WFU makes international news - for pricing out the middle class

[AMCDeac]

http://www.guardian.co.uk/money/2013/apr/04/student-debt-threat-private-university

Threat of debt drives US middle-class families away from private universities - Many families being squeezed out of private colleges because their income is too high for financial aid, but too low for fees

"A recent study conducted in North Carolina, said that 40% of students who were highly qualified to attend a selective college did not enroll in one. And the money has everything to do with it. If you look at the Fishers situation you'll see why. Wake Forest costs around $60,000 a year. The Fishers had set aside $20,000 a year. Chapel Hill costs $20,000 a year. Decision made."

 

[WRS]

Nice misleading title. The headline is actually about the cost of private universities across the board. It's not as if Wake Forest has some particular vendetta against the middle class and has increased costs well beyond its peer group.

 

[AMCDeac]

Point taken - they make international news.

 

[PhDeac]

Private universities price out middle class. Wake is included. We picked our poison.

 

[Say Hey Deac]

I don't really know what a school like Wake is supposed to do about this (and would be interested to hear some suggestions). Operating a private university costs what it costs. You're building and maintaining facilities, paying faculty, staff and administrators, etc. If, in order to pay those costs, Wake has to charge tuition and fees of $X, I don't know how you charge less than $X. It's not as if they're pulling in a profit. I'm not saying it's not a problem, I just have no idea how you solve it.

 

[DeacHead]

Serious question from someone that just doesn't know: What is the expense driver for colleges and universities?

My freshman tuition for 84-85 was $6,000 a year. Now, it's 44,200. An increase by a factor of 7.36666667. CPI-U, from 1984 to 2012, a common index used to determine cost of living, is 2.18 over the same period. What's going on at these institutions that's causing expenses to increase at a rate over 3 times higher than national average? From what I can tell it's not teacher salaries.

 

[HeavyPetter]

Serious question from someone that just doesn't know: What is the expense driver for colleges and universities?

My freshman tuition for 84-85 was $6,000 a year. Now, it's 44,200. An increase by a factor of 7.36666667. CPI-U, from 1984 to 2012, a common index used to determine cost of living, is 2.18 over the same period. What's going on at these institutions that's causing expenses to increase at a rate over 3 times higher than national average? From what I can tell it's not teacher salaries.

Sex change operations.

 

[WRS]

Serious question from someone that just doesn't know: What is the expense driver for colleges and universities?

My freshman tuition for 84-85 was $6,000 a year. Now, it's 44,200. An increase by a factor of 7.36666667. CPI-U, from 1984 to 2012, a common index used to determine cost of living, is 2.18 over the same period. What's going on at these institutions that's causing expenses to increase at a rate over 3 times higher than national average? From what I can tell it's not teacher salaries.

Can't say for sure but to me it seems like an awful lot of money is being spent on capital projects to remain competitive. Look at High Point basically turning itself into a resort to attract students despite a shitty academic reputation. I would love to see a detailed analysis of the cost drivers though.

 

[dartsndeacs]

our financial statements are publicly available.

 

[OGBDeacon07]

They singled us out!!!

Bound to happen though...

 

[PhDeac]

From my experience as a student at two elite private universities and a professor at a lower tier regional public, the main drivers are demand, prestige, and infrastructure.

As a larger percentage of students earn college degrees, it's more important to differentiate between those degrees.

Loans make it easier to afford the price tag and they're plentiful and long term, it is worth the price for the right schools and situation.

There's a sense of "you get what you pay for" that you see for other commodities.

I'll can talk more about infrastructure later tonight.

 

[PhDeac]

Can't say for sure but to me it seems like an awful lot of money is being spent on capital projects to remain competitive. Look at High Point basically turning itself into a resort to attract students despite a shitty academic reputation. I would love to see a detailed analysis of the cost drivers though.

That's part of the infrastructure to differentiate between similar institutions.

 

[DistrictDeacon]

Serious question from someone that just doesn't know: What is the expense driver for colleges and universities?

My freshman tuition for 84-85 was $6,000 a year. Now, it's 44,200. An increase by a factor of 7.36666667. CPI-U, from 1984 to 2012, a common index used to determine cost of living, is 2.18 over the same period. What's going on at these institutions that's causing expenses to increase at a rate over 3 times higher than national average? From what I can tell it's not teacher salaries.

How have administration numbers and salaries changed in that time period?

 

[PhDeac]

Comparable to cost of living.

 

[PhDeac]

Comparable to cost of living for the most part. Some exceptions include coaches.

 

[PhDeac]

How have administration numbers and salaries changed in that time period?

Comparable to cost of living and lower. The exception is football and basketball coaches and some high level administrators over med schools and business schools. They have to price more competitive with the private sector.

Edit: Sorry the other responses didn't show up on my phone.

 

[dartsndeacs]

Looking at the past X years of financials

2007: $169MM Tuition ($43MM) Scholarships $125MM net revenue $185MM in education expenses. $60MM educational loss. Purchases of land and Building $17MM
2008: $183MM Tuition ($48MM) Scholarships $135MM net revenue $193MM in education expenses. $58MM educational loss. Purchases of land and Building $55MM
2009: $198MM Tuition ($43MM) Scholarships $145MM net revenue $211MM in education expenses. $66MM educational loss. Purchases of land and Building $38MM
2010: $214MM Tuition ($62MM) Scholarships $152MM net revenue $210MM in education expenses. $58MM educational loss. Purchases of land and Building $42MM
2011: $236MM Tuition ($68MM) Scholarships $168MM net revenue $242MM in education expenses. $74MM educational loss. Purchases of land and Building $40MM
2012: $253MM Tuition ($73MM) Scholarships $180MM net revenue $242MM in education expenses. $62MM educational loss. Purchases of land and Building $45MM

When I say educational expenses 80-85% of those are salaries, I'm not counting depreciation expense (that's captured in our purchases) or gains on investments, etc.

Tuition is only about 15% of Wake's total revenue, with the hospital being a much larger share of both the revenue and expenses of the university.

 

[DistrictDeacon]

Comparable to cost of living and lower. The exception is football and basketball coaches and some high level administrators over med schools and business schools. They have to price more competitive with the private sector.

Edit: Sorry the other responses didn't show up on my phone.

How about numbers? That's where many local school district budgets have become bloated.

 

[inspectah]

I enjoyed this from the comments section:


"Molly Fisher is not middle class. Her family is in the upper 0.5%, financially. As someone who is raising a family of four on an income slightly higher than the median income, I think this article misses a lot of essential points about affording higher education in the US.

The Fisher family COULD afford a private school, but it would involve sacrifice. Not the level of sacrifice that many median-income families endure to put their kids through public university (with lots of debt), but some expenses would have to go. Sorry, I still don't feel sorry for the Fishers.

Families pulling in good (well above median) incomes have a sense of entitlement about financial aid. They expect free money. If they get the free money, there is less (or none) for people who really need it. People who have been going through the educational system at a disadvantage.

And that's where we arrive at the US's abysmal and growing income equality and lack of social mobility. It's one of the biggest problems the US has and it's killing our economy.

What this article could have said is: If someone in the upper 0.5% of families feels they are struggling to afford college, then what hope is there for the middle class?

Clearly, there is none."

 

[GardenStateDeac]

I enjoyed this from the comments section:


"Molly Fisher is not middle class. Her family is in the upper 0.5%, financially. As someone who is raising a family of four on an income slightly higher than the median income, I think this article misses a lot of essential points about affording higher education in the US.

The Fisher family COULD afford a private school, but it would involve sacrifice. Not the level of sacrifice that many median-income families endure to put their kids through public university (with lots of debt), but some expenses would have to go. Sorry, I still don't feel sorry for the Fishers.

Families pulling in good (well above median) incomes have a sense of entitlement about financial aid. They expect free money. If they get the free money, there is less (or none) for people who really need it. People who have been going through the educational system at a disadvantage.

And that's where we arrive at the US's abysmal and growing income equality and lack of social mobility. It's one of the biggest problems the US has and it's killing our economy.

What this article could have said is: If someone in the upper 0.5% of families feels they are struggling to afford college, then what hope is there for the middle class?

Clearly, there is none."

Completely agree. As someone who works in admissions, it is very evident that people have very different ideas about what they should pay. I have to laugh when families with over a million dollars in assets and mid 6 digit salaries feel like they should receive need-based financial aid. At the same time, there are indeed folks for whom a $60k cost is too expensive. Though for many the model seems "broken" (high tuition costs that keep rising) there are plenty of people who don't bat an eye to pay it. Hell, for some parents, college is a price break from what they were paying for boarding school for their kids.