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About College Education, Cost, and Whose Fault is It Anyway? February 17, 2016

Posted by Peter Varhol in Education, Uncategorized.
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I care deeply about higher education. It is what enabled me to transition from a working class household to the upper middle class as an adult.  A successful decade-plus in higher education has paid off well for me.

My BA work came at an interesting confluence in my family’s economic history. It seemed that in a couple of years leading up to my college life, the wages of an average steelworker increased more than enough to pay for three years at a private college, with some minor help from financial aid.  Of course, it helped that I went to one of the least expensive private colleges available.  And of course, the steel mills in the Pittsburgh area went away a few years afterward, because the economic model agreed to by the owners and the labor was ultimately unsustainable.

I paid for the next three degrees myself, as a young adult professional. I accept no accolades for it; it was just what I wanted to do with my life at that point.  Others have done it more efficiently, but I got it done well enough to have a reasonably successful career.

In time, I became a college professor, first adjunct, then tenure track. And I was exposed to how sausage was made, college finance style.  The colleges that I taught at didn’t care one whit about what they charged students.  They didn’t even really care about the students, to the point of not acknowledging them as customers.  There was an implicit but very real assumption that parents, the government, or loans would pay for whatever they happened to charge.  I say this starkly, with dislike, because the colleges didn’t really like or appreciate their students, in a financial sense.

So where am I going with this? I just had the brash sense to respond to a LinkedIn accolade wherein Senator Elizabeth Warren complains that banks pay very low interest rates, yet charge students market rates for college loans.

I actually like Elizabeth Warren. I think she says a lot of things that need to be said in a public discourse.

But I think she is mostly wrong. College loans require servicing, and college students occasionally default (I realize that they can’t really default on Federal loans, but that also doesn’t mean that they always pay them back; they don’t).  And yes, banks aren’t in the business of providing a public service; they are in the business of making a reasonable return off of the risks that they take.  She seems to have conveniently forgotten that part of the equation.

Most of the blame here is on the colleges, who really didn’t (don’t) care what the bill came to. I could go on, but I became fed up with the incredible arrogance of colleges in believing absolutely that their bill would be paid, by someone.  Some of the blame is on the parents, who want their children to have the same college experiences that they did, without realizing that higher education today is different.  And they are the ones that have to educate their children on the education alternatives, and what is within the realm of affordability and expectation.

Take a deep breath, Peter. So here’s what I think.  I think that the vast majority of students need to have a realistic understanding of what they can pay for, and seek out an education that meets the expectations of their life aspirations.  That doesn’t have to involve compromise, but it does involve research.  And it requires the support of the parents, who I think are mostly ill-equipped to provide that support.

But I really think that this falls on the colleges, who steadfastly refuse to look at their costs and charges, with an eye toward doing right by their students. I realize that there are probably exceptions here, but most colleges simply don’t care what their expenses are.  They do have a minor interest in what they charge, but only in relation to what similar colleges charge.  There is absolutely no concern with how the bill will be paid.

And that is a shame. And that is where Elizabeth Warren is truly wrong.

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