College Is Cheap: So Why Does It Cost So Much?

January 27, 2011 § Leave a comment

 

How much does a college education cost?  Kansas University says that in-state tuition for new incoming freshman is locked in at $3,937.50 per semester.  There are two semesters per year, and eight semesters in a four-year degree. That’s $31,500.00 in total for an education at KU.  Harvard is $35,568 per academic year ($17,784 per semester). Rockhurst University, my alma mater, is    $13, 225 per semester ( $105,800 for a four-year degree).

Alright, perhaps you wouldn’t call any of those cheap.  But, it’s a lot less than students end up receiving.  At Harvard for instance, 75% of freshmen apply for student aid, and almost all of them are awarded it.  The average award package is $41,000.  So, the award to students to attend Harvard  is $164,000 over the course of four years, over 14% more than was necessary to attend.  The average award package at KU is $10,346, 33% more than the cost of tuition!  The average award to students at Rockhurst is just under $27,000, or about 3% more than the actual cost of attendance.

These three universities represent about 20,000 students (with KU making up the large majority).  Between these schools, students are awarded an average of nearly 27% more than the amount of money required to attend.  That 27% adds up, with only these three schools considered, to about $17 million per year in payments to students beyond what was necessary to cover tuition.  This is rough-shot calculating, I haven’t weighted the lower tuition, higher award KU with it’s huge student body, as opposed to Rockhurst’s tiny population that gets only slightly more than is necessary.  So, say I’m off by 50%; we’re still at $8.5 million dollars between three schools in unnecessary financial awards (and, I’m probably off by less than 50%).

There are a lot of universities in this country.  There are over 4,000 colleges & universities in the U. S., and most of them are more like KU than they are Rockhurst, or Harvard, meaning that tuition is relatively low, which means that financial aid awards are more likely to exceed tuition by a larger margin (meaning, the national average will be closer to KU than to Rockhurst).  In fact, the average tuition in the U. S. in 2006-2007 was about $7,000 per semester, roughly in line with KU (actually,nearly the exact average of KU’s in-state and out-of-state tuitions).  If my small sample is anything near representative (and I tried to make it so:  A famous Ivy League school, a State school, and a small private institution), then students are being awarded at least $30 billion more in student aid every year that is required to cover tuition (and as much as twice that).  The entire higher education system in the U. S. is worth $264 billion, so awards to student in excess of tuition makes up over 11% to 20% of the total amount spent on actual education.

Where’s the money come from?  A lot of it is loans, but a lot more is public money (grants).  The Pell Grant system pays out $13 billion annually.  Taxpayers pick up the interest on billions more in loans through the Stafford subsidized loan program.

Where’s it go, if not to tuition?  Every wonder where college kids get the money to party?  How they can have three hours of classes a day, hang out the rest of the day doing not-much-of-anything, and still pay rent?  Wonder no more.  And the next time the government tells us that we need to provide more Federal aid for higher education, we should get an explanation on exactly how much more money middle class kids need to hang out at the coffee shop all day.

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