As they say, "Things are not always what they seem." In these times of rising college costs, paying for college is an increasing upward spiral. Our first instinct is to go after those "greedy, rich institutions". But are the colleges the real villains? I think not.
Since 1980, the value of the dollar has shrunk by about 271%. That is, it will take about $2.71 to buy what one dollar bought in 1980. Thus, if college costs kept up with inflation, a private college costing $35,000 in 1980 could cost about $94,000 in 2008. Public colleges with student budgets of about $10,000 in 1980 should cost about $27,100 today. The fact is that if colleges kept pace with the dropping value of the dollar, they are priced about right or maybe even less than the shrinking dollar might justify. So why are we struggling? Who is the bad guy?
Not surprisingly, it is us. Across the board, salaries have not been upwardly adjusted to adequately compensate for the rate of inflation. That aside, the real culprit in the college world is the failure of the usual support systems to reflect the lower buying power of the dollar. For instance, the normal total amount of subsidized loans for a four-year college student in 1980 was about $16,125. If those loan amounts had kept pace with the falling dollar, that total should be about $43,700 today, an amount that without loan forgiveness provisions is admittedly too high. Currently, private lenders are called upon to fill the student loan gap. In the 2008 marketplace where securitization for loans is extremely difficult, these loan companies struggle to provide a necessary resource as the public support systems continue to underachieve. While the interest rates for private loans are sometimes very high and should always be considered as a last resort, for some they mark the difference between attaining a college degree and unmet dreams and potential for young adults. The private loan industry is the stepchild of the failure of publicly-funded programs like Stafford and Direct Loans, federal work/study, the Pell Grant and other federal grant programs along with state-sponsored grants to keep pace with the effects of the lower purchasing power of the dollar. And last, but surely not least, the need for a privately-funded support system is made more compelling by the increasing practice of "gapping", the failure of colleges to provide sufficient financial aid to families to fully cover their calculated demonstrated need ... . Good people and institutions behaving badly.
The victims in all of this are tax-paying parents, their mortgages and retirement funds along with students who simply have nowhere to turn except the private student loan market which may save them but in doing so will surely extend the cost of college over many years beyond graduation. This grim reality even now forces some students to pick careers that will help them deal with the lingering cost of their college degrees rather than the quality-of-life dimensions of a more appropriate career path.
Many enlightened nations have come to realize that providing free or massively supported college education for its youth enhances the nation's future for all the citizens. It isn't socialism; it is simply good economics. Those words in the Preamble to the Constitution of the United States ... phrases like "... promote the general welfare and secure the blessings of liberty to ourselves and our posterity ..." are closely and irrevocably tied to the quality and availability of our system of higher education. Those eloquent yet simply-stated goals of our society are non-negotiable. They are written in the sweat and blood of our forebears and as such, they should be honored above all else by our politicians and by all of us. Real patriots are in the business of delivering on those promises ratified by the required majority of states in 1788. For Americans, all Americans, everything else should pale by comparison.
Posted 04/18/08 to www.NASFAA.org. Posting of press releases is done as a service to Members and does not imply endorsement or support by NASFAA. NASFAA does not review this information for content or accuracy.
