Let’s begin this article by acknowledging or coming to terms with the fact that universities are not so much in the business of educating students as they are in the business of making money.
It is quite reasonable to call university education an American industry, be it a private or public school. Once this reality is established in the minds of readers, whether they be students, parents, or recent graduates, it’s not so difficult then to understand why the student loan problem (as part of the education industry) requires a $5.9 billion package from the U.S. government.
In the first half of the ’00s, in-state tuition at my alma mater, the University of Wisconsin-Madison (an elite educational institution), was $5600 per year or thereabouts. Think that’s a steal? My high school English teacher who also attended UW paid $1400 per year in 1986. In 2012, the in-state tuition had grown to $9671, according to U.S. News & World Report. Out-of-state tuition has always been in the range of Ivy League schools (around $25,000 per year). With undergraduate enrollment at approximately 30,000, and with graduate and other enrolled students factored into the equation, the total student population reaches 42,595. 58.6% of this number are in-state students, while 46.2% are either out-of-state or international students.
We’re going to do a little math now, briefly, so hang in there—it will bring us to a nice point.
In the 2011/2012 academic year, according to these statistics, UW-Madison should have generated $241,252,766 on its Wisconsin resident students alone. It gets better. Much better. The out-of-state students should have generated $500,386,964, bringing the total revenue for these students to $741,639,730, or 3/4 of one billion dollars, and that’s not including 248 other students in UW-Madison’s system.
The argument is usually put forth that this money is generated to pay for Madison’s Big 10 football program, the Wisconsin Badgers, and various other athletic programs. However, UW’s athletic department operating budget was $88.368 million. That is quite a chunk of change left over, folks. The athletic department is bloated like a lot of other big athletics programs, but with annual revenues in excess of $741,639,730, UW is certainly not pinched because of the football team: they have $653,271,730 left in the coffers after the athletics budget is accounted for. And these number don’t account for ticket sales.
The whole point in this numbers exercise is to illustrate the point that universities generate insane amounts of money. Even smaller institutions, which cannot match a school like Harvard or UW-Madison, generate a great deal of money. And none of the above takes into account the living costs for attending university. Granted, at an institution such as UW-Madison, a great deal of money is spent on funding research and building facilities, to say nothing of attracting top rate faculty, but this cannot account for the majority of the $653,271,730 in tuition revenue (after accounting for the athletics department). And even if it did, would sending students out into the world with massive debt be worth it?
In political debate, we always talk about making government more efficient and lowering taxes, but we should also be thinking about making higher education more efficient and lowering tuition. This, however, is not the trend.
A recent College Board report found that the average price for an in-state student living and studying at a public university rose $1,100 to $21,447. No student, aside from the very wealthy, can afford that number without resorting to student loans. According to Richard Vedder and Matthew Denhart, writing in a CNN editorial:
In 2009, spending by Americans for post-secondary education totaled $461 billion, an amount 42% greater than in 2000, after accounting for inflation. This $461 billion is the equivalent of 3.3% of total U.S. gross domestic product (GDP) and an amount greater than the total GDP of countries such as Sweden, Norway and Portugal.
Let that sink into your mind for a moment. Spending on post-secondary education is being spoken of in terms of GDP. Let those words rattle about the skull: education costs… GDP… education costs… GDP. The university system is an immense industry. It would almost be more useful to compare higher education to McDonald’s, which isn’t in the business of feeding people but in moving massive amounts of beef about the world for profit.
There is no doubt that student loan debt is a problem, but this acknowledgment is not enough. Why is there such a necessity for big loans? It’s simple: rising tuition costs. And exponentially increasing costs of living, in which the dollar doesn’t buy as much as it used to, also create a toxic need for quick money paid back in increments. Theoretically it’s a great idea, but in practice (with high tuition and costs of living) it is simply unsustainable for both students and our country.
Thus the $5.9 billion student loan package making its way through the House and Senate misses the entire point: the legislation attempts to put a bandaid over the eviscerated corpse of higher education. Legislators, in their infinite idiocy, believe that freezing the student loan interest rate at 3.4%, with the costs offset elsewhere in the budget, will actually do any good at all. It’s inaction masquerading as action. It’s a smokescreen. A hallucination. It is, in a word, bullshit.
Education has a number of problems, many of which cannot be tackled in this editorial, but when it comes to the student loan crisis in this country, Americans need to recognize that a well-educated populace is an economic and cultural asset. And if we can lower the costs of higher education to reasonable levels, then it is very likely that we as a country will all benefit. If we don’t, this county will continue to struggle economically.