Harvard University has reported an $8 billion drop, or 22%, in the value of its endowment between June 30 and December 1, 2008 to $26.9 billion. Further losses are expected.
Poor Harvard. You would think they wouldn’t even care about all that money, being rabid preachers of anti-capitalism every day. But don’t be fooled – modern-day elite socialists love money more than any other people in history, and they prove it every minute.
Given the weak economic circumstances of America, colleges across the country expect that fewer students will be able to afford the exorbitant tuitions that colleges are charging today, further exacerbating the fiscal dilemma of institutions of so-called ‘higher education’.
But a look at the statistics of college costs demonstrates that all the poor-mouthing and panic in academia is just a diversionary act. College tuitions have risen an average inflation-adjusted 439% since 1982, while median family incomes have risen only 137% in that same period.
In short, college costs have risen more than 3 times as fast as the cost of living and family income, allowing the universities to accumulate vast riches at the expense of American families. Yet now they are claiming that all these riches are not sufficient to get them through tough times.
How has this happened?
The reason is quite simple: As all those power-to-the-people 1960s liberals in American academia have gouged the public relentlessly and enriched themselves year after year, their media friends have avoided reporting it. Meanwhile the parents of America get poorer in a simple reassignment of wealth, which is the basis for all of socialism – transferring wealth from one group to another, in this case from parents to the universities.
Yet at the same time, students at these same universities are subjected to an ever-diminishing quality of education and a relentless barrage of anti-capitalist propaganda, and for one reason only: To throw them off the scent of who is really doing the price gouging in America today.
This is much like the auto industry. After decades in which unionized auto workers with only high school degrees have been earning (in today’s dollars) $70+ an hour in wages and benefits for virtually unskilled assembly-line labor, the companies now are demanding a bailout from the government as if they do not know why they are failing. This bailout again would a transfer of wealth, from the taxpayer to the largely Democrat unions.
Conservatives know why the universities and the Big 3 car makers are in trouble. Because under the socialism of organized labor and the universities, collusion and price fixing produce bad products at ever-higher costs (lousy automobiles, watered-down education). Under genuine free market capitalism, competition and market wages combine to produce better products at lower prices.
The Associated Press reported on October 30, 2008 that college costs jumped 6.4 percent at state universities this fall. The report also noted that with states cutting budgets and thus aid to their public universities, those schools are considering further tuition increases.
Further AP reported:
For the current academic year, the average cost of tuition and fees at four-year public universities rose $394, or 6.4 percent, to $6,585 for in-state students. At private colleges, costs rose $1,399, or 5.9 percent, to $25,143, according to the annual Trends in College Pricing report from the College Board. When room and board are added in, some high-tuition private institutions can total $50,000 a year or more.
So take note of the price rises – 6.4% and 5.9%, or close to twice the rate of inflation.
Meanwhile Gordon H. Wadsworth at Inflationdata.com reported on August 6, 2007:
College tuitions soar each year, advancing far in excess of the inflation rate. The overall inflation rate since 1986 increased 92.32%, which is why we pay nearly double for everything we buy. On the other hand, during the same time, tuition increased a whopping 343.81%.
Wadsworth also notes:
Yet, the main reason tuition continues to rise is a dramatic change that took place regarding the Federal Stafford Loan more than a decade ago. When Uncle Sam opened the floodgates to government-backed student loans without parent income restrictions in 1992, colleges welcomed the news with open arms. The sudden injection of millions of additional aid dollars only furthered tuition increases. Add to that the government’s continued promotion of the Stafford Loan as a low-cost program, and you have the formula for hyperinflationary costs.
When the government made it exceptionally easy for students to borrow massive amounts of money, the colleges followed the lead by increasing their tuition rates. This combination led to record-level borrowing. Today the average undergraduate student loan debt is nearing $20,000. Those who go on to graduate school often end up with an additional $30,000. Law and medical students report an average accumulated debt from all years (undergraduate and graduate study) of $91,700.
In other words, when the supply of tuition money is increased artificially by the government, the power-to-the-people crowd in academia artificially increases tuition, and for one reason – because the money is there, guaranteed by their friends in the Congress. So as the taxpayer subsidy increases for college students (socialism), the college administrators and professoriate improve their own financial positions through higher tuitions.
Meanwhile all American families are paying those higher tuitions, weakening those families economically. Then those same professors use their power over students to argue in favor of the socialism that is enriching the colleges at the expense of taxpayers and parents.
And this is the reason that the Democrat party continues to urge more government aid for students rather than demanding that the colleges find ways to cut their bloated budgets – because it maintains the flow of capital into the left-wing and Democrat-oriented universities.
It is a vicious cycle of price gouging perpetrated not by capitalist oil companies or railroad robber barons or Halliburton, but by far-left socialists in academia.
Since the 1970s, Congress has held more than a dozen congressional hearings on price gouging in the oil industry and has never found any evidence – never mind proof – that the oil companies are overcharging consumers. Yet just two inquiries in the 1980s and 1990s revealed that academic institutions indeed were colluding on pricing and overcharging students.
Here’s an excerpt from an article by Andrew Williamson in the Yale Daily News of April 20, 2007:
Let me tell you an open secret: In 1989, the Justice Department of the United States filed a civil antitrust lawsuit against all eight Ivy League schools and MIT under the Sherman Antitrust Act for collusion in the determination of need for financial aid. The schools had been meeting every spring to discuss how much money they believed commonly admitted students could afford to pay for college. The Justice Department decided that this practice amounted to price fixing, and eventually all eight Ivy League schools signed a consent agreement with the department in 1991 not to engage in the activity. (MIT refused to admit culpability.)
Another reason for skyrocketing college costs? More administrative bureaucracy, which is the way all socialist entities operate, i.e., pad the payroll.
From 1975 until 1985, college enrollments in America grew by 10%, while support staffs increased by as much as 60%. In 2002, administrative costs were consuming 50% of the annual budgets of most colleges and universities. That number was 27% in 1950 and 19% in 1930.
In reaction to the rapidly rising cost of college education in the 1980s and 1990s, and even a congressional inquiry that found colleges colluding, the National Commission on the Cost of Higher Education presented its findings in a report called Straight Talk About College Costs and Prices which was released on January 21, 1998. And while college costs have continued to rise up to 2008, the report said back in 1998:
The phenomenon of rising college tuition evokes a public reaction that is sometimes compared to the “sticker shock” of buying a new car. Although this reference to automobile prices may irritate some within the higher education community, it serves to remind all of us that higher education is a product, a service and a life-long investment bought and paid for, like others.
Rising college tuitions are real. In the 20 years between 1976 and 1996, the average tuition at public universities increased from $642 to $3,151 and the average tuition at private universities increased from $2,881 to $15,581. Tuitions at public two-year colleges, the least expensive of all types of institutions, increased from an average of $245 to $1,245 during this period.
Public anxiety about college prices has risen along with increases in tuition. It is now on the order of anxiety about how to pay for health care or housing, or cover the expenses of taking care of an elderly relative. Financing a college education is a serious and troublesome matter to the American people.
Further the report noted:
Between 1987 and 1996, median family income rose 37 percent and disposable per-capita income rose 52 percent. During this same period, both measures of net price (at colleges and universities) rose considerably faster. Specifically, the price of attendance minus grants rose 114 percent at public four-year institutions, 81 percent at private four-year institutions, and 159 percent at public two-year institutions. Total price minus all financial aid (grants, loans, and work-study) demonstrates a similar pattern: this measure of net price increased 95 percent at four- year institutions, 64 percent at private four-year institutions, and 169 percent at public two-year institution.
The report noted these other factors in the rise in college costs:
Administrators. The need to employ more administrators to cover both expanded services and larger numbers of Federal, state, and local regulations combined with higher administrative salaries is thought to drive up administrative costs.
This contention may be true for the first half of the 1980s, when administrative expenditures increased as a share of total educational and general (E&G) expenditures, but, between 1987 and 1994, administrative expenditures either remained the same or fell, as a percentage of total E&G expenditures. Another way of looking at rising administrative costs is that administrative expenditures per full-time-equivalent (FTE) student increased over 22 percent between 1979 and 1986, but less than 1 percent between 1986 and 1993, after adjusting for inflation. The expenditures for student services costs increased 16 percent during each of the two time periods in question.
Faculty. Many believe that the labor structure and tenure system of college faculty drive up college costs. It is true that higher education is a labor-intensive industry and that changes in policies that affect the number of faculty required to teach courses as well as the types of faculty hired (part-time vs. full-time, tenured vs. non-tenured) have an impact on an institution’s cost of providing education.
Regulations. The number and types of regulations with which colleges and universities are asked to comply have grown rapidly in recent years. Complying with these regulations costs money. The Federal government regulates colleges and universities through a maze of mandates covering personnel, students, laboratory animals, buildings, and the environment.
Stanford Universityfor example, estimates that the university incurs approximately $20 million a year (or 7.5 cents of every tuition dollar) in costs related to complying with a range of regulations.
Despite the report’s release in 1998, college costs have continued to rise, showing that academics arrogantly ignore reality, have the media and politicians in their pockets, and do absolutely nothing to create more decent, affordable and more equitable institutions. And this all comes from the anti-discriministas on the political left.
The outrageous and unsustainable costs of college education is a subject about which more Americans must become aware. As the 90% liberal professoriate and their administrative brethren have set up this vast mechanism for wealth transfer, socialism is being enriched as American families are being weakened.
And the very fact mentioned above that 7.5 cents of every tuition dollar goes to cover government regulation at colleges and universities – where few would even suspect that regulation is at work – is indicative of the doubly corrosive nature of socialism on our economy, our families and the prospects for the education of future generations.
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