June 10, 2012

Another Crash Coming

By Don Kirk in Economics, Politics

For the past thirty years taxpayers’ subsidies for college tuition costs have exploded, while by many measures the value that taxpayers receive for their subsidies have declined. At many universities, the flood of taxpayer subsidies resulted in hiring more bureaucrats–known as ‘administrators’–than professors, so that now the number of administrators on campus is larger than the faculty. The priority of the college role is no longer teaching; it’s regulating.

In a State such as Nevada, nearly half of the students who are tuition-subsidized by the taxpayer are unable to perform at the college level when they are admitted for their freshman year. They have to take remedial classes for math and English skills. This means, the taxpayer has paid TWICE for the same instruction, once during high school and again at college remedial. The odds of these remedial students graduating is abysmal.

Nearly half of all freshman at the University of Nevada do not graduate within six years, yet the subsidy for their tuition is not tied to performance. Students understandably protest about rising tuition costs, but the taxpayers who pay up to 90% of the actual tuition expense never protest on campus about how much of the tuition costs they paid for at the university are completely wasted. And of course the protesting students are never told by the administrators that the Nevada taxpayer foots 90% of the students’ tuition cost, perhaps because then the students’ anger would be focused on the role that administrator costs propel rising tuition.

The largest aggregate of debt in the United States is student loans. Not home mortgages, not credit cards, not car loans. The student debt load is becoming crushing for the students and their parents, and extortionist for the taxpayer who subsidizes the tuition at the university AND also subsidizes the student loan at a bank to pay for the tuition. There’s a crash coming.