables these days.

Colleges have an over-abundance of applicants. Thus, supply and demand would explain their ability to charge exorbitant prices and get away with it.

Especially for the 'name brand' schools. And, let's be real here, sure - their quality of education may have a richer history, and may be better, but it's not +$30,000 a year better. Not by a long shot. Not in these days, when options are many and information is abundant. We don't need to rely on these archetypes of education anymore - and that's what I believe the book in question is trying to prove.

The bar is raising relatively all around the country - nay, the world - for education standards due to many factors that are driving competition in the education sector, making it very possible to achieve a great education at a lesser known institution.

If you go to Harvard or Yale or Princeton, etc, you are paying for the name, the network, and the brand. And yes, that can be worth it - but just don't fool yourself into thinking the education itself is that much better.

Premium knowledge is no longer silo'd into the minds of a few great men strolling about ivy league campuses.

We live in the Information Age now; we live in a world where knowledge is there for the taking for all from an abundance of sources, and all it takes is enough time to become an expert on something. And these experts are virtually everywhere now.

This could easily lead to a discussion over the criteria of the measured value of knowledge dispersed through educational facilities themselves, but that's for another time.

Ken Baron | Oct 4, 2010

Interesting. Thanks for sharing.

Joe P | Oct 4, 2010

This article may be one-sided, but it seems purposefully so — and justifiably so, at that.

Although your points are definitely valid, they don't refute the any of the points made by the author.

Yes, colleges are spending money on capital improvement, financial aid, technology, etc — but they ALWAYS have. This is nothing new, and it certainly is not relatively higher in correlation with the hike in tuition

And yes, a 'brand name' college degree does give the student a better chance at job placement. But, in the end - and this is what the author is really trying to argue here - that's what you're mostly paying for: a name, and not so much an education.

This all makes perfect sense, too. Think of it as a market. A few decades ago, there weren't nearly as many schools, and the prestige and brands were not so set apart as they are now. Also, College Degrees were more of a choice, an option, and not a mandatory asset to becoming a successful American.

Today, the 'market' is saturated with schools and other higher education options. 'Forerunners' in the market have been established, and with a degree being more of a need, rather than a want, these schools are being overwhelmed with applications.

Thus, supply and demand take over, and they can justify the hike in prices. People will pay it.

Although it seems to follow a fairly logical ruleset, it does make one wonder what they are doing with all that money.

Now, everything would be fair and well if the surplus was going to the places you had mentioned, but let's be fair — if it were, we'd see a LOT more advancement in our Universities, especially our top ones, by now.

I have to agree with that author in corroborating the hypotheses of the book she cites in that the money is flowing down less charitable avenues, and is not coming full circle to the students.

Although not our nations biggest problem at the moment, if this trend continues, it will warrant some significant attention and reform if you ask me.

Joe P | Oct 4, 2010

This article may be one-sided, but it seems purposefully so — and justifiably so, at that.

Although your points are definitely valid, they don't refute the any of the points made by the author.

Yes, colleges are spending money on capital improvement, financial aid, technology, etc — but they ALWAYS have. This is nothing new, and it certainly is not relatively higher in correlation with the hike in tuition.

And yes, a 'brand name' college degree does give the student a better chance at job placement. But, in the end - and I believe this is what the author is really trying to argue here - that's what you're mostly paying for: a name, and not so much an education.

This all makes perfect sense, too, if you think of it as a market. A few decades ago, there weren't nearly as many schools, and the prestige and brands were not so set apart as they are now.

Also, College Degrees were more of a choice, an option, and not a mandatory asset to becoming a successful American.

Thus, supply and demand take over, and they can justify the hike in tuition. People will pay it.

Although it seems to follow a fairly logical ruleset, it does make one wonder what they are doing with all that money.

I have to agree with the author in corroborating the hypotheses of the book she cites in that the money is flowing down less charitable avenues, and is not coming full circle to the students.

Although not our nations biggest problem at the moment, if this trend continues, it will warrant some significant attention and reform if you ask me.