Monday, May 23, 2011

The College Rip Off

These days most of colleges money come from Federal grant programs that will either be for

  1. worthless research,

  2. research that is spun into businesses with intellectual property paid for with taxpayer money with no corresponding discount to the investors (taxpayers) that funded the business in the first place, or

  3. University sponsored (another name for taxpayer subsidized) programs i.e. cultural training that Universities are providing for social workers being paid for with social security funds.

  4. Federal college loans that 25% of students are defaulting on, but colleges are still getting paid 100% of the money

In fact student debt just surpassed the country's credit-card debt for the first time. It is projected to top $1 trillion in 2011.

While a college degree has value, the question is whether the value is worth the price of admission.

Currently colleges are charging tuition amounts and increasing tuition rates at a much faster rate than the economy is growing or salaries are justifying. There is also some discussion of the quality of the education being provided.

For instance, full-time instructional faculty dropped from 78% in 1970 to 52% in 2005. On average faculty spends 11 hours/week on instruction and the remainder of their time devoted to research.

The hiring binge on campus has been devoted to managerial professionals and government-sponsored programs aka subsidized businesses.

Colleges are also boasting the unimpressive statistics of having only 1/3 of its class graduate in 4 years, 2/3 of its class graduating within 6 years and the remaining 1/3 of its class not graduate at all.

Not many, if any, high schools (public or private) charging $25k/year would stay afloat boasting a graduation rate of 66%.

There are some suggestions on the horizon including dismanteling the current architecture of financial aid which (like the mortgage crisis) drives up the costs of education in a never-ending cycle and giving help only to the truly needy students who are performing well academically.

The American Enterprise Institute, is pusching for other ways for young people to be credentialed other than a BA.

Rick Perry of Texas is embarking on a controversial push to get Universities and specifically state universities to focus on education rather than federal grant funding maximization schemes to fund obscure research and government supported programs better served by private enterprise.

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