Education is an investment; the facts bore out one simple truth: the higher education you receive on average, the higher the pay of those individuals. And having an educated workforce is THE #1 issue to help drive the economy long term through innovation and entrepreneurship. The problem with education is that it IS an INVESTMENT. That means that it costs money today…and you don’t reap the rewards until later…much, much later. Of course – it’s the same issue with farming; a farmer plants a seed…waters it…maintains it and waits until the harvest is ready. It is the exact same thing.
Unfortunately – there are so many people in the Republican party espousing this notion that government does not help…government only hurts and that lower taxes are better for everyone all around. Well – you have to ask yourself…what do I want my country to look like exactly? If you don’t want a large military – you can pay less in taxes. If you don’t want Social Security and Medicare for Seniors and leave it to the children of those seniors to become caretakers instead – you can pay less in taxes. And if you don’t want to pay for investments in schools, roads, healthcare, etc – you can pay less taxes.
Today’s student is tomorrow’s taxpayer…
Well – for years we have been cutting education funding by federal, state and local governments and as colleges receive less in funding – they pass those costs directly on to the student. So unlike in the past with the selfish Baby Boomer generation that seems to forget all that it was given by the Greatest Generation…they tend not to want to pay for the costs of the Millennial generation just as their fathers paid for their generation. So now under the auspice of smaller government and lower taxes – students are paying significantly more than any other generation before it because the funding for higher education has fallen dramatically. This is going to affect the economy dramatically in a few ways:
#1 – Students who come out of college with 100k in debt are going to spend their excess money paying off debt…not buying new products which will create jobs and fuel the economy.
#2 – The high cost of college is now a barrier to entry for students. This is going to prove to be a deterrent to students achieving higher education and receive the necessary skills for a 21st Century economy.
Remember – Mitt Romney JUST said yesterday that his plan to combat rising tuition costs is either for students to “shop around” or “join the military”. You can read about that HERE.
I feel that if you are willing to serve your country in the military for instance, that’s a place where we’re going to say, ‘Yeah, we’ll give you help.
The New York Times Economix blog explains:
Some of the rising cost has to do with other services schools have been adding over the last few decades, like mental health counselors and emergency alert systems. And certainly there are other inefficiencies that have crept into the system as higher education has become more things to more people.
But at least at public colleges and universities — which enroll three out of every four American college students — the main cause of tuition growth has been huge state funding cuts.
That’s what the risings costs have been up till now, and this is what the costs of college are projected to be:
Source: College Board
According to Elliott Brack:
In 1995, the State of Georgia formula for paying for higher education meant that the state funded 75 percent, while tuition and fees provided 25 percent. Starting in 2000, the state’s percentage started falling. After a round of cuts following 9/11, this formula fell to 67 percent; after Sonny Perdue became governor, it first leveled off, then took a nosedive, so that today, the state provides only 54 percent of higher education funding.
As the University of California explains relative to their huge public college system:
UC’s share of the state budget has declined dramatically over the last decades. In 1980-81, UC received 5.09 percent of the state’s general funds. In 2011-12, UC’s share dropped to 2.76 percent.
As state support has declined, the student share of their education costs has grown. Since 1990, the state’s contribution to educating each UC student has dropped more than 50 percent.
In 1990, the state funded 78 percent of the total cost of education per student. Today, the state funds 39 percent. As state support has declined, the students’ share of their education costs, net of financial aid, has more than tripled, from 13 percent to 49 percent.
Source: University of California
Even top notch public college systems like the University of Michigan are being impacted severely:
As the figure below shows, funding from the state of Michigan has become an increasingly smaller fraction of the operating budget of the academic enterprise, moving from 23% of revenues in 1998-99 to less than 15% in 2007-08. During this same time, the endowment and its capacity to grow has become a key resource on which the University depends to carry out its mission and take on new initiatives. The increase in gifts/investment income spending as a percentage of total revenues increased during this same time period from 8% to 13%, with the remainder of lost revenue from the state being made up through fees and tuition, which increased from 32% to 37%.
Source: University of Michigan
Or as Minnesota’s Private Colleges explains what is happening in Minnesota:
As for the downward trend in state support for public institutions, state support has not kept pace with growth in postsecondary enrollment. While total combined (need-based and public appropriations) inflation-adjusted dollars dedicated to higher education in Minnesota has increased 23% since 1980, total undergraduate enrollment has increased 65%.
As public funding for higher education has decreased, the onus for paying for higher education has passed through institutions on to students and their families. Student borrowing has steadily increased — up 225% since 1987. In 2009, 73% of students graduated with debt, averaging more than $27,000. This level of debt will limit their ability to fully participate in the economy via the purchase of homes, cars and other goods for years. For many it will also delay or eliminate their ability to start saving for their childrens’ education as they pay off their own educational debt.
Source: Minnesota’s Private Colleges
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