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Original article URL: http://bridgemi.com/2015/02/college-costs-have-doubled-even-after-inflation-and-other-frightening-facts-chapter-1/

Talent & education

College costs have doubled, even after inflation, and other frightening facts (Chapter 1)

Jordan Phillips, left, and mother Laura Phillips of Rochester are learning first-hand how higher education economics have changed since Laura got her degree in 1991. (Courtesy photo)

Jordan Phillips, left, and mother Laura Phillips of Rochester are learning first-hand how higher education economics have changed since Laura got her degree in 1991. (Courtesy photo)

Paying for college didn’t seem so hard back when Laura Phillips was in school. She took classes at Michigan State University for two years and the University of Michigan for another year and a half. Working part-time at various times at a Pizza Hut and a hotel, she graduated in 1991 with a bachelor’s degree in 3½ years and zero debt.

Twenty-four years later, Phillips’ son, Jordan, is a sophomore at Oakland University. He lives with his parents in their Rochester home north of Detroit rather than in the dorms to save money. Yet his family is paying at least twice as much for his education as it cost his mother.

“I lived on campus and he’s living at home, and I feel bad that he’s not getting the full college experience,” said Laura Phillips. “We’re middle class … (but) it’s just not feasible.”

Their experience underscores the struggles of many Michigan families to pay for – and comprehend the remarkable rise in – college costs. Parents of today’s college students commonly graduated college with no debt, often able to pay tuition bills by delivering pizzas on weekends.

That’s virtually impossible today.

As families across Michigan scramble to fill out federal college student aid forms by a March 1 deadline, here are the facts: A college degree costs more than double what it did a generation ago, even after taking inflation into account. It takes a much bigger share of your paycheck. It costs even more because you live in Michigan than most other states. Moreover, costs are rising faster for the poor than for the rich, and student debt has ballooned 56 percent just since 2005.

“It’s hard to know that so many of these kids are starting life so far in debt, where they’re paying student loans of $700 or $800 a month” said Laura Phillips. “That was twice my rent when I graduated from college.”

Roughly four-in-five Michigan residents say that improving college affordability is an urgent priority for Michigan. according to statewide community conversations and polls conducted by the nonprofit Center for Michigan, which operates Bridge Magazine.

To understand why there’s such an urgent need, consider these six realities:

#1 College is much more expensive for today’s students than it was for their parents.

The cost of a four-year college degree has more than doubled in a generation, even when taking inflation into account. The average sticker price of a year of tuition, fees, room and board at a public university in the U.S. was $7,938 in 1975 (when adjusted to 2014 dollars). By 2014, the cost had ballooned to $18,943. That’s a 138 percent increase.

The cost at private colleges jumped even more. The median sticker price of tuition, fees, room and board at private institutions in 1975 was $16,475 (in 2014 dollars); in 2014, it was $42,419 – a 157 percent increase.

By comparison, over that same time period, the median price of a newly constructed home increased 72 percent. The average price of a new car increased 92 percent.

Meanwhile, the median income in the U.S. between 1975 and 2013 (the latest year available) increased, when adjusted for inflation, just 1.6 percent.

“I suspected that was going on,” said a frustrated Laura Phillips. “It certainly seems more expensive.”

#2 Even when grants and scholarships are included, college costs are breaking the budgets of middle-class families.

Most families don’t pay the full sticker price for college. Grants and scholarships from federal and state government and universities themselves cut the cost for low- and moderate-income households. But even with that aid, the financial burden of college is growing – particularly in Michigan.

In the 2006-07 school year, the first year for which data is available, the net cost of attending a Michigan public university ate up 17.4 percent of the Michigan median household income – the ninth-highest burden in the nation. By 2011-12, the latest year data is available, the annual net cost represented 23.1 percent of the Michigan median household income – third highest in the country.

Source: National Center for Higher Education Management Systems

Source: National Center for Higher Education Management Systems

#3 College is more expensive in Michigan than in most states.

Most American families can send their children to their state’s public universities for less money than Michigan residents have to pay.

The Integrated Postsecondary Education Data System (IPEDS) a college data bank for the federal government, tracks net costs of attendance (tuition, fees, room and board minus grants and scholarships) at U.S. colleges. Bridge compared Michigan’s public universities to similar public universities around the nation (U-M Ann Arbor and MSU to other high-research public universities, for example), by using the Carnegie Classifications of Colleges, to provide an apples-to-apples comparison of costs across the country.

That analysis found the net cost at 12 of Michigan’s 15 public universities was higher than the median net cost at peer institutions around the country. (A Bridge analysis in 2012 found the same results)

Some examples:

  • The University of Michigan at Ann Arbor had an average net price (after scholarships and grants are considered) of $15,939 in the 2012-13 school year, the latest year data is available. Two schools U-M is often compared to in national rankings are lower in cost – the University of Virginia at $13,463 average net cost per year and the University of North Carolina at Chapel Hill at $11,994 per year.
  • Michigan State University, with a net cost of $14,526, is just above the national median for “very high research” public universities. A land-grant university MSU is often compared to, Purdue University, has a net cost of $13,541.
  • Central Michigan University ($12,936) and Oakland University ($12,713) are both about $1,000 a year above the national median net price for similar public universities. Grand Valley State University, at $15,664 average net price, costs $3,676 more per year than the median cost of schools in its college classification.

#4 It can be even worse for low-income families, despite need-based financial aid.

For low-income families, the financial burden can be overwhelming. For example, a recent Bridge Magazine analysis found that the average Michigan family earning just under $30,000 a year would have to pay 46 percent of their annual earnings to pay the net price at Western Michigan University; that same family would pay 38 percent of annual earnings at Saginaw Valley State University; 35 percent at Wayne State University.

#5 Paying for full-time college with a part-time job is virtually impossible today.

Take as an example a student trying to pay the net cost of $15,939 a year for attending U-M in Ann Arbor. If that student could pick up a job waiting tables or working as a lab assistant on campus that paid $10 an hour, even if that paycheck was tax-free, the student would need to work 30 hours a week every week of the year just to cover his or her college bill.

#6 The result: students going deeper in debt

Today, more students are going deeper into debt. In Michigan, the average college student who takes out student loans graduates with $29,583 in student loan debt – a figure that has jumped 56 percent since 2005 as incomes have stagnated and tuition has continued to rise. Michigan students rank 8th in the nation in student debt burden (they ranked 18th in 2005).

Ferris State grads leave campus with the highest average debt among Michigan public universities, at $37,325, and Wayne State the lowest, at $23,136. Lawrence Technological University grads had the highest debt burden among the state’s private colleges, at $42,044.

That’s a far different world than when Laura Phillips went to college.

Her father, working one job, was able to pay for five children to attend college. “He said he’d pay for tuition and if we wanted to live in the dorms, we’d have to get a job,” Phillips recalled. Even paying tuition for that many kids seems unimaginable today to Phillips, who has two children.

“I just want to go give my dad a hug and ask, ‘How did you do it?’”

Ron French was a reporter at The Detroit News for 15 years before helping launch Bridge in 2011. He can be reached at rfrench@bridgemi.com . See more stories by him here.

14 comments from Bridge readers.Add mine!

  1. Al Churchill

    Ron French Is the best writer of educational matters in the country. Nobody can hold a candle to him. I am a retired UAW Ford guy with a degree in education Every morning I get up and read newspapers from around the world on my computer, focusing on educational issues. Including the New York Times, the newspaper of record and the Washington Post, Ron, they can take lessons from you.

    Keep up the good work Ron. Phil needs to give you a raise.

  2. Ken

    This is quite accurate Mr. French. Your readers (also voters) might want to know that most public university budgets have “flipped” since the mid 1990s when, collectively speaking, the public decided that subsidizing higher education/research at the state and fed level was something they did not like. In other words, if you were a public university in Michigan (other than UM or MSU), about 3/4 of your budget came from the state, the idea being that some access to higher ed and skilled professions (nursing, teaching, pharmacy, and so on) should be paid for by all. Today, less than a quarter of university funding comes from the state and much of that is drained out of the K12 budget. Correspondingly, public colleges and universities have had to raise tuition to continue basic programming. At the same time, research dollars at the federal level (mostly NIH and NSF) that helped fund and keep tuition down (Wayne State is the best example) diminished significantly. Even skilled researchers were hard pressed to bring in the dollars their predecessors did because the money was not there. Under these circumstances, Michigan colleges and universities found themselves in a heated market for students — just at a moment when the state demographics were changing. What was in the budget was redirected from academic to administrative costs — marketing, advertising, dorms, gyms, etc. — anything that might help draw the “limited” number of students. You create the market you want for yourself, your kids, and your grandkids.

  3. Rob Sisson

    Room and board is an area that requires further scrutiny. The original concept of dormitory living was to lower that cost based on economies of scale. Universities began an ‘arms race’ to build more attractive and enticing living arrangements for students. I have twins graduating from high school this year and have been on several campuses over the past six months for tours. Rooms are still tight, but the food service is unrecognizable to anyone who attended college before 1995. Almost any college food service today serves more choices at each meal than is available from all the restaurants in my home city of 10,000.

    Standard room and board at Central Michigan University for this school year is $8,800 per student. Multiply that by 4 (students per room/suite or to equate to a family) to find that CMU charges $35,200 to house and feed a ‘family’ for 8 months (annualized, that figure is $46,933). Michigan’s median household income is $48,273. So, how is it our public universities can charge basically the median household income to house our students in what amounts to a room the size of a walk in closet? My guess is a lot of consumers would opt for a first rate education with basic dorms and food service at costs more in line with family budgets.

  4. Dale

    Good piece, but I’d like to pick a nit: Ron says, “Moreover, costs are rising faster for the poor than for the rich, and student debt has ballooned 56 percent just since 2005.” This makes it sound like there’s one price for poor people and another price for rich people. Actually, the costs are the same regardless of whether you are poor or rich. It’s the relative percentage of your income required to pay them that is different.

    What has surprised me most about college costs is how low the “you’re too rich for aid” bar really is. If you discount unsubsidized loans, which are often counted as aid, many two-income families with multiple children can easily find themselves “too rich” but woefully underfunded — especially if multiple kids are in college at the same time.

  5. David

    Excellent piece. Perhaps Bridge would consider running a new piece, or linking to a former Bridge article (http://tinyurl.com/qf92h5c) that focuses on how students and families can reduce the cost of college by nearly 50% by attending programs such as the Early College Alliance @ Eastern Michigan University (www.weoc.info)

    Public school options like the ECA @ EMU provide high school students who reside in Washtenaw county and counties contiguous to Washtenaw county the opportunity to earn 60 transferable credits at no cost to the student and family before graduating from high school.

    Early / Middle colleges are one of the means in which the state, local leaders and school districts are working outside the box. They should not be seen as the exception, but perhaps the standard as we move towards defining education in the 21st century in the state of Michigan.

  6. Rick N

    When I went to U of M A2 in the 1970s the buildings were nice, clean, functional and looked institutional.

    Now when I drop by Campus all the buildings look like Ritz Carlton with their expensive top of the line finishes, high ceilings, etc. All this drives up cost and I question the value it adds to a students education. Granted U of M needs to compete nationally, but I’d rather have funding support a lower cost tuition than needing to have all the new buildings look like palaces.

    Does U of M have ANY standards about facility cost as a manageable component of the overall tuition cost or is the standard “Whatever we can get the donors to pay for ?’

    It appears the latter is the operating policy.

  7. Tom

    Ron,

    Very interesting series of articles. It’s been a while since I was involved with higher ed but have a few questions/thoughts to share.

    I do value and appreciate the importance of higher education. However, the bottom line is we simply must find a different way to deliver the product. It is interesting that to a certain degree the purpose of higher education is to help solve problems in society but they’ve done an abysmal job of focusing attention and solutions on themselves. The outrageous cost of higher education is a major problem – the cost, the value to the student who is paying and the value added to modern society – all deserve attention from the institutions that ponder and preach solutions to other sectors.

    It is easy and valid to say that the state has not maintained adequate funding for higher ed. The same is true for K-12 education, roads, and public services in general. It isn’t likely to change so we need to look at solutions other than complaining universities need more money, although I’d gladly support a tax increase for all the aforementioned services, it isn’t likely to happen.

    That causes me to raise some questions I hope you can help with. First, I saw another writer refer to the teaching load at universities. Can you help us understand this? When I was a student my favorite professor told me that a full time teaching load was 2 classes a semester, or six hours of contact time per week with students. Those with grants teach less. I asked what they did with the rest of their time and he responded, “research”. If accurate it is startling to consider. At the time MSU had 2,000 or so professors. That would mean each year taxpayers paid for 1,000 person-years of research. Has anyone ever calculated the cost benefit of that research?

    Research is the path to tenure my professor told me. Teaching was much less valued. I heard long ago about the possibility of creating a teaching tenure tract. It made sense at the time but apparently it never caught on. Doing the math makes it obvious. There are two ways to reduce the cost of college, increase funding from customers and/or the state OR increase the productivity of professors. I’m sure you get the point as will the academicians who read this and have their hackles raised. Maybe it is time to take a serious look at the productivity function of professors as well as look at things like the cost of administration etc.

    A second notion is to make some serious, hard decisions about the cost/benefit of programs at the universities and colleges. We certainly don’t want to strip them down to teaching a narrow range of subjects but a closer scrutiny is certainly something to consider. For example, MSU (my favorite university and alma mater) has a television station and provides training for future broadcasters which involves a very expensive technical infrastructure. Is it worth it? I don’t know, but it is an example of a program (I’m sure there are others) that deserves a serious review.

    Recently Governor Snyder and the legislature changed tenure for K-12 teachers from a standard of not being able to fire someone except for “just cause” to allowing teachers to be fired unless the action of the district is “arbitrary or capricious”. In the legal world this is a huge difference. Protection under a standard of arbitrary and capricious is hardly a lifetime guarantee of a job. Schools can much more easily move poor teaches on than in the past. Perhaps this needs a look at universities as well. Virtually no one has the type of job protection of university professors. What interest does it really serve in this day and age? What are the negative consequences of granting someone this type of job protection?

    I’m sure there are many more good questions that should be asked/answered about the structure of higher education and the associated costs. Until the advent of online programs universities hadn’t changed much in tens, if not hundreds, of years. It’s time to take an honest, critical and substantive look at this important institution. Professors are great at telling others how to do things better. Time to heal themselves?

    I don’t write this with disdain for universities, I love the environment and the benefits they bring. But we can’t go on as we have in the past. Let’s be smart about changing them for the better and that means having them turn a serious focus on themselves.

  8. Duane

    As much as I appreciate Mr. French’s work, research, writing, and inclusion of inforamtion that maybe considered counter to the theme of an article, I do notice he has a tendency to project a theme of disappointment, of dissatification, or difficulty.

    In all this article he seems to make no effort to find success or to even indicate there are people who succeed, those who plan for their kids college early on, for programs that kids can use. It seems Mr. French doesn’t see the student haing any responsibilities. It seem there has been a 529 program in Michigan that was designed to help address costs, Mr. French doesn’t seem to think that is a viable way to address school costs.

    There are degree programs that have the opportunity for internships (with significant pay, 2/3 or more of what a new graduate would receive), there seems to be cost difference when attending community college for a couple of years. Now I have to admit that this places repsonsibilities on the student, but I wonder why Mr. French offers no examples of success.

    Mr. French even ignores that there maybe a value difference between the degress available, and how they afford the students the ability to pay any loans back in a timely manner.

    If we only hear about the ones that have problems and never about the ones who succeed, I am afraid that an expectation of failure is created and a discouragement of trying follows.

    1. Tom

      Duane,

      It still comes down to the cost,or opportunity cost, of attending college. It’s too high.We need to make changes to the system.

  9. R.L.

    Great article a must read for anyone and their families to read before going on to college. The idea that a person can go to college and pay for their education while attending is as close to impossible as one could ever possibly imagine. I was in education at a college and K12 level for 40 years. I can immediately site examples of debts of 110,000,54,000,200,000,152,000,60,000. etc. These are actual. One yesterday told me she owes $ 54,000 and is now working on her Masters. She is paying between 6% and 8% depending on the loan. She is fortunate to be employed in the teaching profession married and able to pay on it. One lady said she owes 60,000 and is paying $400 a month for 15 years. I know this is 40 years ago but I attended college for 7 years and earned my Masters I owed $1000 when I finished. I paid 100% of it with jobs. and got a total of approximately $3,000 dollars in graduate asst. money. Keep in mind those loans are not able at this time are not to be forgiven through bankruptcy. The time to make college affordable I am afraid has passed. With a trillion plus national debt in college loans it could be another 2008 scenario. Consider all educational option be sure credits transfer and choose majors and careers where there are jobs. More later. Love to hear feed back. R.L.

  10. Marina

    Very interesting article backed up by statistics.
    One subject that should demand another in depth report is the issue of administration inflation at Universities. As a recent example, I found the bonuses in the 5 to 6 figures above salaries of 6 figures simply jaw dropping. Was this customary in the past?
    Get to work Ron!

  11. Mark

    It’s true that the cost of an education, judged by what students pay directly out-of-pocket, has escalated precipitously over the last few decades.
    Has the cost of education increased or are individuals simply paying for their education directly via tuition instead of indirectly via taxes?
    Where is the unabridged data set? Total all monies universities collect (taxes, tuitions, endowments, royalties, et al) and divide by the number of students credit hours. Now give us that number inflation adjusted for the last few decades and we’ll know if the true cost of education has increased..

  12. Patrick Shannon

    Why does Michigan need 15 state funded public universities, 15 boards of control, 15 annual budget requests, 15 strategic plans, 15 university presidents and their administrators? Are we that different that Michigan needs 15 permutations of higher education to service a decreasing student population? Is Michigan higher education a jobs program or is it a government good to be delivered efficiently and with academic quality? Affiliate or eliminate the poor performers. Andy Hardy graduated from college years ago. It is time for Michigan’s higher education to more relevant and move into the 21st century.

  13. J

    So very sorry to say it but for a hopeful, optimistic, and adventurous young person, one solution is to leave the state and find more opportunity elsewhere. It just doesn’t have to be this difficult.

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