College & University Funding

I have an undergraduate degree from a state university. I also have a graduate degree from a state university. When it comes to college, the majority of my high school graduating class went on to some form of post-secondary education. This education comes in many forms, including but not limited to private "4-year" colleges, state universities, "two-year" tech/trade schools, and specialty schools. There are other paths, such as military academies, straight into the work force, and others that themselves are points of education. Ultimately, learning is a life-long process not limited to attending a "college".

The problem in a broad sense, is the financial situation colleges, universities, students, etc. face when footing the bill. The military academies in the US are funding through tax payer's dollars, and the students repay for the education in the form of years of military service. Private and public schools alike are funded from a variety of sources; generally primarily through tuition and fees from students, athletic revenues, general endowment funds, state, local and other government funds, private donations ranging from alum or friends monies to trusts and grants, and corporate sponsorships. Money exchanges hands in a variety of ways to help the operations of the school, to maintain buildings, to create new buildings, to pay for staff and professors, and to help students pay for expenses. 

I was fortunate to receive a $500 scholarship leading into my undergraduate years. I also collected another $200 in scholarships for writing some essays as part of college competitions. $700 was a ton of money to me in 2000, but it didn't cover my tuition and fees for even my first semester. This meant I needed to fund my education through student loans. I took out loans for my undergraduate and graduate degrees. The debt mounted and it took me years to pay it off, but I knew that going into it. I was very well aware of the interest rate, the payment terms. I mean, I purchased a used car for $5,600 in my freshman year. Should I really be surprised about the payments? I can't be angry with the dealership for the payments, all of the terms we clearly set forth. For school, I was investing in myself, choosing a major of study that I knew would position me well to land a higher paying job than I would have likely been stuck in without a degree, and that the difference in pay would more than cover the incremental monthly debt payments from the student loans. Unfortunately, many many people are not as thoughtful when selecting a major as to be realistic about future earning potential, and as noble as it is, they chase what interests them or they work to discover themselves, all while being in the same financial predicament I was in at the same time. 

So college is and will always be expensive. It's virtually a necessity if you want a job, even in the trades, so I'm not suggesting education after high school is limited to white collar jobs. But what gets me going is when the schools have the gaul to reach out to me and ask for more money. I consistently get phone calls as an alum with the school asking me to donate to the schools general fund, or for a project, etc. The question I pose to them every time is, suppose you went to Target and bought a shirt. Target listed the shirt at $20, and you thought it was a fair price for the shirt, so you agreed to buy it for $20. Transaction complete. Does Target then call me up five years later and say, "hey, I know you really liked having that shirt, how about throwing use a few more bucks?". Who would say yes? In the end, the school you attended posted a price, tuition. This was agreed upon, in that I pay you this money, you teach me these skills, end of transaction. You don't get to come back to me and ask me for more money. 

Some people I know, give back because they themselves were recipients of huge scholarships, or full rides even. Sure, I could see giving money to the school in this scenario, because you are almost playing catch up against your own financial outlay. I get that. But ultimately, the problem is with the design of the tuition and fee to operating expense structure. If you are running a business that relies heavily on donations, perhaps its time to have your prices reflect your needs. Tuition goes up double digits every year. There needs to be a one-time, massive adjustment, so that the price accurately reflects the reality of the operations. In this world, the price of education will match the cost, with even some profit margin built in. There is no need then for alumni calls for more money, because the transaction is complete. And frankly, with this approach, the schools are more inclined to actually optimize their operations. It's not sustainable to continue the way things are going. Target would be out of business if they priced $20 shirts at $8 and hoped they would have others subsidize the rest. This price to cost disconnect doesn't happen anywhere else, so why does it have to happen for some colleges and universities. The irony is that they themselves teach economics. 

Some interesting solutions have been proposed and are in flight at this time, such as companies offering a job and paying for the degree, with the agreement you stick around and work for a couple of years once you have graduated. This is similar to the military school approach. Some schools have offered the education for free, with their motivation being you sign a contract to relinquish a percentage of your salary to the school for an agreed upon term. The school then actually cares that you are getting educated and being placed into a high paying job. This approach really interests me, but still at the root of the design is a consideration of price to cost, it's just with this approach the risk is being shifted from the student to the school, for the most part. 

One last comment about people; the students wanting the education. Be smart about what you are getting yourself into. Whether you come from a wealthy, middle-class, or poor background, education is something that only you yourself can pursue. Some of you will get scholarships, or have your family cover the costs, or others will need to fund 100% of the effort through loans, but it is entirely possible, and will continue to be entirely possible to finance your entire education. But there again, you need to be smart. Choose a major you know will lead to a solid career that will offer you the financial benefits of having your degree. Very few people get degrees in what truly interests them and also make a fulfilling and financially stable career. The vast majority of people need to be realistic about the bills they will need to pay, the salary they need to pay back their loans, and allow themselves in their free time to pursue what truly interests them; we call these things hobbies.