Thursday, April 25, 2013

Higher Education Rise Peaked? Students See Too Much Debt

The reason why higher education is losing customers is that it is a poorly run business. It's like any other business that has decided their customers are stupid and will succumb to any hardship dumped on them to extract their money. This to have always worked as tuition and living costs have risen out of control.

As long as the federal government controls the funds that students need to gain a higher education, as the Obama administration has decided was a good idea, the decline in degree candidates will continue. Colleges and universities saw how easy it was for students to get a loan, and no matter how much they raise the tuition, the student seems to have the money to pay the increases.

What really was the icing on the cake for universities was the federal government assumed all responsibility for the loans, taxpayers that is.Little wonder then the endowments at the larger universities, especially the ivy league schools, is in the billions.

I believe the general public is waking up to these facts of crushing debt and how hard it will be to pay it back, so students are looking for other ways to make money without having the government in their pockets for decades.

I also believe when Mr Obama took control of the student loans from the banks, he saw the potential of millions of voters that would be indebted to the government, and if they want any relief from those debts, they had to vote for him. And now with the student loan debt at more then a Trillion dollars, the fix is in and  the plan has worked well.

Addressing the Declining Productivity of Higher Education
Source: Douglas N. Harris, "Addressing the Declining Productivity of Higher Education using Cost-Effectiveness Analysis," American Enterprise Institute, April 11, 2013.

April 24, 2013

Higher education productivity, as measured by academic degrees granted by American colleges and universities, is declining, says Douglas N. Harris of the American Enterprise Institute.
  • Since the early 1990s, real expenditures on higher education have grown by more than 25 percent, now amounting to 2.9 percent of US gross domestic product (GDP) -- greater than the percentage of GDP spent on higher education in almost any of the other developed countries.
  • But while the proportion of high school graduates going on to college has risen dramatically, the percentage of entering college students finishing a bachelor's degree has at best increased only slightly or, at worst, has declined.
The downward slope is steepest among universities, where current productivity is less than half of what it was 40 years ago.
  • Even when adjusted for the growth in overall labor costs in the economy, the decline in bachelor's-degree production is nearly 20 percent.
  • If these declines continue, maintaining the current rate of bachelor's-degree production will cost an additional $42 billion per year 40 years from now.
  • Thus, even if state support for public higher education did not continue to decline, tuition would have to increase by an average of $6,885 per full-time equivalent (FTE) student in public universities to maintain current spending, almost doubling today's tuition.
What accounts for declining productivity in higher education? Most analysts point to the role of rising costs, and others focus on declining degree attainment. Collectively, these explanations reinforce a widespread perception among higher education administrators and many scholars that productivity is impossible to control.

In his paper, Harris shows that policymakers and college leaders do in fact have some control over productivity, but generally lack the information necessary to take the appropriate steps toward improvement. Specifically, decision makers have little information about which programs, policies and resource decisions are most cost-effective.

 Relative to other areas of public policy, cost-effectiveness analysis is rarely applied to specific education policies and programs. Even research that looks at the higher education system as a whole rarely considers the relationship between the costs and output -- that is, productivity.
 

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