Colleges are losing pricing power

After years of relentless tuition hikes, many colleges and universities are facing a backlash and more students and parents are looking at value. They don’t want to be stuck with outrageous student loans, and now many private colleges are offering record financial aid to keep classrooms full.

Movement for $10,000 college degree

The value of a college education has been a hot topic, along with the issue of the college loan crisis. With that backdrop, we’re starting to see some momentum behind the movement for what’s being called the $10,000 college degree.

With the cost of going to college already more than $30,000 a year at many California campuses, is it possible to earn a bachelor’s degree for just $10,000 – total?

Assemblyman Dan Logue hopes so.

Borrowing an idea being promoted by Republican governors in Texas and Florida, the Republican Assemblyman from Linda has introduced a bill that would create a pilot program in California for what he’s billing as a $10,000 bachelor’s degree. The degree would be available to students majoring in science, technology, engineering or math disciplines.

Assembly Bill 51 calls for closer coordination between high schools, community colleges and California State University campuses and targets three regions for the pilot: Chico, Long Beach and Turlock. Participating students would earn some college credit in high school through Advanced Placement classes and greater access to community college courses. The bill calls for participating community college students to go to school full-time. CSU campuses, moreover, would be required to freeze tuition for those in the program.

Tuition at CSU right now is $5,472 a year. Books and campus fees cost another roughly $2,000 annually. A statement from Logue said his proposed $10,000 degree would include textbooks. It does not cover living expenses such as room and board.

You’ll note that it’s governors in Texas and Florida, both Republicans, who have started this movement, and it is being embraced by prominent conservatives. I would suspect that Democrats would happily go along, so this could be a significant bi-partisan movement.

Dealing with rising college costs

The issue of rising college costs is a hot topic these days, as young students and families grapple with the issue of how to pay for a college education. Too many young people are saddled with crippling college debt, and as this has gained more attention, it has certainly focused the minds of many Americans as they weigh their options.

Universities are reacting as well, and some of the trends are very promising. Davidson College has created an innovative no-loan policy.

“When I got my acceptance letter and my tuition bill, it told us that everything was mostly paid for,” she recalls. “I had heard something about Davidson’s no-loan policy, but it didn’t make sense because it sounded too good to be true. My mom was like, ‘This can’t be right. We need to go talk to them.’ ” The admission counselor explained that, because of the Davidson Trust, the school was able to cover 100 percent of demonstrated need without loans. Her mother cried. “At the time, I felt kind of embarrassed. When we walked back to my car, she said, ‘I’m so happy. I feel like I should make [the counselor] something.’ ”

Other schools like Harvard are also making it much easier for students to get grants instead of loans in order to lower the student debt burden. Families and students need to do their research, and you have to factor in costs and debt into your decision. Otherwise students will have this debt hanging over them for much of their careers.

You can read more about the student debt crisis and the value of a college education versus the costs here, here and here.

Read all of these materials, and you’ll be much more prepared for the decisions you’ll have to make.

The crippling cost of college

One of the themes we keep emphasizing has to do with the crippling costs of a college education today in America. Sure, college campuses are much nicer with all the new buildings and new technologies, but they are failing in their basic mission if students leave there with massive student debt that will hang over them for the rest of their lives.

More publications are doing good work discussing these problems. In Newsweek, Megan McArdle asks whether college is a lousy investment.

Why are we spending so much money on college?

And why are we so unhappy about it? We all seem to agree that a college education is wonderful, and yet strangely we worry when we see families investing so much in this supposedly essential good. Maybe it’s time to ask a question that seems almost sacrilegious: is all this investment in college education really worth it?

The answer, I fear, is that it’s not. For an increasing number of kids, the extra time and money spent pursuing a college diploma will leave them worse off than they were before they set foot on campus.

Given the costs, it’s hard to argue with her on this point. She discusses how college was critical for many families in building a better life for the next generation. But sitting on an English degree with $150,000 of debt seems like a pretty bad deal.

That said, we can’t overreact to the current economic conditions. When the economy improves, more of these kids will get jobs with their degrees.

Yet something has to give, and it was very encouraging to hear President Obama challenge colleges to slow down tuition inflation.

Also, the future of free college courses looms on the horizon. Universities would be wise to start figuring out how to lower costs, or they might really have a problem in the future.

Start-ups offer free college education

The cost of college tuition is skyrocketing, so it’s not surprising that some entrepreneurs are trying to fill the void.

Technology start-ups are cracking into the higher education market and there pitch is an enticing one: A college education for anyone at almost no cost.

Sound to good to be true? The founders of tech start-ups behind this revolutionary idea say they have already had success with their models, but they say there needs to be more momentum if their idea is to succeed.
“The 99% should be protesting college campuses,” says Sebastian Thrun, a Stanford University artificial intelligence professor, who recently co-founded Udacity, a technology start-up dedicated to providing higher education at a very low cost.

Two companies doing this are Udemy and Udacity. The new trend is self-education with all of the tools out there, including free lectures on iTunes and Khan Academy.

Smart employers will start to figure this out as well, and I suspect in the future we’ll see job applicants will put a Self-Education section on their resumes. It shows initiative and prospective employers can always quiz applicants on what they learned for verification.

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