Hey… apparently, I’m a genius…
“Everyone who owns GET plans, they’re starting to look like geniuses,” said Joe Hebert of TrueNorth Financial Services in Seattle.
We prepaid our daughter’s tuition when she was five years old, back in 2002, when the cost was only $42 a credit. After this week’s GET price increase, the cost is now $101 a credit. That’s a pretty damn good annualized return. But I’m no genius.
Washington’s in-state tuition costs were bizarrely low at the time we bought in, and there seemed nowhere to go but up. The GET program was only advertising (but not promising) a projected 6 percent average annual return at the time, but that seemed impossibly low considering rising costs and stagnating state tax collections. Besides, the “G” in GET stands for “guaranteed,” so it wasn’t much of a gamble to plunk down $16,800 in 2002 for four years of college tuition our daughter wouldn’t finish redeeming before 2019. I suppose it might have turned out to be a conservative investment, but it also bought us peace of mind.
But, as is my wont, I digress, for it’s not the virtues of GET I planned to blog about, but rather the first comment on the story in the thread on the Seattle Times, in which rawdibob asks:
Why has the cost of college tuition increased faster than inflation?
Yes, I understand that part of the government-run college tuition increases represents a decrease in the taxpayer subsidy but that is not all of the story.
No, the recent budget cuts aren’t all of the story, but this question gets to the heart of one of the basic misunderstandings many taxpayers have about the cost of providing government services… a misunderstanding I’d argue is intentionally perpetuated by many of those in the smaller government crowd.
Government critics often point toward population plus inflation as a formula for constraining government growth, and while that’s not the best metric (growth in demand for government services most closely tracks growth in personal income), it does appear somewhat reasonable, at least on its face. Problem is, there are multiple measures of inflation, and the familiar Consumer Price Index is perhaps the least applicable when it comes to measuring rising goverment costs.
Why? Because as a broad index of the economy as a whole, the CPI reflects productivity gains resulting from technological and policy efficiencies (such as trade) that simply aren’t available to state and local governments, for whom the bulk of the services provided rely on highly trained professionals. Think about it. You can automate a factory floor, resulting in fewer workers producing more and better product, but you can’t comparably automate a doctor’s office or a fire station or a police precinct.
Or, a classroom.
The only way to dramatically increase the productivity of a university professor is to either increase class size, or require the professor to work longer hours for less money, neither of which is a tenable alternative if your goal is to attract and retain quality students and faculty. And even if one were to head down that route, the productivity gains could not possibly be sustainable compared to those achieved in the broader economy, even compared to many industries that also rely on a highly skilled labor force. For example, Microsoft can exploit the global economy by outsourcing engineering to India and China, but the University of Washington simply can’t outsource its faculty. (It can outsource its students perhaps, but not its faculty.)
Republicans point to year over year spending increases and argue that state government has grown too fast, but the fact is that the cost of providing most government services simply rises faster than consumer prices. Indeed, when adjusted for the Implicit Price Deflator for State and Local Governments (the IPD is widely accepted as the most accurate measure of inflation for various industries), Washington state taxes per capita were already at a 15-year low heading into the Great Recession that sent our budget off a cliff.
Just look at the widening gap between CPI and IPD. What that represents is a decline in government spending power.
And that, rawdibob, is one of the main reasons why the cost of college tuition has increased so much faster than inflation.
UW may be bringing Tent City to the UW main campus, will that affect tuition? Maybe if future students, including prospective athletes decide not to go there.
http://www.youtube.com/watch?v=4p0Q7Lou-zo
Maybe stop spending money on non-educational projects as a means to lower tuition.
Tent City:
UW enrollment is severely limited by space, not by demand. Any students who wouldn’t want to attend due to tent city (and frankly, maybe five? ten?) would simply make space other people will happily fill.
Goldy spews:
Ummmmmmm Goldy…have you heard of “technology”?? Are you telling me that class sizes and on-line alternatives cannot significantly increase productivity?
And why in the hell shouldn’t we have profs work more for less money?
When you spewed this…were you assuming all profs are working full-time on classroom stuff?
This is where the rub is…public accountability of the productivity of profs and the entire higher ed system. Who is watching the henhouse??
PS–
Congrats on the great investment.
I did it too….but our youngest is just about done so we didn’t get quite the “return” you will.
Cynical @3,
Distance learning is an alternative, and those who want a degree from the University of Phoenix are free to pursue one. But for those who want a classroom experience there are little productivity gains to be had, regardless of new technologies.
As for making profs work more for less money, sure, as I wrote, you can go down that road if you want, but only so far. Eventually, the efficiency gains in the broader economy will far outstrip those gained by squeezing more out of faculty, and we’ll be right back where with started, with tuition costs rising much faster than inflation.
I would argue the strongest downward pressure on state spending comes from the severe maldistribution of state/local tax burdens in our state.
The decline of per-capita spending in 2000 dollars from $2,200 to $1,900 still amounts to only $300 per person.
A state tax burden of $3,800 for a couple earning $200,000 a year is barely noticeable, but is burdensome on a retired couple with an income of $30,000 a year. You can’t ask that retired couple to pay more. You simply can’t. And because we’re not asking the affluent to pay more and we’re putting all the burden of tax increases on those least able to pay and already paying the most, we can’t raise revenue to keep up with state spending needs. We simply can’t. Any efforts to try accomplish nothing more than providing fodder to demagogues like Tim Eyman.
Nothing is possible in this state until we reform our tax system. Until we do, this downward revenue spiral will continue until all of our essential public services crash and burn. But the Democratic legislative caucuses, despite their overwhelming majorities, have done precious little about this; and our Democratic governor, despite her convincing re-election, nothing. Why is that? Have these people forgotten they’re supposed to act like Democrats?
@3 – even distance learning requires someone to grade a test or review and comment on a paper. So in essence, unless you don’t need a full service learning experience, then costs go up. Those profs not working full-time on classroom “stuff” are often mentoring grad students, doing their own research, all things that make the college experience richer (and sometimes the university, too!).
Perhaps some students do learn by simply watching a video and then taking a multiple choice test and more power to them, but for those that don’t, a real teacher with time to give feedback is needed.
Needless to say, in all cases, teachers of all levels need to be proficient and that is something that should be pursued, but it will be hard to put together measures that ensure teachers are being judged fairly.
@1 So typical of mean-spirited wingers! You don’t want the homeless living under freeway bridges. You don’t want them living in church parking lots. You don’t want them on the U.W. campus (which costs the U.W. essentially nothing). Where are they supposed to go? To hell, apparently. Yes, you want the homeless to go to hell. Fine, this is a free country, and you’re allowed to be a prick. But quit pretending you’re Christians, because that isn’t believable.
@3 “And why in the hell shouldn’t we have profs work more for less money?”
This is always the money-line whenever a Cheap Labor Conservative shoots off his mouth. More money for them and less money for workers, that is.
As if job insecurity, working conditions, high taxation of wages, and penurious pay levels weren’t already intolerable in this country, CLCs like KlyniKalKlown want to create even more disincentives against working! They won’t be satisfied until they drive absolutely everyone out of the workforce!
I’ve already left! I don’t work anymore. Why should I? Work is unrewarding. I make more money and pay lower taxes by sitting on my fat rabbit ass producing nothing! It’s a stupid system that’s going to run America into the ground and turn us into a third-world also-ran country, and you can thank the CLCs for creating it. Why do Cheap Labor Conservatives want to destroy the American Dream?
And when they graduate from these colleges, they still can’t find a job in this damn state. What a wonderful investment.
Does McDonalds have a Pers1 Pension
Or can you take your wife out to town here for a little less than the $24,000 Obama the Spendomatic spent for a one night romp in NY
how much time did bush waste vacationing at his faux ranch?
Just wondering…..
Why do Cheap Labor Conservatives want to destroy the American Dream? They admire the system in China and want the US to be like them.