Why Does College Cost So Much?

John Reid
Thursday, August 9th

Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

Why do colleges cost so much and why. Are the prices. Increasing so quickly David Feldman is an economics professor at William and Mary. And he's the author of why does college cost so much. And I'm glad you can be with us some look and it does the latest story that's out here that says undergraduate students. In Virginia paid between 9056. Dollars that's a DSU Virginia State University. And 23400. Dollars at William and Mary are you are. In tuition and mandatory fees in the coming academic and it seems like an outrageous amount of money even for. Own a top tier of education. Well welcome to be with you. I love those terms outrageous. Do you injuries and your listeners know what they're return with the benefit of a college education brings over high school degree. Well I would say you know I certainly would be up up a creek without a paddle if I didn't have the degree would need to get an interview and as the radio station probably or pass the jobs that I've had so I mean it's it's the ticket of admission of it's it's an admission for most employment around. Yet the that the value of a college degree to the average student is they usually measured in seven figures in today's dollars over working lifetime. And that includes four. Such often despise the majors and the humanities. Talk about the actual the actual prices. As you point out that the huge range from 23000. 9000. The he is they focus on the list price. And even the public universities that remains subsidized by state appropriations. Only about half the student to actually pay that was priced. The list price is one of the worst things you can look at. And and does better this school for more meeting list the list price is. You mentioned William marries a strike by the way one thing I ought to mention is that. When you come to a Mary. No list price that you come in use those Portugal out that so what they've we've Mary's tuition goes up 66 and a half percent this year which is. The increase is the next year or the year after that year after federal 000. Do you have a good planning horizon. Don't go well that's helpful if you lock in your for your first year by the alarm again you're locked in. And does that extend just the at a curiosities that extend if you stay for the fifth or sixty you're just for the first four. Yes I believe it does but he doesn't extend infinitely you can. Yeah William area that's something called the tenth faster rule you gotta be done in contention master. But. So we an awful lot of people don't pay the list price. It's called the counting. He. Something like. Seventy plus percent of students doing merry don't pay that that full list price and in fact if if you come from families that there is a very modest means. Your income is below 40000 dollars a year would married essentially free so focusing on the list price. Is great for headlines stories but it often doesn't tell anyone what the average student actually have to pay to go to college. And let's news Wayman Mary as these apple what would the average student that. The average you're gonna pay two very different things if there instate and her out of states right. And and I don't have the actual in states and number. But a good rule of thumb is that. Lacks some I'm under the 20000 of the list price. I can believe that the net price to go to William and Mary is something on the order thirteen or fourteen I'm not going to swear today you can go to the state higher education website and find out the exact number. But it's a very big difference and the difference is driven largely by family income lower income families pay a lower price higher income damaged by a higher price. Well this is good to know billion to the difference between the price of slow and it's almost like haggling and in a bizarre that you go in and you see one price menu. You know see if there's some way to. Negotiate down or find some way to bring the price down especially if it's. You know money right out of your pocket and you're not a family of of wealth but why would the price be set at this level. You know we get if we go through the budget to look at the line items for. The average university in Virginia why what are we spending so much money on is it the fancy new buildings. I know actually know if you if you look furcal talked about the changing buildings here in Richmond right I am. At least in the in the not too distant past VCU build a really nice athletic center. And national public radio dug into the finances and and does their show marketplace that we came up with a startling number of fourteen dollars. We do with the additional charge per student per term university sometimes they're very efficient builders because they get spread those costs over a large number of students. But what I want to draw your attention Jews is something simpler maps. If you look. A map the the United States. And look at a mount the stage contributed to higher education. We can get stand out among all the states that surrounded and being really low spending the only state that spends. A little bit lower than began here in our region is West Virginia. North Carolina spends almost double. We are outspent by Tennessee and and can talking. Georgia Maryland. These state of Virginia have cut spending in real dollars per student. Like 20% since the Great Recession and if you go back further to the mid eighties by 50%. So we're paying the state is paying 45%. This they didn't help pay 45% of bill when it had committed years ago the pain to surge is a bill. And it's paying less than the build any used to pay. What's interesting observation but that just means that the bills being spread around for taxpayers to pick up the tab and I'm I'm. Will have to pick up the conversation with with more detail about the actual wolf. Cost it's on campus minutes interest staying. When you compare. Community college vs away human Mary university Virginia what is it. It's actually drive in the cost up you view. Commented on the the facilities. Will send you the university's. Professor's salary is you know I'm I'm I'm not be curious to do a deep dive on. You know this largely personnel. And one of the things that used to look at is not the average for the state but look at the range across the state. So. Virginia commonwealth. Tuition is going up I substantially higher percentage than say Virginia which is only going up two point. Something end and Virginia Tech which is also going only going up to bring something. But would any commonwealth. I mean that I'm and how to get yeah I have to go but I'm I have to get your book and not take a peek at a David Feldman who's at the way add Wayman Marion economics professor and the author of why does college cost so much appreciate you talking with us the Frankie yeah.