It's Probably Nothing

It's a bubble that will burst eventually

The linked chart is oversized, Kate, so it's screwing up the homepage and this comments page formatting. [And feel free to delete this after the problem has been fixed.]

P.S. At least when viewing with Firefox.

Nice huge chart. :)

Obviously what's needed is more offices for social justice, diversity, and sustainability to add to the burgeoning administration load.

Although how social justice is served by massive tuition increases is anyone's guess.

Nice Chart! I didn't need my glasses to read it.
:)

So what does this mean? Home prices and inflation are growing at a steady pace, but tuition fees have skyrocketed. What does this indicate? What is the basis?

It's an interesting graph, but it doesn't show the whole story. While the portion of educational costs paid for by students may have skyrocketed, how much has the *overall* cost of educating a student changed? Are governments (we, the public) simply footing a smaller portion of the bill now? If so, I don't see a problem here. Those with McDegrees will end up bankrupt, defaulting on their government-backed student loans. That's no worse than if the gov't had simply provided a greater subsidy in the first place.

Let's get the whole picture. Anybody have statistics?

Sorry about that - forgot to resize it!

The chart is a bit misleading. This shows the "list price" for tuition. Most students get a significant proportion of the fee reduced on a needs-based analysis of the parent's wealth and income. Why would the "list price" bubble burst? Even if it did, all it would do is correct the list price closer to the average price. This chart, alone, does not make a case that any serious changes will be in store fo rthe post-secondary education market.

That's because the CPI is complete hogwash, as proven by economist John Williams over at ShadowStats

http://www.shadowstats.com/alternate_data/inflation-charts

Well stefan,if the CPI is hogwash as stated by john williams,then the chart is probably nothing.If john williams is wrong then maybe you should question john williams.Time will tell.

This bubble will burst soon. Better quality education is available online. One of my (and Bill Gates') favourites is
http://www.khanacademy.org

A much better education model than the traditional classrom lecture.

Unless things have changed, "most" students in Canada do not get a tuition reduction. From what I remember, Cdn. students get loans based on their parent's income. Some students may qualify for a grant or two but this is nothing like the US system.

A better measure would be the change of average student debt over the same time period. An overlay of the average wage of graduates would tell if the education investment was worth it. Comparing university graduates wages/debts to high-school graduates and to non-university post-secondary school graduates* would complete the picture about the dollar value of university education.

*oddly, the media tends to ignore the trades and tech category, I wonder why?

oh no , does that mean eventually a shortage of interpretive dancers??

I agree with Stefan; the current US CPI figures are misleading, and it's being done on purpose.

Every year, the US federal government has to set Social Security and other pensions to match the growth in CPI. This costs the essentially bankrupt government billions of dollars. Hence, they do their best to manipulate the CPI down as much as possible, in order to reduce the COLA. Google "hedonic adjustment", and you'll soon see what kind of jiggery-pokery is going on.

LC Bennett, I believe the chart shows US tuition, housing and CPI, not Canadian. As to US universities, over 75% of the students at Cornell University, for example, pay reduced tuition.

What it means, Alimony Chainsaw, is that governments across Canada have generally been increasing base operating grants to universities across the past 25 to 30 years at less than the rate of inflation.

In large part they have made up for this by increasing class size and increasing tuition. In 1975, for example, tuition covered something less than 10% of the cost of a university education. Today it's a much higher percentage.

In Ontario, for example, the province provides a base operating grant per student enrolled. So it's much less costly to herd 300 arts students into a lecture hall than to provide class room and lab space for science or engineering students. There is some additional base grant for science students but not nearly enough. This is the principle reason why science has been shrinking relative to total student population for the past two decades or so.

It must also be remembered that the quality of student arriving from the high schools has declined considerably over the past 30 years. A far larger portion of a university's curriculum is devoted to remedial math, science and english. This is not because of a higher portion of foreign students primarily. Generally their science and math skills are higher than those of Canadian high school graduates. To use just one example, a Canadian high school graduate in 1980 had a working vocabulary of 25,000 words. By 1990, that had declined to 15,000.

Some universities have largely abandoned much of their postgraduate funding, concentrating on keeping the undergraduate programs alive. In turn, the postgraduate funding is increasingly drawn from the professors' research grants from things like NSERC.

A second large area of new funding is that universities have increasingly solicited corporate research grants, virtually unknown in Canada in the 1970s.

Walter: "A much better education model than the traditional classrom lecture."

And are you engaged in active teaching to make such a judgment? On what do you base this claim?

RW in BC: "While the portion of educational costs paid for by students may have skyrocketed, how much has the *overall* cost of educating a student changed?"

Quite a bit actually. First, union settlements have tended to push costs higher relative to inflation, particularly for support staff. Second, energy costs for universities have risen heavily since the 1970s, particularly for electricity. It must be remembered that on average, the building stock is ageing, making buildings more expensive to heat and light over time. Third, administrative requirements have risen heavily, in large part because of much more extensive regulatory requirements.

No, Cal2, it means a shortage of science and engineering students. Arts courses are the least costly to offer.

How did I ever make it through life without a college education, without a masters, a blackberry?

It probably //// definitely 'is!' something - considering the huge number of "successful" grads who are unemployed and probably un-employ-able because of the corrupted software that was installed in their brains by artsies and soft scienceies.

Same deal as charging ever higher prices for and producing ever higher volumes of a product that doesn't work. Only possible in gov't, civil service, NGOs, public "education" systems and "higher" education faculties.

Walter: "A much better education model than the traditional classrom lecture."

cgh: And are you engaged in active teaching to make such a judgment? On what do you base this claim?

I agree with Walter. Based on experience as a student I found that profs, particularly in social science and humanities, were not worth the cost of the class. They were obviously not interested in teaching and had no passion for the subject matter. OTOH, I did a history class via distance education - a series of recorded lectures that was more like watching an interesting in-depth documentary- that was superior to any in-person classroom setting. With today's technology students could have access to their choice of the very best lecturers on-demand and not have to suffer through a class headed by a second or third rate prof.

Murray: Yes, I know it is a US chart but often Canadian and US circumstances get blurred into one on this blog even though there are significant differences. Besides your post seemed pretentious and annoying so I felt compelled to argue with you.

I agree - the potential for on-line ed is huge!! Effective, efficient, affordable, adaptable, no classroom distractions.

The argument against is - 'but the students will miss the "life experience"'. Such as bullies? And attention deficiters? And drug dealers? And wacky profs? And Al Gore propaganda global warming lies?

BOSTON (TheStreet) -- George Soros, the billionaire hedge-fund manager and philanthropist best known for breaking the Bank of England in 1992, will return capital to investors in order to avoid reporting requirements under the Dodd Frank reform act.

http://www.thestreet.com/story/11198058/1/soros-returns-capital-avoids-dodd-frank.html

Tenured marxists aren't cheap.

Ask 'em if they are worth it.

You'll find they believe they are underpaid to rot our kids' minds.

Engineering students are a very small proportion of any university. remember I are one.

khan Academy - anyone here familiar, have opinions on it?

LC Bennett, okay, but the chart on its own is still misleading and more is required to make the case their is an education bubble. The availability of a new, less expensive alternative does not make traditional education a price "bubble" in the economic sense. I would agree that too many profs live in a bubble in another sense, whcih depreciates the value of a traditional university education.

oops--typed too fast--it should be "there"

Murray, like most bubbles the signs of an education bubble will seem obvious after the bubble pops. I am more interested in the value of higher education, particularly degrees in social science and humanities. Do the wages for a soft science degree justify the cost when compared to being an electrician or a medical tech?

Ron: "It probably //// definitely 'is!' something - considering the huge number of "successful" grads who are unemployed and probably un-employ-able because of the corrupted software that was installed in their brains by artsies and soft scienceies."

Try this:
www.bls.gov/emp/ep_chart_001.htm

I've been reading all this higher education bubble stuff since Glenn Reynolds started it, and I find it fascinating. I would love to see left wing universities figure out they're pretty much useless. But here's my question: this graph (and most of the writing on the higher education bubble) is American based. In Canada tuition, though it is rising, is not nearly what it is in the U.S., at least at most universities. So I'm wondering how big an issue this is here in Canada? Does anyone know? I'm just afraid our universities won't be forced to change the way I think American universities will be soon!

@cgh break down the data between arts/soft sciences and eng/med/ and you will see where the low wages/unemployed reside - incl PhDs.

One thing about the oft-repeated mantra that arts degrees are toilet paper - most arts grads refuse to work in the private sector at entry level and have a disdain for anything remotely entrepreneurial. Most of them want to work for the government and won't compromise. Many arts grads that don't suffer from degenerative socialism do just fine.

Education is increasingly becoming a do-it-yourself proposition. I recently tried to find a computer programming camp for a young relative. I found one that teaches Java and C++... in California. Bit of a drive from Ontario.

Now the kid went to California and did the course and is back home. Can I find a tutor for this prodigy? Can I hell. McMaster, Mohawk, Brock, local school board, blah blah blah, NOBODY will tutor a kid, FOR MONEY lets be clear, unless the kid is enrolled in their program. Can a public school age kid old enroll? No. Why not? Doesn't have the prerequisite courses.

Meanwhile the kid is starting to think about writing a program to find the least common multiple of two fractions. Doing it by hand was hacking him off.

If your kid is brain damaged and will never be able to even read, there's millions of education dollars on tap for him/her to reach the limits of their no-potential. In fact there's people whose whole job it is to help you find and spend the money.

If your kid needs an hour or so of help per week to figure out how to apply RMS analysis to Pi or Phi to see how "noisy" it is (that's what the kid was oh about today)and will PAY for it to boot, they slam the door on you and run away screaming.

Do it yourself.

Ron, I agree with you strongly on the division between arts and science. However, the fact remains that arts BAs still do considerably better than high school only.

The key difference there is that the figures I quoted don't show apprenticeships.

K.C. Finney at 12.02pm.....

Faster please................

It's an interesting scam in Canada. Teachers' unions provide an over-priced, taxpayer-funded, sub-standard education chock full of lefty indoctrination graduating kids who are semi-literate, mathematically challenged and scientifically illiterate. The result is that they need a "higher" education in order to get them to the level of a high school education of the early 1960s. So off they go to another over-priced, taxpayer-subsidized, parent-funded lefty indoctrination institution graduating socially dysfunctional, politically indoctrinated morons. Having completed their left wing ant colony dumbing down and of an age whereby they are now armed with a vote, these dysfunctionals want (surprise, surprise) government jobs, since they're wholly incapable of providing any useful product or service beyond, "Do you want that with fries?" Left-wing pols are more than happy to provide such "jobs" since they are a guaranteed voting substrate to perpetuate the cycle. The real workers pay for this whole boondoggle and the members of teachers' unions and tenured professors spewing utter nonsense reap the financial harvest. Time for a voucher system and private competition.

$1,200 a year really doesn't seem like too much to ask. Get a summer job at Tims and make four times that much, enough to pub crawl twice a week. I paid that much in the 80's, to attend Funshawe for two semesters, spoiled brats.

"$1,200 a year really doesn't seem like too much"
I think that's 1200% over the 1978 cost.
(1100)

Although it would be kinda nice, if, like, the profs in engineering and the real sciences could speak English.

Collage tenure has become a licence to steal for the academic class.

Put your kids into business or engineering. Even pure sciences are dead ends these days. Oh and lest you think the costs of educating your kids are all about Unionised Faculty, did you know that about 60% of the undergraduate teaching load in Canada is done by low-paid, non-tenured sessional staff, who, after all hours are totaled up, are making close to minimum wage.

So ask these colleges and universities again: where is the money going?

Answer: administrative salaries and benefits. I have rarely (if ever) seen university administrators cut their own pay or layoff any of their own personal staff. Forget the bonuses to CEO's, at least they create wealth. But University Adminsitrators? Why aren't these people in jail for fraud?

Saw a similar graph once for California. Timescale was longer. For fun, I started googling around on the dates where tuition shifted slope. Wouldn't you know, major union victories coincide with sharp increases in tuition.

Conceptually, it's not ok that people wrapping sandwiches in the cafeterias make double (and cost quadruple after benefits and other overhead) than the free market is willing to pay subway sandwich artists.

On the plus side, the people hurt most by this are the whiny union-supporting lefty art students.