Tuition at four-year colleges and universities has risen almost 1,000% in a generation, while other goods and services such as healthcare and food have gone up only a fraction of that amount. At the same time the availability of state and federal funds in the form of grants and scholarships has become inversely proportional to the need. In other words, there was more money available when the cost of education was lower. Now that the cost of many four-year institutions is stratospheric, the majority of funds available seem to only be through loans.
I think this is part of the macroeconomic trend that I’ve often written about: The risk and responsibility for providing, in this case funds for education, has shifted from large institutions such as state, federal and local governments to individuals. I saw it happen in real time as I witnessed my tuition at the University of California go from essentially nothing as an undergrad to almost six figures when I completed my last post-graduate degree.
Education isn’t a luxury; the competitive global economy demands an educated workforce, but the money to pay for it has to come from somewhere. If ready funds for grants and scholarships from government have all but disappeared, this means the individual and his or her family needs to make provisions to pay through either savings or loans. And because both saving for and paying education loans takes money off the table for other expenses that range from buying a car or home to funding a small business, there will be an economic impact not only to the individual and his or her family but also, eventually, to the economy at large.
I’m not making a judgment on the way things should be: This is the state of how things are now and what is currently available with which to work. What probably aren’t sustainable, in the long run, are four-year undergraduate liberal arts educations that run well into the six figures. I have confidence that we are innovative and adaptive to change and that will extend to how we structure and pay for higher education. Whether it’s through cobbling together community college with MOOCs (Massive Open Online Courses) and such approaches as the Khan Institute, an online, self-directed educational resource with libraries of content on every subject, or something yet to be developed in the future, I have confidence that we will develop a vibrant, effective alternative. It’s the American way.
Take Away: As higher education becomes more expensive and the burden to pay for it is falling more and more on the individual, it’s time to develop another approach to the college education equation.