Friday, March 16, 2012

Markets in Everything: College Degree for < $10k

Texas Tribune -- "Officials from a few Texas community colleges and universities said that $10,000 bachelor's degrees are available now — and more will be within the year.  At Texas A&M-San Antonio, a bachelor's in information technology with an emphasis on cyber security will cost about $9,700. Starting in 2013, a bachelor's of applied science in organizational leadership will be available for under $10,000 in South Texas College."


At 3/16/2012 12:44 PM, Blogger AIG said...

Sure. Subsidize it enough, and you can even make it free.

Am I the only one here arguing that college needs to be MORE expensive? Because everyone seems to be complaining about the increase in price (which is then attributed to a supposed bubble).

At 3/16/2012 12:44 PM, Blogger morganovich said...

tuition at the ucals is still only 13k.

of course, they are losing money and hiking fees every year.

At 3/16/2012 12:56 PM, Blogger morganovich said...


the hikes in price are being driven by loans and scholarships.

i'm still very involved with my old high school.

it was 15k in 1990 (it's a boarding school).

it's $50k now.

but 1/2 the students get finincial aid.

the cost would be more like $27k id they didn't which would, ironically, eliminate much need for financial aid.

the current model barbels the student population. the poor can go, and the rich who can pay for 2 can go, but the middle class either gets buried under loans or flat out cannot go.

my parents scraped and sacrificed to send me. they would never have been able to do it today.

the other reason prices are going wild is loans. they add leverage to the system.

in a housing market where mortgages first become available (generally because insurance becomes available) prices tend to go up about 4X in 3-4 years.

20% downpayments grow to the nominal amount that the whole house cost.

school tuition is experience the same effect.

if you want it to go truly parabolic, then you opt for the insane plan our entitler in chief is pushing:

government loans for school capped at 10% of income as a payment and 20 years for duration.

so, if you make $50k as an average and work 20 years, the most you can pay back (including interest) is $100k, which is not even half of many 4 year programs at present.

this causes a horrific situation where you literally do not care how much it costs. $100k and 100 million are the same to you.

this woudl drive prices wild, make all but the wealthiest need loans, and make debtors of us all while creating utter dependence on the feds to pay for private tertiary education. (which may well be the plan)


At 3/16/2012 12:56 PM, Blogger Gale L. Pooley said...

The Higher Education bubble is bursting. Classic case of creative destruction with disruptive digital innovation.

Who will be the first to offer a BA for free?

At 3/16/2012 1:21 PM, Blogger AIG said...

"the poor can go, and the rich who can pay for 2 can go, but the middle class either gets buried under loans or flat out cannot go."

I'm not so sure. If we want to aggregate "higher education", you don't get a clear picture. Higher education today can be very affordable if you go to community colleges or state schools...and it can range to very expensive for top schools. There's something for everyone. But here I think we focus too much on the aggregate figures, without seeing that we are talking about very distinct populations.

And of course, it depends on the major of study.

I'd venture to say, for the value they deliver, prices are still too low. You may argue that in some parts of this market the prices are being driven up by availability of credit, and that may be true for majors which in themselves would not have high prices because they do not create a lot of value.

But a lot of these degrees do deliver a lot of value, and increasing amount of value. And tuition is just too low for some; like engineering. If a computer engineer starts off with 70k+ starting salaries, their 25-35k a year school is just too darn cheap.

At 3/16/2012 1:32 PM, Blogger Don said...

Sweet! I live about 8 miles from the campus. Sounds like I'll be able to afford my kids education after, something I was beginning to wonder after living in Austin for a dozen years :^).

Actually, that's cheaper than my degree was in '93.

AIG, if I'm not mistaken, the reason for this particularly low tuition is because there is a community college (Palo Alto College) almost directly across the highway from TAMSA and it has a partnership with TAMUK (another of the baby A&Ms and my alma mater - sorta :^) for several complete 4-year programs (TAMUK has a presence on the PAC campus for the 3rd and 4th year classes).

I know, they are all publicly funded, but if you want to rank the order of things that shouldn't be funded by tax dollars, I'd put higher education pretty far down the list.

Don't read too much into this. TAMSA is a brand new school (opened last fall), so they have extra dollars from the Leg and (I think) even from the City and County governments, to help get the school off the ground. They have only 1 building, 2 parking lots, and 2 streets to maintain. The real question will be, what will tuition look like in 10 years. I'm betting it'll look a lot like UTSA, which is around $23K for a IT/Security BS right now.

At 3/16/2012 1:35 PM, Blogger morganovich said...


how do you figure?

there are lots of online degrees etc, but they are largely of very low value.

sure, some top schools provide online course videos, but no accreditation, and i doubt they will.

part of the reason a potential employer values an ivy league degree is that a ton of vetting has already been done on the students.

just getting in is a big deal. think of it as outsourced HR. if anyone could get an MIT degree online without going through such a process, it would deeply devalue the diploma in the eyes of those hiring.

far from bursting, the competition for top degrees has intensified and the desire for them keeps going up.

i used to hire our junior analysts at a fund. you get 300 applications for a job in a day or 2. you cannot vet them all seriously and if they do not have experience, you just look at education and accomplishments. you're looking for reasons to toss 270 resumes out.

"online degree from kaplan" just gets you tossed. they might have been great, but the reality is that few employers will take the time to find out. that's why all the publicly traded companies offering BA's have had such problems.

i think it's been more the other way around, with the online degree bubble bursting.

take a look at APOL (apollo group, owner of university of phoenix) to see what i mean.

it would destroy their brands.

At 3/16/2012 1:47 PM, Blogger morganovich said...


my alma mater is now about $60k all in.

it certainly delivers a great deal of value, but coming out with $240k in debt is pretty serious.

tuition has doubled at the average us university in 12 years. it's difficult to argue that value has. (though perhaps they were under-priced before)

i also think you are overstating starting salaries a bit.

it's not 1999.

avg starting salary is $50k, $60k for CS.

but the % finding a job has dropped a great deal from a decade ago, so you need to weight gains by probability of employment.

i'm not saying that college provides little value, it provides a ton, especially the top ones.

my point is that it would be much cheaper if loans were not so heavily subsidized.

if you dump a ton of money into a system, you get big inflation.

it's the policies intended to help that are causing the price spiral.

regarding barbelling, it's very real. it's a big concern at my old high school. i'm still close friends with many of my old teachers, and they are all concerned that you have this weird, disjointed student body where there is not enough middle class glue in the middle of the rich and poor.

at these prices, there is no way i could have ever gone.

At 3/16/2012 1:49 PM, Blogger morganovich said...

granted, that's what you get for studying comp lit, but this is a worrying tend for kids buried in debt.

At 3/16/2012 3:16 PM, Blogger rjs said...

why should anyone get a degree? you can learn just about anything you want online...

on the other hand, if what kids are being taught is expected to make them more employable, then the corporate employers should pay for it...

At 3/16/2012 4:17 PM, Blogger morganovich said...


how do you figure?

it's an employer's job to give you skills to make you employable?

why would they do that? it's your education. it's you job to have marketable skills. if you can learn from an employer, great, but they are under no obligation (nor should they be) to teach you.

if i am you prospective employer and you say "i need you to send me to college and pay $200k so i am employable" assuming i didn't laugh you out of my office, i would then get down to brass tacks.

you want me to invest $200k in you. what do i get back? will you sign a contract to work for me at $50k for 15 years? what do i get for my investment? if you work here one year and leave, i got badly screwed. why would i expose myself like that?

you have some very strange ideas about how corporations work.

note: the system you describe used to exist. it was called the guild system. you joined and were indentured to me as an apprentice. i fed and housed you, and you labored for me. after many years, you might become a journeyman and have to work for me in my trade for years, at low or no pay. finally, one day, you might become a master in your own right and go out on your own and maybe grab some apprentices.

you really want to go back to that?

At 3/16/2012 6:38 PM, Blogger juandos said...

Well if the government keeps interfering in the educational market place is there any reason tuition should go down at the so called, 'diserable schools'?

At 3/16/2012 6:51 PM, Blogger AIG said...

"I know, they are all publicly funded, but if you want to rank the order of things that shouldn't be funded by tax dollars, I'd put higher education pretty far down the list"

Yes. I was just pointing out that, technically, you can make college "free" for everyone if you subsidize it enough. But that's not necessarily a desirable direction.

"my alma mater is now about $60k all in. it certainly delivers a great deal of value, but coming out with $240k in debt is pretty serious. tuition has doubled at the average us university in 12 years. it's difficult to argue that value has. (though perhaps they were under-priced before)"

I would make the argument that schools were very under-priced before. I would also make the argument that the value they deliver today, is considerably higher (yes you can look at average salaries, but those also take into account the salaries of people who graduated from 5k a year State schools).

The CS majors graduating from your school, aren't starting at 50k.

And if you're starting off with 60 or 70k a year, it's certainly not unreasonable that the additional income gained from this should cost you pretty heavily. Now I've never heard of a school charging 60k a year :)...and yours may be an outlier.

At 3/17/2012 11:11 AM, Blogger morganovich said...


60k is very common among top schools.

i went to brown. all the ivies are similar.

tufts is $55k. williams is $56k.

a few of the schools with really big endowments are now offering income based tuition because they were threatened with loss of tax exempt status if they didn't, but most schools cannot afford that option.

it's easy to underestimate these numbers as they are often published not including room, board, insurance, etc.

the point is average private tuition in the US just doubled in a little over a decade. i doubt you can demonstrate that their value doubled as well. they are much more expensive. whether they are still a good value is a judgment call. a CS degree from MIT probably is.

but a comp lit degree from brown probably isn't.


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