Shoebat.com has noted that a ‘day of judgment’ of sorts is coming for higher education prices because the entire ‘education’ market functions akin to a giant scam. It is overpriced and provides a product with a return of questionable and sometimes non-existent value that impoverishes people often for life and creates long-term social problems.
COVID-19 helped to expose these problems because schools are charging the same prices for university tuition it many cases without the “experience” associated with college. This has pushed many students ‘over the edge’ in that they feel sufficiently defrauded and frustrated with their degrees that universities may have to lower prices in order to keep students attending.
As New York University marketing professor Scott Galloway points out, higher education is perhaps the only industry that hasn’t faced pressure to cut costs. The actual instruction received is affordable enough that gross margins are great, but overhead has become perilously high. To cover it, the average published tuition at a private, nonprofit U.S. college has more than doubled in 30 years and tripled at state universities.
Perversely, students often pay more for less return at lower-ranked schools. The average tuition actually paid after aid is 90% higher at Dickinson College, number 100 in The Wall Street Journal’s college rankings, than top pick Harvard, even as graduates of the blue-blooded Ivy earn 60% more a decade after matriculating.
Professor Galloway reckons only the most elite institutions with huge endowments and brand names that have rich parents world-wide lining up to write tuition checks can afford not to change. And even they might. The same year the SNL sketch aired, a new college with Silicon Valley funding hired a former Harvard dean and began recruiting its first class.
Minerva Schools at KGI has a published tuition rate just a third as high as Harvard. All of its classes are online and it claims its scientific approach to learning better prepares graduates than other elite schools. One sign its argument is hitting a nerve is how many applicants are competing for one spot: It has an acceptance rate of only 1.2% compared with 4.9% for the 384-year-old Ivy League school.
Tech entrepreneur Ben Nelson, founder of the for-profit Minerva Project that provides the technology for the eponymous nonprofit college, sees a reckoning for many traditional schools because of their huge fixed costs.“You can not design a worse business,” he says. “This pandemic is such an unmitigated disaster for their model.”
That model has a bloated bureaucracy, expensive sports teams and fancy gyms and cafeterias built in an arms race to attract students. Combine students deferring due to Covid-19 with the Trump administration’s less-welcoming stance toward foreign students from places like China—who generally pay full tuition—and it is a perfect storm for financially weaker colleges. Even before Covid-19 appeared, almost a third of colleges tracked by Moody’s ran deficits and about 11 a year were being forced to close. (source)
The warning we gave- that prices will be forced to come down and the nature of higher education itself will change -is starting before our eyes. It is an overdue change, but a necessary one for the health of society and the good will of all people.
It is good to be educated, but not at the expense of gross impoverishment and the self-handicapping of oneself for the rest of one’s life.
This will force the closure of many schools. However, this is not a bad thing, as the “education” market is bloated and just like housing, is in need of a healthy contraction.
Expect this trend to increase and continue for at least a decade, because if the trends continue, it will be part of a major social re-adjustment along with the rest of society as America continues to fundamentally change in many ways, some good and some not so good.