Given that this is quillette one would think they would be hesitant to question the wise and steady hand of the free market.
Surely the rationally-acting rational actors at all of these institutions are acting rationally in accordance with rationality?
After all, we live in a time when any "entrepreneur" can affix his name to a suburban sprawl wasteland strip mall storefront, open a University, and get accredited by at least SOMEONE and drive all of the wasteful and bloated (and liberal sissy-manchild-- their words not mine) institutions out of business, using the holy and righteous motive of PROFIT to deliver a better, cheaper, more rationally rational product to all of the young impressionable minds out there, right?
The supply is still constrained, though. Despite massive population growth and a simultaneous increase in the percentage of people choosing to go to college, new institutions are accredited at a lower rate now than they were in the mid 20th century.
It would be interesting to see the trends in the costs of getting accredited over the decades.
Yes, you can open a college/university without being accredited, but you might find it's not such a good idea. Direct subsidies will be out. Most kinds of student loans and other aid will be out. You're going to have a bit of trouble attracting faculty or students, except those who are desperate. And if your students are demonstrably not getting any benefit from attending you'll be shut down as a fraud.
People really lost patience with that crap after Corinthian, Capella, etc. so there are a lot of new limits and regulations. Basically the only non-accredited colleges that can make a go of it are those that have some other kind of rich sponsor - most often a religious one.
Imo it is the bloated general education requirements, squeezing as much money from students as possible. It should only take 2 years to earn a bachelor’s. I believe if these classes were optional, they would not survive in the curriculum. University should not be in the business of propping up classes that no one wants, or professors who don’t have classes to teach.
> It should only take 2 years to earn a bachelor’s
Only if you assume that the purpose of a bachelor's is to provide job training in one specific profession. Not so much if you believe in the value of a well-rounded education, for people who are likely to change careers multiple times, maybe also be civic leaders, etc.
I'm not saying you're wrong, but the debate between these two visions has been going on for centuries and IMO it's not very useful to assume one answer (especially without recognizing the assumption as such).
I thought elementary/middle/high school was for general purpose and moral education while college was for specialization. I guess you could argue that the amount of general purpose knowledge you need nowadays has increased but I agree with OP that ~50% of your college education being unrelated to your specialization seems unnecessary.
It's the reason I could never finish my degree. Imagine getting motivated to do something you know is a waste of your time for your given goal. It was a total mismatch of what I needed versus what the institution provided. ADHD makes this torture to endure.
Somehow practically every country besides the US manages to give people a general education in secondary school, and reserves universities for deep study of one subject. Consequently, their bachelors degrees usually take less time.
Do you think university graduates in France, for example, are less “well-rounded” than those in the US?
It's hard to totally dissociate this from second-language issues, but I've noticed that international science grad students sometimes struggle to organize their writing, often in ways that go beyond grammar/vocab. I didn't realize this at the time, but writing essays on (e.g.,) feminism in The Canterbury Tales are really just exercises in putting together a cogent argument. Those skills transfer over to project proposals and design docs too.
In a similar vein, European PhDs are also laser-focused on one topic so that they can be finished in 3-4 years. I think there's a pretty widespread sense that many need to spend a little longer as a postdoc to "round" out vs. Americans with slower PhDs.
First year is general math and science. Many people earn some of those credits in high school, so it's already effectively on an as-needed basis.
Second and third year are the core engineering curriculum. At that point, you have all the specific course prerequisites to start a master's program.
Fourth year is a capstone project. You could do that over a summer in the second calendar year. The electives are redundant if you're going to do a master's.
General education requirement is also redundant with high school, and is about a semester's worth of classes.
So depending on your first year preparation needs, it could be as little as two calendar years. Assuming the program requirements are reformed.
Yes. I assume there is a point here, but you're not being very forthcoming about it.
Is your suggestion that YouTube could function as a way to audit potential college courses? Good idea, except you would already need to know what you're looking for to not be captured by the recommendation algorithm.
Not at all, you can delve into a huge pool of educational content rife with opportunities for self-edifying tangents. You could do the same on Audible. Or at a book store (or on library genesis). I picked up Taleb, heard about Mandelbrot, learned about fractals (a complement to my hobby, 3D), all because I wanted to trade some puts because I saw an opportunity in 2020 while working as a janitor - not a fucking thing to do with with some slovenly professor whose class I'm forced to occupy disinterestedly while spending large sums to listen to him parrot the chapter contents read from a slide for the third time of the day.
We haven't been trapped in a world where the only access to the arcane and the esoteric is held in hand copied, gilded manuscripts, we've even largely transcended the need for libraries.
"Higher education" is, at best, internally conflicted with two very different motives. On one hand it is the arbiter of the gates of the middle class. On the other it operates under the pretense of being the authority of intellect. Frankly my experience with the latter half is a joke, a mixed bag of disinterested people that are just there for the class, some that are disinterested in education in general, some egregiously incompetent at the coursework, and the very few (often none) who are passionate about it. This isn't uniquely on the side of the students, but that of the pedagogues as well. And it is contagious. If anything I'd be willing to bet that it does just enough trauma to people that they put a terminal end to their curiosities.
Anyways, I don't agree, I think the old approach is wrong, I expect it's harmful from the many anecdotes I have. I think it's one of the many coats of lacquer varnishing the piles of shit that these institutions represent to ensure their continuity, and justify their ability to arbitrate so much of the world around us.
This is... strange. The issue of a price would seem to me to be an issue of supply and demand. Yet, this article talks about a weirdly tangential topic. This article seems to put forward the idea that the administration of colleges has become bloated and this has led to higher fees. But that's simply not the causal chain. No one in any administration is thinking "better put that tuition up, and accept the loss in candidates to justify this new diversity officer".
Demand is through the roof - there are 20 candidates for every 1 place, and those candidates have almost unlimited access to loans. So the price is immaterial, if you get a place, you pay whatever they ask.
So sure, there's going to be administrative bloat - because there's literally no limit to the purse strings. And this is exacerbated by university rankings which will literally list staff:student ratio as a metric. But none of this has anything to do with Quillette's racist agenda.
And yet education costs were exponentially lower until about 1-2 decades ago where they exploded. Despite demand being ridiculously high even in the past.
Doesn’t explain why a bostonU accounting degree costs 50k a year. Also doesnt answer why I should pay for someone else’s useless umass Boston econ or psych degree
The article cites a $6.6 billion reduction in state funding. There are 14 million students in US public universities. So this accounts for less than $500 per student. Not a significant factor to price increases.
Just take a read through some of the articles on the site, it's all absurd right wing bollocks about critical race theory, often literally written by people like Noah Carl who got fired for publishing racist pseudo-science. There's a reason out of the 25,000 staff at the university of Michigan Quillette decided the 70 with "diversity" in their title were the problem.
That's what I'm bringing up - the economic issues are actually driving education cost, and it's not a coincidence that Quillette is banging on about the 71 diversity staff at an institution that employs 25,000 people instead. It's just a constant drip of subtle racist bilge that Quillette puts into all their articles.
The problem is the bid/ask spread. Ultimately everyone would prefer cheaper education with the exception of college administrators.
The last 40 years has seen interest rates steadily fall, allowing students to pay the cost of education further in the future. This in turn allowed students to bid more for education that they otherwise would have paid less for.
If interest rates and inflation reverse their long term course, then there is no reason to believe that students will be able to afford their previous rates.
> everyone would prefer cheaper education with the exception of college administrators.
And the banksters who make the student loans which are difficult to discharge in bankruptcy. The price ramp started after the no bankruptcy provision was made law.
I almost put "simply" in italics for you. Getting this through the lobbyists would be challenging. Letting us vote is just for show because the lobbyists have the access.
Supply and demand is not driving the price of Harvard. As you point out, there are many more people willing to pay the current price than are admitted. This indicates that the market price is much higher than the current price. In other words, supply and demand factors would allow Harvard to raise prices substantially if they chose to, and something other than supply and demand is determining where within the range of zero and the equilibrium price the price is set. I don't have a strong opinion as to whether administrative costs are the driving factor, but it's certainly much more plausible than supply and demand.
States cut funding to public schools, costs rise to accommodate those cuts which spills over into every part of the education market. At the same time schools increase spending on non-academic upgrades to appeal to prospective students bringing higher costs (and more administrators). I think that may account for the bulk of the increases.
If you look at Figure 4, within the last 10 years, and for the first time ever, the amount of federal money flowing into state universities exceeded state money. There are all sorts of consequences for this. Mostly, I mention this to echo that state contributions to higher education have gone down consistently and the editorial's assertion that the high cost of a university education can be reduced to a bloated administration is a simplified argument of a complex issue that is likely made in bad faith.
> In 2018, the United States spent $14,400 per full-time-equivalent (FTE) student on elementary and secondary education, which was 34 percent higher than the average of Organization for Economic Cooperation and Development (OECD) member countries of $10,800 (in constant 2020 U.S. dollars). At the postsecondary level, the United States spent $35,100 per FTE student, which was double the average of OECD countries ($17,600).
A data point of USA exceptionality is that a significant portion of such money that pays employees must necessarily be allocated to the parasitic healthcare complex.
2. Public schools need to raise tuition to make up the difference
3. The gap in price between public and private school decreases
4. Schools need to improve their product to attract students in order to make up for this lost savings
5. Schools work to improve amenities and add ancillary services (and this can now become cyclical when other schools improve, sending you back to step 4 again)
6. The administration bloats as they hire people to work in these new areas.
Basically one person's "administrative bloat" is another persons "investment in attracting students". I think really the only difference between the two is whether the return on investment is positive or not.
On top of that, it seems like more schools are trying to do/increase graduate education and research.
In principle, this helps two ways. It increases the prestige of the school, thereby attracting students. More directly, it brings in new revenue streams, both from tuition (paid directly or via federal training grants) and via overhead on research grants. However, it requires more--and fundamentally different--kinds of admin.
Education should be recast as a sort of MMORPG instead of a physical campus. Would be 100th or 1000th the cost and achieve 80% of the results. Kahn Academy and the like are a start.
I meant talking face to face is way better than Zoom. If you can find a group willing to talk in person about whatever it is you want to study, it should work.
Tutorials don't really need paid tutors if peer to peer Q+A like a discussion forum is available. Another concept that could improve things is team education - you get marked on your own achievements but also partially on how your whole team does - so you have incentive to help others along.
Yeah I don't think tutors do all that much if everyone is motivated. What I meant was that conversations in person are often more productive, especially when you're trying to get motivated.
In a game world motivation can be generated by access to the next room, level, whatever. Or, if you finish your fractions drill problems, you can play XYZ for an hour.
One of the most valuable parts of the in-person college experience is learning to live independently, exposing yourself to a much wider variety of people, and taking personal risks in a semi-controlled environment. You spend only around 20% of your waking hours in the classroom anyway, if that, but the rest of the time in the college environment is still very educational.
the canonical brand name university experience in the US these days can hardly be called independent living
a growing portion of the bloat discussed in this thread goes toward increasingly luxurious lodging, amenities and services
generally agree with your broader point, with caveats (e.g., how the credentialism encouraged by the university system might be considered an obstacle to personal and civic development)
Administration is one component but another is student life/amenities. Lots of schools borrow to keep up in the arms race for new swanky dorms, gyms, aquatic centers, climbing centers, you name it. Then they need dough, so they shake down their clients, the students. Oftentimes standards are viewed as less important than continuing the student loans that pay for the school's loans. Going back to simpler times when you got a little bullshit dorm room or shacked up in a greek house and made your own fun might be an answer here too. But I agree that admin bloat is real and most of these positions seem to be some mix of bullshit job or student entertainment coordinator.
The evolution of education has already been diluted (die looted :p).
I just saw a video on California's education system in the middle of the 20th century, compared to where it is today (actually thier ecomony). Not the finest of the bunch in the 21st century.
If the underlying cause were primarily administrative overhead, that should be readily apparent in the (public) budget of any public university. I’m not going to go do Silvergate’s research for him, but I’m surprised he doesn’t cite such a readily available piece of compelling evidence, which at best suggests he’s too lazy to track it down, and at worst that reality does not support his hypothesis.
Some are, some aren't. If some function required the same ratio of admin to students to perform, it would be. But many things have been made more productive. Most schools have fully automated the course selection process except for the academic advisor. Schools can take advantage of automations in admissions, bursar, financial aid, etc.
I think Baumol's cost disease explains a lot of the increase. I find it suspicious that it's not mentioned in TFA. But there are other drivers, of which much higher student expectations play a part. A school patterned after a typical university in the 60s would have some charm but probably students would not enjoy the Spartan living environment or the lack of support services.
Yes, and teachers can grade some assignments electronically with a click. But generally speaking admin work has not kept up with the productivity of manufacturing positions.
In fact given that the numbers of admin staff per student and per graduate has increased, you could credibly argue admin productivity has declined.
If you read your own link, you’d find that Baumol’s hypothesis is that cost disease led to an increase of professor salaries… which is not reflected in reality. Real professor salaries have decreased (not increased) over the relevant time period, mainly because universities have shifted from tenured faculty to untenured adjunct, who work on semester-long contracts.
actually the Wikipedia article itself doesn't support your statement. Even if you take for granted there are some other explanations that contribute to the cost rise, administrative overhead is clearly a big factor and that's the issue that can be addressed and he's tackling, not e.g., the relative difference in productivity of educators and everyone else which is a questionable facto.
So what percentage of budget from, say, the UC system went to administration forty years ago vs today? My point was that this should be public data, yes, surprisingly, is not mentioned.
Per https://nces.ed.gov/programs/digest/d21/tables/dt21_334.30.a..., after two minutes of googling, if I am reading correctly, the percentage spent by four year institutions on “academic support”, which includes admissions, has remained at about 8% from 2000 to 2020. That seems like a basic statistic Silvergate should have on hand, and one that invalidates his hypothesis, right?
> I’m not going to go do Silvergate’s research for him, but I’m surprised he doesn’t cite such a readily available piece of compelling evidence, which at best suggests he’s too lazy to track it down, and at worst that reality does not support his hypothesis.
Why do you assume these influences to be mutually exclusive? Upward price pressure for unnecessary bureaucratic positions does not invalidate the problems with those positions, but rather exacerbates them.
I agree they’re not mutually exclusive. But each additional real dollar cost is attributable to one cause or the other. Silver gate seems to only entertain one explanation for all inflation in education, despite very well known alternative hypotheses.
That was my point: not addressing alternative theories, while failing to furnish seemingly readily available supporting evidence, seems on its face dishonest.
Double edged sword. What the author proposes can be found. Go to some small low endowment private or public school for less money. Oh wait, you say, I don’t want to go there! The buildings aren’t as nice, the dorms are cramped and drab, there aren’t as many resources, the food sucks, the Wi-Fi is spotty, heck even the website sucks. Why is this? Because they don’t have the human or financial resources to do so.
You get what you pay for. Student and parent expectations have changed and so have college and universities. If you want what colleges used to be like 50 years ago go to a small private or public school that is just barely staying afloat, it will be more or less similar to the so called halcyon days of low cost, no frills college.
The thing is—people don’t want this as voted for by their choice in school. The biggest drops in enrollment are at community colleges, state schools, and small private schools. If people were price sensitive cheap schools would have people busting down the doors to get in. They don’t. In fact, when a college lowers their tuition, they paradoxically often see a dip in enrollments.
Why? Because human brains are broken. We connate price with prestige and prestige with quality.
Colleges get punished if they lower the price, so what do they do instead? They increase the discount rate. Rarely do families pay the sticker price. Google any college tuition and you will see average price paid. It is typically anywhere from 50-75% of sticker price.
I don't think Colorado State is a top-tier college - in a pretty quiet place - no big names - but when I visited it from the UK for a conference I could not believe how nice and polished everything was. Beautiful buildings and spaces. I did some coding in a kind of forum with a large open fire and two-storey glass walls looking out over the snow. Very inspirational. I guess it costs though.
This is the reason - because we are lending to anyone and everyone. It’s similar to subprime - no need to prove ability to pay the loan back. Only you can’t discharge student loans with bankruptcy so it’s almost worse in the long run. It’s predatory lending by another name.
This is how that argument works. You come up with a bunch of logical-sounding explanations for why it must be this way, completely ignoring the material reality that there are numerous working examples of other ways to do it. You keep everything as abstract as possible, and you hand-wave real-world counterexamples as sounding so extreme that they must be highly unusual and therefore irrelevant. And if someone presses the issue, you simply allow it to immediately devolve into bikeshedding, discussing the minutiae of that specific issue while ignoring the larger context.
I'm not sure if there's a name for this style of argument, but it happens a lot, particularly in defenses of uniquely or primarily American phenomena.
I think you have the causality all backwards. Colleges with quality gain prestige, which makes people willing to borrow extra money to go there, which creates windfall profits administrators can use to increase their personal standing by hiring more headcount and do things like paint the dorms and buy fancier food. That doesn't mean people's priorities in college choice are primarily or even significantly determined by dorm quality or cafeteria food, much less administrative headcount that harms the educational experience if it has any effect at all on it.
If you want what colleges used to be like 50 years ago — more power in the faculty senate, greater academic freedom, more focus on doing research and less on grantwriting, greater freedom to research moonshots, very few adjuncts — you aren't going to find it at small private or public schools that are barely staying afloat.
:-) eh, it always came across to me as a repackaging of the already-existing concept of non-dualism.
But i fail to see it’s pragmatic application here. Prestige implies hierarchy, and hierarchy implies ranked measurement. But we can’t define what we’re measuring in terms of quality research or teaching. Apparently, like porn, we’re suppose to just know it when we see it. Like a lot of Pirsigs dialog, it feels a little too precious, without necessarily adding much.
you don't have to reject cartesian dualism to doubt that you can reduce the quality of artworks or research to 'metrics' or 'ranked measurement'. you just have to not be a complete idiot. hierarchy definitely does not imply ranked measurement
How would you create a hierarchy without ranking? How would you create ranking without measurement? If it’s just biased ranking, there’s nothing to substantiate it and I can just refute it with my own contrived ranking.
That seems to just be a reduction to subjective relativism, which is often the last refuge of people who don’t know what they’re talking about but still want to feel smart. (Or, alternatively, hiding behind rhetorical gimmicks like the “no true Scotsman” fallacy). If they know what they were talking about, I would suspect they could define it. To paraphrase Feynman, if you can’t explain it to a first year student, you don’t really understand.
The other side to the problem that most commenters here are missing is something that is much easier to see if you are employed by the school (as I used to be). There are dozens of layers of bloat and positions that exist only to make Doing Stuff (for values of Stuff that include both Research and Teaching) as slow as possible. Even getting a door fixed -- to stop the door stuck open alarm going off -- took multiple days and multiple people, and not because we had trouble getting a hold of someone. I got decent at navigating this stuff and acquired a reputation as a fixer, which I was all too pleased to move on from, but I sure did become aware of all the people I had to keep happy. There were a lot of them.
I firmly believe that at least half of those staff positions (not people, but positions) could have been eliminated with nothing of value lost. It was kind of ridiculous, and it's one of the reasons I don't work for a tier 1 research university anymore.
(These jobs also tend to be excellent sinecures and attract the difficult sort of person, often by virtue of who your coworkers are going to be, but that's another story.)
Not easily. I wasn't the lead (this one was tackled by the official Lab Manager with the Lab Manager Title, which does matter to some people) so I don't recollect everything that went on. The alarm was intermittent and directly related to use of that door, so it wasn't like it was squawking at 2 am and annoying Security or anything. We did have to do Special Things to that door because we actually needed to prop it open for some Research Stuff, so that added headaches of its own. (I seem to recall the solution to that was a magnet in the right place. Which we had to remove should any official maintenance staff come calling because they hated such quick fixes.)
But, honestly, what sticks out in my mind with the Door Saga, what I remember years later, is what the union maintenance guy did. He showed up at 11:55, set up his ladder, then "noticed" it was noon, and left to go on break because that was The Rule. I don't remember what he did with the ladder, but it sure did piss the next guy off... so he left too, because he needed the first guy to do his job. Fun all around!
I have union blood in my veins. I don't cross picket lines. UFCW scholarships helped put me through college. So I don't say this lightly: Fuck. That. Union. Utterly destructive leeches. Unions have so much more to offer our workers and our society, and instead they do... this bullshit. Thanks for giving everyone a reason to hate you, you greedy assholes.
thanks for the details! it sounds like these situations are a culmination of years of unresolved conflict clusterfucks (not uncommon in education/healthcare and other gigamega organizations ... so anything in state-federal-international politics) :|
It is true—prestige grants price flexibility for the college. They can charge more equivalent to their relative standing. But what leads to that reputation? How do you measure quality of education?What makes Harvard better than any other college at educating students? How much better? What percentage? Okay now prove it. At least in a succinct explainable way.
No, prestige is based on awareness and reputation. That can be gained a lot of ways. Recently a lot of schools have gained reputation through athletics. If you are good at one thing people think you are good at everything and so that reputation becomes overall reputation.
Three repeatable anecdotes regarding college enrollments:
1. When a college builds a new fancy building they see an enrollment spike. Almost every time. Especially if it is student quality of life focused.
2. Colleges that have lowered tuition to increase price transparency have consistently seen enrollment drops.
3. When a college or University makes it to March Madness they see an enrollment bump.
Reputation is tied to many things. Academic quality is hard to quantify or measure and so any reputation based on academics is apocryphal and based in word of mouth.
I looked up US World News ranking methodology and, to your point, at least 40% is squishy measures like “peer assessment surveys” and “reputation”.
Others, like selectivity, are known to be gamed by encouraging students to apply even when they have no chance of getting in (which carries the additional income of the application fee).
Basically you are saying capital investments improve enrollment (though not necessarily the education given). You can have capital investments/improvements (buildings, labs, gyms) without ever increasing administrative non-capital costs.
That might just be selection bias though. If you only accept the top 1% then even if they don't graduate they're still far above the average person. Ie they're more likely to succeed whether they went to Harvard or not.
Harvard accepts only the smartest, hardest working, most talented and richest 1% of society. The number of students who have a perfect SAT or are the child of a billionaire are staggering. Good input leads to good output.
Yes - loudly signalling that the parents can blow $100K/year on an exclusive country club-cum-college for their kids, and never miss it.
Treatment #1 - Immediately start treating the $$$$$$-no-object "colleges" as for-profit luxury resort corporations. Donations NOT deductible, fully subject to property taxes, zero state/federal money for anything, rights to have their own police forces yanked, subject to all SEC regulations, degree-granting powers revoked, etc., etc.
This is very much the case. Consumers are not price sensitive in the US and therefore quality of experience is valued over price. Colleges and universities responded predictably. Not by some grand scheme or even consciously, more so organically.
And we're lending this money to high school students who often have no sense of what it means. These are all amounts that most students have never had to handle before, and they'll be repaid when students are at jobs they've never previously had making more than they could possibly imagine. The whole thing is probably so abstract for them that a lot probably don't grasp what the difference between $8,000 a year tuition and $40,000 a year tuition _actually_ means for their day to day lives.
On top of that students are sold the idea that, as the above poster said, "you get what you pay for," and that cheaper schools are somehow worse and will mean they'll earn less money. If you're getting into debt to increase your earning potential anyway, it makes sense that you would try to maximize things. But you're 17, and might not realize that these adults who are in positions of power are likely misleading you.
Also, honestly, a lot of 17 year olds don't seem to be able to grasp the idea that debt is something you actually have to pay back (a lot of adults even don't seem to grasp that). What do people think would happen if they gave every 17 year old a credit card? Yet their financial competence is somehow expected to be completely different if we give them a much larger loan?
We visited my granddaughter at a Midwest state school last week.
I was actually surprised with how beautiful the university grounds were. They likely spend a fortune on landscaping alone.
Our older grandson went to the same school studying CS and EE. I’d say he’s doing very well.
I agree education is over priced, much like any other investment or asset in this day and age.
Perhaps my world view is narrow, but what are examples of these “affordable” schools with spotty wifi?
I think the old buildings or drab dorm argument isn’t a huge deal. Call me old fashioned, but I’d prefer my grand kids being safe but having some challenges. Otherwise, we’re keeping them in a bubble. As long as their is climate control and cleanliness, I’m fine with them not getting a 4.5 star hotel treatment.
Yet these colleges were nice in 1980 too, before the price of tuition went up 1200% per the graph in the article. I don't think your argument really makes any sense in view of that.
Did they have giant fitness center with a rock climbing wall and full time staff? What about a lazy river with life guards on duty? What about a counseling center or career center? Were the dorms apartments with individual bedrooms per student? How was the food? Were there vegan, gluten free, and nut allergy options available every day? Was the menu set by a chef?
actually the Wikipedia article itself doesn't support your statement. Even if you take for granted there are some other explanations that contribute to the cost rise, administrative overhead is clearly a big factor and that's the issue that can be addressed and he's tackling, not e.g., the relative difference in productivity of educators and everyone else which is a questionable facto.
That's really not true. Where I went to college has gone from $14,000 to $38,240 in the past 22 years. Inflation would have predicted it be $24,130. That's a private school that back then had a beautiful campus, good food, good wi-fi, a good website and good dorms. (Though, notably, food and dorms don't come out of tuition.)
The price increases are massive, across the board, and not obviously linked to quality of facilities. There's definitely something more than you're suggesting at work here.
I would be interested to know what they average net tuition price actually paid is. I suspect it is lower than the sticker price, though 38k is sadly low by today’s standards.
The average annual net price is $26,482, but it was also significantly below sticker price 22 years ago as well. $38k is not low for modern tuition (it's in fact well above average -- though almost exactly average for private liberal arts schools).
I have the feeling that you're looking only at elite institutions. At the time I was in college, the place came in around #100 on the list of top liberal arts schools in the country, which while not especially shabby, also wasn't in any way elite. In comparison, the one elite university that I'd applied to back then was $36k/year for tuition, and is now $59k/year. Surprisingly, its tuition has grown at a slower rate.
I think the article misses the root cause here. Drastically increased availability of loan-based financial aid means far more more money in the system, which means the prices go up.
The article nails the cause of more administrators--the schools have more money to spend and need to spend it--but completely misses the reason schools are able to charge so much more these days.
Yeah, but you're ignoring the mechanics of that happening.
> completely misses the reason schools are able to charge so much more these days.
I don't think it misses it. I think it just ignores it as a matter of practicality. It would take an act of god to get money removed from the system, but there is a very real chance he could cut some cost and bloat from single, incredibly influential, school.
More money in the system doesn’t generally drive prices up in other areas due to supply and demand. Instead you get very expensive options for people with more money and cheap options for the cost cautious.
Collage is largely an exception to that as elite schools don’t charge 100+x the average the way say watches, clothing, etc do, and most people aren’t going with the low cost options.
> More money in the system doesn’t generally drive prices up in other areas due to supply and demand.
Do you have an example?
Supply and demand is exactly what drives the prices up. People have a huge supply of dollars due to financial aid loans, and cannot spend those dollars on anything but education. With more money available, schools charge more.
Manufactured goods generally follow this trend of increasing total money being spent resulting in a lower cost per unit. Microwaves, toasters, dishwashers, flatscreen TV’s, etc are all vastly cheaper today than when they first hit the shelves. The best example bing transistors, we are dumping vastly more money into them and getting ever lower prices.
Commodities often follow a similar trend with global Steel production resulting in lower prices per pound over long stretches of time. The trend is less obvious over short periods of time but compare steel prices every 50 years say 1820, 1870, 1920, 1970, and 2020.
Some things like beachfront property are inherently in short supply, but it’s hard to argue that applies to collages across decades.
It's unreal that most of the comments here are missing this. The government guarantees effectively infinite loans that can be put toward college, and prices rise to meet the supply. Cause and effect.
Yes, but if you control the supply, and the government was guaranteeing infinite demand via loans, wouldn't you want to scale your programs up to make more money rather than just inviting more people to share in the grift?
Colleges make more money anyway, and the additional bloat does support larger programs, just not very efficiently. With all the free money floating around, I suppose they aren't very economically pressured to be efficient. They surely need large administrative departments dedicated to making sure students have an easy time securing more loans.
I think this relationship might be a bit backwards.
Easy credit made it so demand for degrees outstripped capacity. Schools raised prices to meter demand. At these increased prices, schools felt compelled to invest in programs and administration.
Also, as I understand it, the accreditation process is pretty broken in the country. Whatever the top programs are doing becomes the benchmark for everyone else to match. So it's a never ending treadmill to keep up.
Don’t employers have a contribution to this as well? There’s many positions that don’t really need college degrees yet list them as a requirement. I feel if people could get gainful employment without college, demand would fall.
Supply and demand is making education unaffordable. The government subsidizes student loans which increases demand of course, but they subsidize at such an irrational rate it also gives colleges a blank check to charge whatever they want.
It has to do with the wage premium. it is still widdening for college grads. This needs to change for demand and thus prices and aid to fall. governments subsidize college so much because of the high roi.
PRO TIP: Don't pontificate about things you are not an expert on. You usually are missing a lot of context and detail and if you are right it will only be by accident.
College is too expensive, but it's not because people who work at universities are overpaid.
Isn't the whole point of Web 2.0 that random people who aren't journalists or experts can post comments? The website operator then gets the users to provide their own content without the expense of hiring journalists, actors, writers. (That and rounded corners).
Businesses that use a bachelor's degree requirement as blunt hiring filter. Loose credit that can't be discharged in bankruptcy. Colleges are in a rankings arms race instead of prioritizing affordability.
So there is an issue with the lending system, that allows the bloated admin to continue to exist.
Colleges are investing in amenities instead of quality, affordable education, because the bloated admin is useless and corrupt, so they spend on big ticket sports facilities and buildings (where does the money go?) to justify the administrative excesses (if you build a $100 million stadium it's easier to justify a few million to renovate the presidents office).
The root of the problem is the terrible leadership, that is enabled by the broken funding model. Fixing the funding model won't resolve the leadership problems.
I will say there for sure is a certain percentage of administration at most public colleges that should be cut. Coming from the UC system, there are wayyyy too much bureaucratic bloat. But at the same time they do provide a lot of support even if it's for smaller niche groups of people on campus, which without them would make going there a much worse experience.
There should be a middle ground in reducing costs of overpaid bureaucratic bloat while also providing everyone on campus enough support, from undergrads to grad students to professors, etc.
The best solution here is just to start enforcing pip quotas lol.
In the US, both college education and healthcare have become enormous taxpayer wealth extraction schemes. Everyone has a "right" to education and healthcare, therefore we should subsidize it with taxpayer money. That is as far as the politics go. We have stupidly funded the demand side of the equation to where both education and healthcare are incredibly bloated behemoths capable of absorbing all the money thrown at them. All perfectly justified.
Where the taxpayer money should have gone: on the supply side. For example, the number of UC campuses in California should have doubled as the population doubled. The last UC campus to open was Merced in 2005. Before that was Irvine and Santa Cruz in 1965. And we wonder why tuition keeps increasing? 1) Demand increases with population increase. 2) Demand increase with more people seeking 4 yr degrees. 3) Demand increases with the US subsidizing the ever living shit out of college tuition. 4) Supply stays relatively constant.
Similarly Obamacare drove the demand side by subsidizing health insurance and onboarding millions of new members. It did almost nothing on the supply side - same number of hospital beds and doctors. Insurers and medical groups made a killing as the price of their services grew dramatically.
In both cases, political stability was achieved in shoveling taxpayer money at education and healthcare without increasing competition. This is a very clever way for existing vendors in healthcare and education to soak the government.
Solution: drive prices down by investing in supply of education and healthcare.
"Drive the price down by increasing seats and then fostering competition between schools."
The seats have increased dramatically.
You won't be able to create efficient competition. The value shoppers already go to state schools. The other people are looking for a specific "quality" or just plain emotion (my family went here, this school is prestigious, etc).
Supply isn't the real issue in most disciplines. The problem is the demand side individuals making economically dumb choices (sometimes semi-forced by the larger societal situation).
Schools compete not on price but on other factors. That's why they want to build massively expensive campuses and elaborate facilities, because that is what students base their decisions on. If schools competed on price, everyone would be going to state colleges c̶o̶m̶m̶u̶n̶i̶t̶y̶ ̶c̶o̶l̶l̶e̶g̶e̶.
I'm not sure how you compel schools to compete on price, because the consumers don't care about price. They'd rather get they "good college experience" for $50k a year than the "sufficiently good education" for $7k a year, even though both options are available to choose.
Not to nitpick a tangent, but community colleges, at least where I live, are only 2 year institutions, and don't provide full BS/BA degrees, just Associate degrees, which don't really open the same doors as the Bachelor degrees.
I really wish we had 4 year institutions managed like our community colleges, though. I remember my 2 years there much more fondly than I do my time spent at a "real" university.
Possibly because that's including the flag ship and state school systems (if I'm using that correctly). For example, the Cal State system seems to be in the $6-9k/yr range and the UC system seems to be $13k+/yr. I think this excludes fees, and I think some programs may also cost extra.
New research from the think tank New America shows that 24 states have approved at least some community colleges’ plans to launch bachelor’s degree programs; at least seven have been approved in the past five years.
FYI many CCs have started offering 4 year degrees in the past 20 years or so. Mostly related to “local” industries such as nursing, food safety, some business admin, etc.
Well, the first thing I should say upfront is it's very possible those were just better years for me, and that colors my memories of CC with happy nostalgia. I think it was how much simpler everything felt, from the administration to the classes. The atmosphere just seemed less pretentious, while the actual education wasn't really any better or worse than the same undergrad studies I got elsewhere. Not really great, but they weren't pretending it was. It was "highschool part 2, except attendance is strictly voluntary, admission is cheap but not effortlessly free, and the faculty has greater authority/autonomy to teach".
A few things that stick out in my memory are the greater number of non-traditional students, several of whom I made acquaintances with. They had more stories and life experience than the average 18/19/20 y/old and I thought were more interesting to talk to. Also, my CC had some vocational/non-academic tracks with accredited classes available as general electives, and I enjoyed stuff like some aviation classes, where again I got to hang around a totally different group of students.
It feels like it all was more developmentally important than the by-the-books liberal arts education I got at a private university, full of self-important pep-talks by upper level college administration, and professors who were only paid marginally better than the instructors at my CC...
(I want to emphasize this is about cookie cutter undergrad studies, and leaves out the other functions of universities, which a CC obviously couldn't compete with)
Remembering when I was applying to colleges, it was understood that inexpensive state colleges were probably 'sufficiently good', and cost effective, but it was impossible to grade that statement. Would it be good enough for your goals in life? How can a sixteen year old know?
So, people picked the 'best' school they could get into. Not just for the 'experience', but to make sure they got the best education they could and opened as many doors as possible. Because you don't really get a do-over.
After having gone through it all, do you think if it matters how many doors open for a person based on the college they went? I suppose if someone went to a highly ranked school, it might matter.
But being able to get into a highly ranked school is probably because of what the person had (money, life experiences) or what they did (crushed some standardized test).
Yes, it matters. The quality of education is better. Lower ranked schools don't dole out the same kind of punishingly hard material that higher ranked schools do. The content of the degree is meaningfully different (based on my experience doing undergrad in a well ranked school and going back to mess around in part time classes while working.)
Consider the percentage of alumni kid and kids of ‚friends‘ admitted to ivy league schools who very likely would fail admission in a purely merit based system. Then factor in the very high graduation rates of ivy schools. And now consider how hard they must be to get through. Still think harder than others?
After reading many resumes and talking to many candidates, it can matter. Many budget state colleges simply don’t have the curriculum, faculty, or clout- at least in my field. This means their graduates are like juniors at higher ranked schools. An exceptional student can overcome that obstacle, but they are swimming against the current.
Interestingly, the renowned private universities don’t seem to have any better of a curriculum than the high-grade public research universities. So from an education point of view, there still exists a ‘good enough’, it’s just not the budget state college.
I did physics at a world top 10 university and the course work was basically day care. The vast majority of the 'difficulty' of the subject matter was because the majority of students were bad at algebra. The outcomes would have been better for everyone if we completely ignored first year and just taught people the Knuth Bendix algorithm instead.
The reason why the consumers don't care about price is because of the federally guaranteed student loans that easily mislead decision making. The market would look very different without that compounding subsidy.
5. And we wonder why tuition keeps increasing? 1) Demand increases with population increase. 2) Demand increase with more people seeking 4 yr degrees. 3) Demand increases with the US subsidizing the ever living shit out of college tuition. 4) Supply stays relatively constant.
Demand is increasing due to the college wage premium, which keeps widening with no end in sight even despite Covid and online learning.
The college wage premium is the number one culprit for all these problems . For whatever reason, employers derive enough benefit from college grads to pay them waaaayyy more than high school grads
The vast majority of people attend college to earn more money and be employable, as a sort of ticket the middle class. If college degrees only paid slightly more than high school instead of 2x more, demand would probably fall a lot, so would borrowing and tuition. Same for unemployment: high school grads have to 2x the unemployment rate. Maybe the onus is on employers: start finding ways to find hire more high school grads for better paying work...huge labor pool of high school grads..they cannot all be bad.
> Demand is increasing due to the college wage premium, which keeps widening with no end in sight even despite Covid and online learning.
> The college wage premium is the number one culprit for all these problems . For whatever reason, employers derive enough benefit from college grads to pay them waaaayyy more than high school grads
That may be true. But there's an easy fix: any job requirements that ask for any college degree (e.g. "a 4 year degree" not "a BS in chemical engineering") should be illegal.
Honestly, I don't really understand why they aren't already: they clearly violate the 4/5ths rule. And it's hard for me to believe that some enterprising lawyer hasn't already brought suit under this theory.
> Honestly, I don't really understand why they aren't already: they clearly violate the 4/5ths rule. And it's hard for me to believe that some enterprising lawyer hasn't already brought suit under this theory.
My guess is because 'not having a college degree' is not any kind of protected class. Not an immutable characteristic. It is a behavior choice. Do we really want to get the gov't involved in telling private companies what qualifications they can require for a particular job?
> My guess is because 'not having a college degree' is not any kind of protected class. Not an immutable characteristic. It is a behavior choice. Do we really want to get the gov't involved in telling private companies what qualifications they can require for a particular job?
That is true.
But race and sex are protected classes. And the 4/5ths rule says that if a particular requirement generates a resulting distribution that is more than 4/5ths different from the general population, then it is presumed to be a form of structural discrimination[1].
From what I understand, a requirement that is necessary for the job - for example, a particular degree like Chemical Engineering - would be exempt. But I doubt that the requirement for a college degree without regard to the subject would be similarly protected.
---
1. This is not idle conjecture on my part. There were a number of pretty high profile firefighting tests that were the subject of lawsuits for this very reason. And the cities lost. Sadly, I didn't save the test at the time and I suspect that they've been lost of the mists of time, but I did read at least one of the tests in question, and it was a bunch of firefighting related questions.
The college wage premium is either reversing or pretty much gone by now. Plumbers and landscapers out-earn English and History majors now. It's only degrees that prepare you for specialized fields that still have an edge.
It's fallacious to compare the lowest paying college degrees to the highest paying of trades work as evidence of the premium reversing. Someone could just as easily compare an engineer, lawyer, or doctor who makes $250k/year to someone who works at McDonald's and makes $25k/year. A plumber with many years of experience on average makes $50-53k/year. This is respectable, but this is after many years. College grads by comparison on average make $55k out of college, whereas an apprentice makes $30k .
some of this is negated by higher unemployment rate for high school grads vs college grads. High school grads earn more initially but surpassed by college grads as time goes on due to wage stagnation.
In education, "supply" itself is not the issue; there are more than enough spots at state, etc. universities. Its supply of prestigious universities, which is controlled by a cartel. Similar to diamonds, which are neither precious nor rare, yet prices are outrageous because they are controlled by a cartel.
If/when I become President of the United States, I will hold back all education dollars on cartel-controlled education institutions, and heavily tax their endownments.
This is funny and true. The competition and prices all originate from elite institutions.
I wonder if it legal to completely clone a curriculum? Like could you clone an MIT EECS education? Down to the coursework? Or alternatively - force elite schools to license and manage franchisees?
Gray area. I'm no lawyer but AFAIK professor's syllabus/tests/etc. (being written documents) are subject to automatic copyright, I imagine the university is the holder of the copyright given that the prof is an employee. That being said, how many profs clone their syllabus/coursework directly from textbooks? The content of most online universities (Khan Academy, Coursera, etc.) is already superior to Ivy League based on first-hand experience of both.
The bigger problem IMHO is that very little of the overall $$$ and energy at Ivy League is actually spent on course content. For many profs, esp. in STEM, teaching undergrad courses is a "chore" / distraction from their research work. I think there is opportunity to make a "lean-and-mean" physical university (perhaps online hybrid) with minimal admin overhead, which a degree could be on-par with MIT in terms of prestige. Is anyone doing this?
Schools don't compete on curriculum. Nobody pays for it. Nobody cares about it.
And in one particular case, I think the "conventional wisdom" has it right - the lectures don't really matter. You can record a lecture and then play it for any number of people, very cheaply. I recently watched a Chinese drama in which a minor plot element was a character (in the 80s) getting a degree from "the TV university", lectures available to the television-viewing public. (Having your own TV was out of the question, so she and her "classmates" would make long commutes to places that had a TV showing the lectures. This educational format has been very affordable for a very long time.)
That format is not as good as actually having a lecturer, or a TA, who you can ask questions of. If you lose track of a recorded lecture, it will not help you find the thread. All a recorded lecture can ever do is repeat itself. A lecturer versus a lecture is the difference between moving forward and getting stuck.
Didn't everyone read Introduction to Algorithms by Cormen et al? It doesn't matter if the curriculum is the same between University of $STATE and MIT. From Amazon, Meta, Palantir, Microsoft etc will always choose candidates from the main elite schools first.
I've taken classes at a number of institutions of varying rigor. My experience is that less well ranked schools just do not expect the same quantity and quality of academic work as more prestigious schools, and the students at these schools are not interested in changing that. It's especially striking in math, where I saw e.g. cross listed masters level courses start off with a disclaimer that we won't be writing any proofs.
In western Europe and Asia all college education is more rigorous than American college.
And yet I don’t have the overall impression that the international bachelor’s people I know got something correlated out of the difference in rigor. It would be as obvious as the difference in rigor itself. It’s not.
> Similar to diamonds, which are neither precious nor rare
Well, there are many functions (mostly to do with abrading things) where diamonds are useful for the purpose and a substitute is much, much less so. If you're distinguishing "precious" from "rare", this would seem to be proof that they are precious.
You got my vote! Now what about the college book pricing issues. One semester I paid for my books cost more than the classes I took. It was that bad. Even worse was that the book companies ensure you need the access code to the online portal in order to do anything. This ensures the used book market is nonexistent
BaaS - books as a service. I am noticing that whenver "as a Service" is suffixed to X, it becomes far less useful and far more expensive than X was originally.
It's the American system. In the UK professors did everything in their power to avoid students having to buy textbooks, based on my experience at 3 different universities...
The accrediting system is a cartel of sorts. It keeps supply low by keeping competition low. It’s not a perfect cartel but none of our modern ones are. They just seem to capture large chunks of the market enough so that most people are forced to work with em.
That's not a real cartel. Several new colleges have achieved accreditation in recent years. There is some paperwork and expense involved but it's not a huge obstacle for any legitimate school.
I think a modern cartel does not need fully block competition to be successful merely slow down competitors and put up lots of road blocks such that new entrants can’t compete on cost.
Many industries in the USA are quasi cartels, 2-5 companies own most of the market and competition is quashed by it being very difficult to break in.
The airlines are a cartel but occasionally you see a new airline or there is a private equity attempt to cartel the vet business dispite the fact that some new independent vets can enter the market.
"Back in the 1990s, the Justice Department charged several elite colleges with price-fixing, including many current members of the 568 Presidents Group. Those colleges regularly communicated and gave "essentially the same financial aid award" to any student who was admitted to multiple schools, according to congressional research. The suit ended with a settlement, and a 1994 law allowed colleges to keep working together on financial aid packages."
"In writing the law, Congress specified that its goal was to spread the benefits of financial aid as broadly as possible."
And if they're discriminating against lower-income families, that aid won't go to those who ostensibly need it most. Being that the filthy poors won't receive that aid, they will pay more.
The dismissal was refused in August, the case is proceeding, I expect there is something veracious about it, huh?
Cartel: (noun) a combination of independent commercial or industrial enterprises designed to limit competition or fix prices.
Limit competition: How many new entrants to the prestiguous university club (Ivy League, Stanford, MIT, etc.) have there been in the last 50 years?
Fix prices: How do you explain tuitions growing at 5x inflation consistently since 1990, in an era where information itself has become dirt cheap (the internet.)
There does likely not need to be quid-pro-quo "collusion". I am not envisioning a shadowy meeting room where all the university heads smoke cigars and agree on tuitions. There doesn't need to be. Has any of the elite universities ever cut tuitions, in order to compete with the others?
The fact that most people can name the most famous schools seems to imply they are rare.
They are perceived as having better outcomes than regular state schools. Do they or dont they? If their grads do get better jobs and end up more successful - then they are genuinely better? People from state Universities end up sitting next to Ivys etc there is no difference - this is what I believe. We'll see if everyone else's perceptions change in the future as well.
Yeah a median of $110k isn't that amazing. Could just be because they're mostly in the NE. Also against "all schools" isn't really comparing good state schools which I'd like to see.
I don’t know how you’d track this statistically, but my experience has been that not just the pay but the quality of job is much higher for graduates of elite universities, and like pay this just feeds back into itself.
All the people I know who went to Stanford got very nice, “cushy” jobs straight out of college. Most of the people I know who went to state schools had to bust their asses for years at much less pleasant work before they worked their way up to the nicer jobs.
The head start you get from an elite school in the US, in things that have nothing to do with education per se, can not be overstated.
> The head start you get from an elite school in the US, in things that have nothing to do with education per se, can not be overstated.
Yes it can be, and you just did.
The people who routinely get the best jobs and keep them into their 30s and beyond are well connected people. It doesn’t matter whether they go to Ivies or other schools.
If connectedness could be controlled for, I think you would find that the most connected people at Ivies, Stanford, UMich, UTexas, NYU, etc. (let’s call it top 10%) are much more similar in terms of steep career trajectory than less connected top graduates (e.g., top 10% in gpa) even from the most prestigious schools. This is doubly true if you control for SES in addition to connectedness.
For folks who are not natively from these well-connected classes of people, it is possible to make a big jump in “opportunities”, but in practice that means socially integrating oneself into the elite class as an outsider (tough to do and rare) or finding work in a handful of places that facilitate social climbing (e.g., Goldman, also relatively rare).
Your median elite school grad will find it slightly easier to end up on the higher end of the SES class that they were already in, although even that is not a guarantee.
This is not nearly as life-changing as you make it out it be.
> All the people I know who went to Stanford got very nice, “cushy” jobs straight out of college. Most of the people I know who went to state schools had to bust their asses for years at much less pleasant work before they worked their way up to the nicer jobs.
I’m pretty sure that there are a large number of SJSU grads (a CSU school, of all things!) who would like to say hello. Plenty of them got and get “cushy” jobs straight out of school, with the folks who were already connected and/or worked on their connections taking the lead.
You wrote: <<The head start you get from an elite school in the US, in things that have nothing to do with education per se, can not be overstated.>>
I have posted about this before on HN: One thing that is frequently overlooked, better schools (usually) have better/smarter students. My first uni was medium famous. My second uni was part of Cal[ifornia] State. The first was full of intelligent, highly engaging students. The second was... well, much less. The best parts of my uni education were working with other highly intelligent people on hard engineering problems. My second uni felt like an intellectual desert, but, hey, I got my degree.
More: Good schools act as a filter for employers. Why look for "diamonds in the rough" at a low quality school, when you can pay marginally more salary and get much better students at medium quality and above schools? I am on the hiring side now. I rarely find a diamond in the rough from a low quality school. The best candidates are mostly from the best unis. The same is true for former employer. If your CV has a bunch of low quality companies, you are also likely low quality. Again, rare exceptions exist. I won't name the employer: But one has had a 100% failure rate during interviewing. It is so bad, that I now regularly discard CVs with this current employer... unless the CV has something exceptional.
In closing, what if you are a diamond in the rough? My advice: Change employers as often as possible in your industry & country. Each change needs to be a step up the reputation ladder. If a sideways move, make sure you get title and/or money. In my last employer move, I move down one step in reputation. The quality of employees is much lower here than my other higher rep employers.
Why is this response being downvoted? It seems to clearly reflect the hiring bias present in the industry. Please upvote it so that people can know how to overcome the inherent bias on quality.
Schools attended almost exclusively by people with strong connections getting good jobs out of the gate seems like a bit of a self-fulfilling prophecy.
Average outcomes in terms of income for the most famous schools are not much better than regular state schools after you control for high school grades and SAT scores.
My implication is that these schools are artificially made "rare". We live in a golden age of information accessibility, and the knowledge these schools teach is by no means "secret" or "rare". Hell, Matt Damon learned it all from a library in the 90s, and he was an ill-tempered janitor.
As for whether these schools are "precious", well, their students certainly are judging by the number of trigger warnings and emotional support pets.
The value these institutions provide isn't education though. The value is prestige and networking with connected peers. The prestige is artificially rare I guess, but there are only so many connected 18 year olds. Their rareness is not artificial.
Then as POTUS, I will propose a law that they must label themselves as such. Harvard won't be able to call itself an "Institution of Higher Learning", however "Institution of Influence for Sale" will be permissible.
I think credit deserves some blame. Schools charge the maximum they expect students to be able to pay, and when students have significant leverage through the bank, those costs rise with it. Very similar conditions in housing. I think administrative bloat is a consequence rather than a cause. Now that the faculty lounge has replaced the factory floor as a reliable voting demographic for you-know-who, I don’t think the subsidies and waste will stop anytime soon.
People went to college before the guaranteed "right" to go to college. It was also more affordable then - for some strange reason.
Removing government help won't end the college dream... but it might, in time - since it took time to get this fucked up - restore some semblance of reasonable to the equation.
It’s not a dream. It’s a nightmare for most folks. A girl I knew went to school for speech therapy. Decent grades. Good school. $80k debt for undergrad. Couldn’t get a job with a bachelor’s degree, so she racked up $100k getting a master’s degree. She’s 25 years old making $30k a year working for an agency that pairs her with kids that need help.
She has no conceivable way to pay that loan off on that salary. She will never qualify for a mortgage with that kind of debt to income ratio. The university promised this hopeful 18 year old child a dream job and a good wage to go with it and instead they basically destroyed her future.
The fraud universities are perpetuating makes the banks look like a freaking soup kitchen. The first politician who recognizes that this is modern day feudalism and has the guts to call it as such is going to be very successful.
For public universities, declining state government funding is the primary reason for tuition increases. Funding for the state university nearest me declined from the state providing more than over 75% of the budget in 2005 to under 25% last year, while the number of staff decreased. Unsurprisingly, tuition increased to make up much of that gap in funding.
They aren't getting involved in an industry. When they do, it is to build public schools, which seems to be a great idea. What they are doing is submitting to public demand that education be accessible to everyone by paying for it, or by lending people the money for it. It is like saying that food stamps are 'government getting involved in the grocery industry'. If one counts subsidies, then the government is involved in most industries in some way.
I think that by looking for an excuse as to why the government messes up everything and using that as a way to remove government from things, you haven't changed the need for that thing, you just make it so that in order to fill a public need the government has to enable it in some way that is probably less efficient -- like giving out lots of loans for education, or by having people forgo basic care and then ending up in the hospital with a huge bill that the government pays for because they cannot.
There is usually a medium between these things and it would be great to get off of our collective ideological horses and find them instead of blasting rhetoric at each other.
It seems ideological to me because the government was specifically mentioned. If it were a non-profit guaranteeing all college loans, would 'non-profit' have been mentioned instead of government? I doubt it.
Can you describe what you think the argument I am making is? I think you are confused and I would like to be more specific so that you don't end up making completely irrelevant statements like the one above.
I agree with a lot of what you're saying but the evidence that Obamacare ballooned healthcare expenses isn't there.
Obamacare also has a huge positive impact besides just access to healthcare. For instance I couldn't have started a startup without it, and it's much easier to hire contract workers because of it.
I'm still so irked that they didn't go full single payer and put everyone into one coverage pool.
Still, the supply side support necessary would also be an issue. For markets where the local going rate is expensive enough it would make a ton of sense to allocate military medical units to supplant the local market until more doctors of that type were in the area. If it takes long enough the military supply might even retire from the forces to open practices in that area.
What do you think the difference in premiums are between a 20 year old and a 35 year old?
What about between 35 and 50?
I mean I know only two interesting facts about you, the difference in time, and I already know a common sense reason why your price today is much higher than it would be when you were 15 years younger, in “literally” any time in history, and perhaps it was always about 3x more expensive premiums.
For example, in New Jersey, a gold metal level plan would cost a 64 year old 3 * $730.86 ~ $2,200 per month, which legally has to cover 80% of a person’s expected healthcare costs.
For a silver level plan, ~$1,300 per month will cover 70% of the healthcare costs.
That just shows how much more healthcare people need as they get older.
It would depend on the cost of healthcare being delivered to those customers.
Considering that an out of pocket maximum did not exist prior to affordable care act, and insurers were allowed to deny people with pre existing conditions, I would expect drastically higher spending on new insureds because they would finally start getting healthcare.
Now the insurance company has to pay the hundreds of thousands and millions per NICU/hemophiliacs/cancer patients etc, so why wouldn’t their expenses go drastically higher?
That is not profit. If an insurance business picks up 10% more clients that cost 5,000% higher expenses, they cannot just increase premiums 10%. They have to increase premiums a lot more.
Not to mention that the ACA forced insurers to subsidize old people from the young (maximum age rating factor), health to sick (can only price based on age, location, and tobacco status), and imposed out of pocket maximums. All of these mean the insurance company is spending a lot more after ACA than before ACA, and all of that had to be recouped as revenue from premiums, otherwise you have bankruptcy.
Also, all the US health insurance company financials are public. You can see their profit margin is a steady ~5% for over a decade. They are spending $95 for every $100 in premiums they take in.
Going back to testfoobar’s comment comparing tech companies and health insurers, I do not think any investors will be impressed by health insurance companies’ low single digit profit margins compared to tech’s 20%+ profit margins.
Short answer is that insurance companies were “limited” to 20% profits and 80% expenses by ACA.
Smarter insurance companies realized quickly that they not only had zero incentives to cut costs, but they were actually incentivized to let costs increase to be as high as legally possible, thereby increasing their profit cap in absolute dollars.
I don’t know if this was the idea of one party, a bilateral backroom negotiation with the insurance companies, or a comprehensive lobbying victory, but it ended up being a massive boon for insurance companies and hospitals and a complete shitshow for consumers.
If this part of the ACA doesn’t change, it will break the US healthcare system.
You can easily see that all the health insurance companies’ profit margins are in the 5% range, which is not a lot.
It is a competitive business without a lot of pricing power. But what it will do is provide consistent, reliable returns. And since more people are getting more healthcare, the magnitude of the profits will obviously be higher, hence the increase in stock price.
Basically, the market caps now reflects what are essentially utilities that earn ~5% profit margin on huge revenues. This was not clear in the early ACA days, but investors have obviously warmed up to them.
> It is a competitive business without a lot of pricing power. But what it will do is provide consistent, reliable returns. And since more people are getting more healthcare, the magnitude of the profits will obviously be higher, hence the increase in stock price.
It seems like you’re theory-crafting here rather that describing what is actually happening in the industry.
1. I somewhat sloppily used the term “profits” in my previous post, and I should have used “gross margins”. Specifically, 80% of premium payments have to be used on healthcare expenses. Their profit (~5% as you mentioned) comes after they pay their relatively consistent operating expenses out of their gross margins.
2. The increased number of people getting insured is not what has driven up the insurance companies profits. Those numbers don’t add up.
3. The prices of name brand insurance have increased fairly consistently. It’s not competitive at all, imho. It’s an oligopoly.
4. If you know people who work in medical billing and/or you’ve known a handful of people with substantial medical bills, you will know that hospitals have increased prices for many things to ridiculous levels, and they “nickel and dime” patients at ridiculous markups for anything possible. Why? Insurance companies don’t bat an eye at these expenses any more, and they are not incentivized to do so. As money out increases via payments to providers, money in can increase via premiums, and thereby absolute gross margin can increase proportionally. If you need further proof, check out the actual prices that people pay when insurance doesn’t cover something. Miraculously, charges come down and substantial portions of the bill will be forgiven/waived.
5. Investors have warmed up to the idea that health insurance is a government-supported racket that ultimately screws people who have to pay their own premiums in part or in whole.
Note that I am a fan of most parts of the ACA, but the 80/20 rule (and the misaligned incentives that it facilitated) needs to be fixed. That said, the hospitals and insurance companies are feeding at the trough, they have established a new excessive normal, and they will fight any change to the 80/20 rule by comically pleading poverty.
>Their profit (~5% as you mentioned) comes after they pay their relatively consistent operating expenses out of their gross margins.
Just like in any other business.
>The increased number of people getting insured is not what has driven up the insurance companies profits. Those numbers don’t add up.
Their profit margin has not been driven up [0].
>It’s not competitive at all, imho. It’s an oligopoly.
In an adjacent comment [0], I posted profit margins for 7 different publicly listed multi billion dollar health insurance businesses, which excludes Kaiser Permanente. If that is not a competitive business sector, I don’t know what is. If you are claiming collusion, I would need proof.
>That said, the hospitals and insurance companies are feeding at the trough, they have established a new excessive normal, and they will fight any change to the 80/20 rule by comically pleading poverty.
How are sub 5% profit margins feeding at the trough? If that is feeding at the trough, what is Apple, Microsoft, Visa, Alphabet, etc doing?
If insurance companies had the pricing power you are claiming they have, why would the shareholders accept anemic profit margins?
Do you have any direct experience with the medical industry? If not, do you know anyone who has?
It really seems like you are arm-chair quarterbacking your comments based on some quick online searches. I strongly encourage you to talk to folks who have worked in hospital billing pre- and post-ACA and (if possible) actuaries who work in the health insurance industry who will speak to you frankly (rather than toeing the industry line). The misaligned incentives are a complete shit show.
> Why is gross margin relevant?
If you can increase gross margin number while maintaining operation costs at about the same proportional level, then you end up with more absolute profit. So 100 premium, 20 gm and 5 profit can become 150 premium, 30 gm, and 7.5 profit.
> How are sub 5% profit margins feeding at the trough?
The percentage is not the issue. The absolute amount is.
Some examples:
- My premiums pre-ACA to now have almost quintupled. There are some good reasons to explain a small part of that increase (e.g., I’m older), but 4-5x is absurd. Way higher than inflation, and way higher than the quality of care has improved (for me specially, but also in general).
- This link (https://khn.org/news/article/surprise-bill-iv-push-hospital-...) is an example of hospitals feeding at the trough. Imagine this happening hundreds or thousands of times a day at every hospital. It’s absurd. I realize that this is basically a marketing piece by Kaiser, but the article is directionally correct based on folks I know who work in medicine, health insurance, and hospital billing. Their stories are all very consistent.
- There are many other countries with functional healthcare systems that do not charge anywhere near this much (for most people). Japan comes to mind. I have lived there. Premiums are based on a percentage of your salary, and the cost is much less than the US for 95%+ of the population. If you have no salary, it’s about $100 a year. When the US system reforms, I hope that the reformers take lessons from Japan since the transition from our current system to something like theirs will be relatively easier than many/most other options.
> If you are claiming collusion, I would need proof.
This isn’t CSI, and collusion doesn’t have to be explicit, especially with oligopolies.
Once the major players in any market in the US realize that they can take a win-win game theory approach to their pricing, they pretty much do so. They don’t have to have surreptitious back room meetings in order to realize that increasing prices more or less in step is mutually beneficial, especially in health insurance, which has a wide moat.
> The percentage is not the issue. The absolute amount is.
Do you expect profit margins to approach 0% over time?
> If you can increase gross margin number while maintaining operation costs at about the same proportional level, then you end up with more absolute profit. So 100 premium, 20 gm and 5 profit can become 150 premium, 30 gm, and 7.5 profit.
Sure, but because of competition, this is not happening. The premium payer will shop around and choose a different insurer offering 130 premium. If this is happening, there would be clear evidence, since all of these publicly listed companies have public financials.
> is an example of hospitals feeding at the trough.
This discussion is about insurance companies, not hospitals.
In any case, I will simply rest my case that a business with low single digit profit margins is, by definition, not “feeding at the trough”. Lots of competition, low profit margins, all lead to a pretty cutthroat business environment.
I suggest people direct their ire at drug manufacturers, healthcare providers, software providers, and others in the healthcare business with 20%+ profit margins. And increasing the supply of healthcare in general.
Or people can keep wasting energy on blaming the 3% middleman, which is beneficial for the 20%+ profit margin businesses.
Edit: final note:
> - My premiums pre-ACA to now have almost quintupled. There are some good reasons to explain a small part of that increase (e.g., I’m older), but 4-5x is absurd. Way higher than inflation, and way higher than the quality of care has improved (for me specially, but also in general).
Premiums pre ACA and post ACA cannot be compared due to drastic changes in laws about the terms is the insurance. Namely, the limitation of pricing insurance on only age/location/smoking status, and the implementation of out of pocket maximums. In addition, as of 2022, the no surprises act bill means out of network emergency costs are included in the out of pocket maximums.
Effectively, even though you feel you are getting less quality of care (and you very well might be), the insurance product is much different than before with much higher (nominal) coverage, much more expensive treatment options, and more subsidies for others in the insurance pool.
Based on aging demographics and declining labor force participation rates, I would not expect the situation to get any better. Healthcare, especially labor intensive, will cost more and more.
What about instead of looking at health insurance market caps which can be affected by 20x different factors besides the cost of healthcare, we look at the cost of healthcare. Which has gotten more expensive, but there's no inflection point when Obamacare passed.
> Obamacare also has a huge positive impact besides just access to healthcare.
<rant-on>
Sure. On my back, and that of countless others. It's fucking highway robbery.
Before Obamacare we had excellent health insurance with excellent coverage, doctors and low deductibles for $650 per month.
When we were shoved into Obamacare, our rate TRIPLED to $1,800 per month. Today we are paying nearly $2,300 per month. This is equivalent to a mortgage payment or non-trivial savings either for personal use or to help your kids with college.
There is no other way to put it: We are being robbed.
Put some numbers to it for context:
Over ten years the increase amounts to about TWO HUNDRED THOUSAND DOLLARS. Money taken from us, by law. This doesn't even include a calculation of what this would be if invested in a low risk mutual fund or real estate.
The concept that a family has to pay so much PER MONTH for health insurance should make everyone take pause. This kind of thing is why I have always had a strong negative reaction to anything government-driven. It never ends well.
Even worse, Obama lied to all of us. His promise to the nation, easily found on countless videos, was that families would save in the order of $2,500 per year on health insurance. Right.
How do these people get a free pass on shit like that? Why?
I don't know if this is even possible. I wish someone could organize a massive class action lawsuit against all who forced this on us. I am happy for those for whom things improved. I truly am. However, doing it by causing serious financial harm to likely millions of families is not right, at all.
We (my family) are burning --quite literally-- tens of thousands of dollars per year on healthcare because of Obamacare. The other part people don't understand is that deductibles have gone up and insurance does not trigger until you spent a certain amount per person per year. In our case my entire family would have to be run over by a semi truck before we actually start to see significant benefits. In other words, the cost isn't just the premiums, but the expenses we have to incur before benefits actually kick in.
Here's an example: One of my kids ended-up in the hospital with myocarditis due to the Covid vaccine. That cost us over TEN THOUSAND DOLLARS, cash.
Needless to say, every time I see Obama, Pelosi and the bunch I have to try very hard not to launch into projectile vomiting. I know many people idolize them. Sorry, you have chosen to admire liars and criminals.
My genuinely overkill for my needs private health insurance as someone living in Australia where theres a public health care system that looks after everyone... costs less than half your pre-obamacare insurance, factoring in the exchange rate.
I cant fathom why the majority of Americans are ok with their weird sociopathic Job = Health Insurance based system. While not as nearly unanimous as the metric system, well funded Public Health Care to a level where most people don't need health insurance to cover an emergency hospital visit for say a broken leg... is basically what everyone else around the world in other countries considers a normal and good thing...
In essence... You were already getting ripped off, now you're getting ripped off even more.
In England, Australia, Germany, France, Canada, etc, etc, etc... The treatment for your child would likely have cost you nothing, or nearly nothing. The fact it cost you over $10,000 is not entirely the Obama's fault, it's the collective fault of nearly a century of American citizens who have accepted the status quo and not pressed for any sort of change prior to Obama promising to change it single handedly, since that worked about as well as most people watching from other developed countries with modern socially supported public health care expected it to... it was a best case train wreck because of health care industry self interested lobbying efforts from pharmaceutical companies, insurance companies, hospital management companies, all the companies... not because it was a bad idea to stop the fright train that is employer provided health care in the USA. They just managed to convince them to stop the metaphorical train in such a way they could profit even more, and thus cost everyone including the government even more money...
>thus cost everyone including the government even more money...
Americans were simply going without healthcare, so it was unavoidable that it was going to cost the whole country more money.
>I cant fathom why the majority of Americans are ok with their weird sociopathic Job = Health Insurance based system.
Because once the government gives a subsidy to a certain tribe, that tribe no longer has an incentive to vote to increase that subsidy to members of other tribes.
For example, in the US, old people have had healthcare for many decades. And they have the highest voting rates. But as a politician, you are not going to get far advertising that you will increase their taxes so that non old people can receive healthcare, especially if many of those non old people do not look like the old people.
But, completely screwing people is also politically unpopular, so what can pass is a half measure, like Medicaid, where politicians can say they helped people get healthcare, but also keep taxes low. How? Well, you simply pay the doctors and drug makers and dentists less for people covered by Medicaid. And you pay more for people covered by Medicare.
And as the tribes get more and more politically influential, you can keep adding various tiers of subsidy recipients. And that is the beauty of “health insurance companies”, or rather, “managed care organizations”.
Businesses with young, healthy, office workers can pool their health risks into less risky pools and pay much higher reimbursements so they get premium healthcare.
Poor people get directed to Medicaid, which will have a network of fewer and overburden doctors so they get less care, and less quality care.
Medicare will provide old people with enough healthcare to keep their votes coming.
Federal and military employees get decent healthcare because their coverage pays more.
Others get dumped onto the statewide exchanges that are you get what you pay for type deals.
And all of this is funneled through the managed care organizations so that people cannot easily measure who is getting what and who is getting more from the system versus less.
So tl:dr is that as a country, we do not actually want to help everyone equally. Just enough to say they were helped, but at the same time, make sure we get as much of the pie for ourselves as possible, and give up as little as possible.
> as someone living in Australia where theres a public health care system that looks after everyone... costs less than half your pre-obamacare insurance
> I cant fathom why the majority of Americans are ok with their weird sociopathic Job = Health Insurance based system.
Agree with everything in your comment. I think I can say everyone in the US wants a solution for this, including the idea of healthcare not being financially crippling for anyone.
It is easy to wrongly reduce any issue to a single variable. Politicians love doing this because they can then identify good and bad and use that to divide the population for votes. The truth is that everything in life is a complex multivariate problem. Few take the time to take a deep dive into the tree of variables in order to understand.
While not a comprehensive explanation, I'll attempt to at least provide some perspective, particularly for those not living in the US and likely, because of that, not having direct visibility into the web of issues. From my perspective, there are four macro issues that drive our cost structures. I'll keep it short. Happy to expand on any of these if interested.
Like I said, there are many variables beyond these.
Primary and Secondary Education
We send our kids to school from 5 to 17/18 years of age. After twelve years of schooling young adults come out of these institutions with no marketable skills whatsoever. Our high school graduates are only good for stacking boxes and, with training, making coffee. They are ignorant and pretty much useless without an additional 6 to 24 months of training.
They are sold the idea that minimum wage should be a living wage because we are training people who can only qualify for minimum wage jobs. Except that faulty economic ideologies is constantly eroding living standards at every level. Politicians pushed the $15/hr minimum wage as a solution for all the problems. Today, with inflation and rising cost structures (some of it driven by the doubling of the minimum wage), earning $15 per hour is likely less --in terms of purchasing power-- than it was before selling people that fantasy.
Education is at the core of a number of problems in this country. How does that affect healthcare? You are creating generations of poor people with no or low skills. This means they have trouble financially contributing to the greater good.
University Education
If I remember correctly, the university drop-out rate is such that only about 25% (if not less) of first year students in the US graduate. This is connected to the prior issue as well as other factors. Once again, we end-up with a massive number of people who will likely suffer from financial struggles for life.
The fact that K-12 schools do not prepare students well means a significant number of them have to either take (and pay for) remedial coursework or eventually drop out. Most drop out.
In addition to this, our university programs waste student time by forcing them to take irrelevant coursework. This is particularly visible in the STEM fields. Students have to engage in about a years' worth of irrelevant non-STEM coursework. I define "irrelevant" to mean: Coursework that no employer cares about at all and will have no effect in advancing anyone professionally. We could graduate people 25% faster and with 25% lower student debt if we just excised irrelevant coursework.
What's ironic about this is that anyone would agree that someone pursuing a degree in art would be wasting their time and money if forced to take a year filled with mathematics, physics, chemistry and other STEM topics. And yet, for some strange reason, we force our STEM students to spend tens of thousands of dollars and waste an entire year taking courses like "Young Karl Marx". No bullshit, my son was force...
Government subsidized and guaranteed student loans cause massive increases in the cost of tertiary education. Who in their right mind would give an 18 year old with no work history or finances to justify it a loan for hundreds of thousands of dollars? The answer is: Nobody. Unless the government guarantees you'll get paid. In which case you have nothing whatsoever to lose. Young adults have no clue what they are walking into and buy into the scheme, not knowing what awaits them.
One particularly sad example I have of this is a young lady who was a member of the FRC robotics team I mentored for many years. She was duped --I have to use the word, no other way to describe it-- into accepting admission into a university that was going to charge her $300K for a degree in mechanical engineering. I and other professionals mentoring the team advised her against doing this. We explained what $300K in debt for a degree in mechanical engineering was a formula for financial slavery for three decades, or more. Well, we could not beat the marketing machine. She graduated with a little over $300K in debt and is absolutely hating life today.
This is where we make a connection that starts with K-12 and culminates with university outcomes and the healthcare systems.
An MD, depending on specialty, graduates with about $300K in debt. That's actually a bad number because it is an average, and averages are horrible metrics to apply to a population. The number can easily reach $500K, particularly when you include all elements, not just tuition.
Here's the connection: There's an ecosystem of professionals, all of whom participate in delivering healthcare through their own specialties. The MD, nurses, PA's, radiologists, etc. are the most visible layer. The next layer is likely an array of engineers, biologists, chemists and other university-degreed professionals working either directly for the hospitals or for tech and pharmaceutical companies that are an integral part of the healthcare dependency tree.
When you are on the table in an operating room, the team surrounding you likely has a collective student loan debt in the order of two million dollars, if not more. One layer removed are other nurses and support personnel at the hospital. That is also likely debt that must be serviced in the millions of dollars. The people who build the equipment in that operating room, conduct research and develop drugs and other tools represent hundreds of millions of dollars in student debt.
One can follow that cost structure tree as far as one might wish.
This means that healthcare in the US has a non-trivial baseline cost of doing business that is inextricably linked to the quality and cost of our education. That's an important baseline to understand. You cannot fix healthcare costs in the US without fixing this complex element of a complex equation. At a minimum, the government should have nothing to do with student loans. University costs should not be subsidized. Students should pay fair market value for what their degrees can actually deliver. Curriculum would also be fine-tuned as part of this process. Nobody wants to spend thousands of dollars for a course on "Underwater Basket Weaving" when it is irrelevant and has no value. Let the student decide, do not force irrelevant material on them and charge inflated rates for it.
The journey to this point includes additional variables that have not been accounted for. One example of this is the fact that K-12 education is dominated and ruled by regional teacher unions, none of which truly exists as real advocates for excellence in education. The effects of such a structure ripple all the way up into university, graduation rates and the cost of remedial education. These result also dominate life outcomes for those who either don't attend university or drop out. They leave K-12 without marketable skills that could seriously improve their lives and...
People assume because other places have public health insurance and lower health expenses that's why it's expensive in America. But there are plenty of places with private insurance in Europe that are much cheaper than the US. And our public healthcare prices are also much higher than the rest of the world.
Our medical establishment is very inefficient, pays for lots of useless shit, and subsidizes the world's medical research. All those things cost money.
Yes, that was the point. People who could not afford healthcare, are now receiving it. Hence people who can afford to pay for others to get healthcare, have to pay for others to get healthcare.
>However, doing it by causing serious financial harm to likely millions of families is not right, at all.
There was never going to be a way to redistribute wealth without taking to from those who have it or to give it to those who do not.
>Here's an example: One of my kids ended-up in the hospital with myocarditis due to the Covid vaccine. That cost us over TEN THOUSAND DOLLARS, cash.
And you are insured for amounts that go over the out of pocket maximum, which is legally around $17k for families. So if you need a $500k heart surgery tomorrow, you only have to spend a maximum of $17k.
Obviously, the price of healthcare is a problem, and the only way to fix that is to lower demand (let people die) and increase supply (more doctors, more taxpayer funded R&D into medicines that go into public domain, and tort reform).
> There was never going to be a way to redistribute wealth without taking to from those who have it or to give it to those who do not.
Yeah, that’s why they had to resort to blatant lying to get it passed. But hey, it was for the greater good! Take one for the team and be a good sport about it. “We have to pass the bill to see what’s in it,” and all that.
> And you are insured
You are intentionally missing his point. The cost of that insurance has gone up massively the past 15 years. The same level of insurance cost at least an order of magnitude less 15 years ago.
> The same level of insurance cost at least an order of magnitude less 15 years ago.
again, because,
>There was never going to be a way to redistribute wealth without taking to from those who have it or to give it to those who do not.
Health insurance premiums are an explicit wealth transfer, from young to old, and sick to healthy. For all intents and purposes, you can consider them a tax (hence the individual mandate that was later removed).
> Five factors can affect a plan’s monthly premium: location, age, tobacco use, plan category, and whether the plan covers dependents.
>Notice: FYI Your health, medical history, or gender can’t affect your premium.
You have more poor and more sick people getting healthcare, without commensurate increase in the supply of healthcare, so obviously costs are going to go up.
> People who could not afford healthcare, are now receiving it.
Nobody I know has a problem with the concept of helping others. Nobody. Helping others might be to tack-on $100 per month to help cover the under-insured. We do this with auto insurance already, everyone pays a little more for uninsured motorists. A QUADRUPLING of health insurance costs is theft. It isn't equitable by any stretch of the imagination.
And then there's the fact that the US President and everyone from his party who supported this told us, promised us, families would save $2,500 per year. Instead of that, we were forced --FORCED-- by law to buy a product that today costs four times what we used to pay for a better product.
We have a situation where the US government is forcing us to pay an exorbitant amount of money for a substandard product. Forced. So much for the land of the free.
> Hence people who can afford to pay for others to get healthcare, have to pay for others to get healthcare.
What's next? Pay for those who can't afford to buy a house? By that logic one can justify just-about anything.
Sorry, that's not justification for any government to force people to buy a bad product that financially brutalizes them.
Yes, we need solutions for healthcare. Obamacare isn't even close to a solution. It's a travesty. In the long term it has actually degraded our healthcare system. The problem is it will take years for the less informed and easily impressed among us to understand this.
>Nobody I know has a problem with the concept of helping others. Nobody. Helping others might be to tack-on $100 per month to help cover the under-insured.
Apparently you do, if the help costs more than $100 per month.
>We do this with auto insurance already, everyone pays a little more for uninsured motorists.
Uninsured and underinsured auto insurance does not help anyone else, it only helps the premium payer.
>what we used to pay for a better product.
I do not see how this can be true when there were benefit maximums, as opposed to out of pocket maximums, and pre existing health condition exclusions existed.
>What's next? Pay for those who can't afford to buy a house? By that logic one can justify just-about anything.
Yes, that is the crux of politics today. How much wealth redistribution should the government perform?
Previously, a few tribes in society had it made in the shade. Old people, government employees, employees of large businesses, especially white collar or ones with large union presence. Then sufficient amount of Americans no longer belonged to those tribes, hence the political will to pass reform. Which I guess you characterize as “buying votes”.
>Sorry, that's not justification for any government to force people to buy a bad product that financially brutalizes them.
You are not buying a bad product, you are paying a tax since your premiums explicitly subsidize others, just not paid directly to the government. Also, there is no penalty for not purchasing health insurance since 2018, so the government has not been forcing anyone to pay the “tax”.
You are misrepresenting what I am saying as well as the reality of the matter. Calling it a tax is an indication of having bought into a false political narrative. I don't really have much more to say to you. Perhaps one day you might understand just how much damage these people have done to this nation.
BTW, and because the accusation is always made, implicitly or explicitly: I am not a right-winger/conservative. Not even close. I am driven by data and facts, not fantasies. Pure and simple. If I had to classify myself politically I would be a classical liberal. In other words, socially liberal and fiscally conservative. That, I believe, is, for the most part, the balanced formula that lifts all boats, not the madness both political parties force upon us.
There's a question around whether people actually want a higher supply of quality institutions, or simply more access to the high-end ones that everybody is competing over. The latter would be self-defeating, because by definition they would no longer be elite or luxury.
What would happen if suddenly hundreds of additional institutions as good as MIT, Stanford and Harvard appeared out of thin air in the US?
Wouldn't we quickly revert back to the current state of things, once US News and marketers figured out a way of creating another "Top 100" hierarchy of schools, with parents shoving their kids into violin practice, water polo and building-orphanages-in-Nicaragua photo ops to make it into the new top 5 luxury brand name universities?
The scarcity IS the product of these institutions. This is the nature of positional goods.
No doubt education and health care have become corrupt feeding frenzies for bureaucrats mediating these industries. However, your cry, "competition", is exactly the rallying cry of these bureaucrats.
Neither education nor health care make sense to organize by competition - the consumer lacks the ability to make the informed choices that an effective market requires. Obama care, in fact, contained a variety of pseudo-competition schemes to bring down costs, all of which predictably failed. And we're seen the disaster of various for-profit colleges.
We have a shortage of doctors because Congress has refused to fund more residency program slots. This has held down Medicare costs, but as the population ages appointment wait times are increasing and existing doctors are burning out from excessive work.
While more healthcare supply is definitely needed, this is ultimately a bottomless pit. Patients with complex chronic conditions have essentially infinite demand for healthcare services. The majority of those chronic conditions are caused by lifestyle issues including overeating, lack of exercise, and substance abuse. As a society there has to be a limit to what percentage of our GDP that we devote to healthcare.
This reminds me of a doctor that did ten thousand heart surgeries and quit because people kept coming back for their second or third bypass. It's pointless because you're not addressing the source of the problem.
> both college education and healthcare have become enormous taxpayer wealth extraction schemes
Yup.
Early 70s, we started transformation from a manufacturing to a rent seeking economy. Cleverly branded as "supply side", "knowledge worker", and "service industry".
I still can't get over the fact that I have to spend money to use my money. Even more so the less money a person has.
This isn't really true. Obamacare was integral to the push toward increased capitation. Health care insurance paying for services provided instead of patients covered leads to incredibly perverse incentives that have been a huge part of why costs are so high. Capitation solves that by aligning provider incentives with patient incentives; provide timely, high quality care and not unnecessary treatments.
Even in Canada it’s getting worse. I finished undergrad in 2010. Back then I paid about $3000CAD per term. Someone in my program I met recently is paying $4800. The program is the same. Admin keeps growing.
Stanford has now reached the point that they recently built an entire 35-acre campus just for administrators.[1] This is completely separate from the main campus and miles away.
"The campus provides workspace for about 2,700 employees (including three of the university’s eight vice presidents) working in critical areas such as the School of Medicine administration, libraries and archives, business affairs, human resources, development and Land, Buildings & Real Estate. Stanford will be the city’s third-largest employer in Redwood City."
Amenities:
* Cardinal Café -- Located on the first floor of Cardinal Hall, serving globally- and regionally-inspired cuisine for breakfast and lunch.
* Recreation & Wellness Center -- The 28,000 square foot facility includes a six-lane rooftop pool, indoor basketball court, state-of-the-art fitness equipment, locker rooms, showers and an outdoor fitness courtyard.
From what I'm seeing online Stanford has about 22k students in 2022. 2700 does seem like a large number compared to the student population, and given it seems like it isn't meant to house all the administrative staff, that does seem like a lot.
That said, Stanford is private, so I'm not sure they're a good example. Various state universities seem like they would be a more apt target to look at to see what this is like in reality.
In 2021 15,750 staff members supported teaching, learning, research and core operations at Stanford
...This includes ... 1,603 staff at SLAC National Accelerator Laboratory
.. Includes clinical educator and research staff.
Yes, and note that the clinical staff who instruct students are also counted in the employee numbers. I can't find a number for Stanford but Yale has 1,729 "continuing" medical faculty: https://www.yale.edu/about-yale/yale-facts I would not be surprised if Stanford had the same or more.
Anecdotally I just looked up the number of municipal employees for 2 random towns with populations of about 28,000 people. 1500 employees. I believe that's including teachers, police, etc. not just administrators.
Stanford and other top institutions can't really be compared to other schools, students fees are not how these institutions make money. There are massive business arms tying in to fortune 500s, political think tanks, government institutions, etc. It's a whole different game for schools at this level.
To understand administrative bloat in the US it's much more instructive to look somewhere like University of Idaho where the business of charging students for services rendered is the main game in town. It's there you can see how administrative services have drastically ballooned costs for just the education.
Great find. You missed the best part: <<Families with incomes between $75,000 and $150,000 will contribute from 0-10% of their income...>>
That means for income <= 75K, Harvard tuition is free! That is impressive. Their system looks fair in comparison to other US universities. This system looks similar to progressive taxation (higher income pays more taxes).
For readers not familiar with US university system: This will not include "room & board" (housing & food).
Arguably, Stanford is a venture capital and real estate firm which operates a school on the side for the tax exemption. Back in the early 1990s, Stanford split off their endowment and land operations into a separate company, the Stanford Management Company. That worked out very well. They had startup money in Cisco, Yahoo, Google... Over time, the SMC tail came to wag the SU dog.
> Stanford and other top institutions can't really be compared to other schools, students fees are not how these institutions make money. There are massive business arms tying in to fortune 500s, political think tanks, government institutions, etc. It's a whole different game for schools at this level.
Then they are welcome to stop charging students fees.
That doesn't rule out indirect influence, no? The likes of Stanford are what other universities aim for, so if the implicit message is 'If you want to play in that league, you need a massive administration and pretty facilities for them', then you shouldn't be surprised to see other universities, who don't necessarily have the same financial means, trying to mimic that.
They can be compared since universities are direct perfect substitutes.
Price sets expectations. If you tie your service to lower tier pricing , you are indirectly communicating that your service value is substantially lower.
This calculus is literally happening in administrators minds. They so much have admitted this in the past.
Just want to caution that the legalese is really important here. I know that at Stanford all the IP and patents stay with the researcher. Meaning that they keep all the money from their discoveries. Contrast this with the UCs where you have to sell the UCs your patents and IP for $1.
SLAC National Accelerator, a National Lab that Stanford happens to run, employs about 1,600 people. They don't necessarily need to interact with students; other national labs are run by corporations (e.g., Sandia is run by Honeywell).
Stanford has a massive medical system, including an adult and children's hospital. They are teaching hospitals, and so part of the point is to train medical students and residents, but they also need all the staff of a regular (actually, top-of-the-line) hospital: doctors, nurses, techs, porters, billing, payroll, etc.
On top of that, Stanford also has a massive research program funded by grants from (e.g.,) the NIH, NSF, and DOD This requires people to actually do the research (heavily-funded profs rarely teach, plus postdocs and research scientists) and support it (animal health techs, machinists, etc). There is also a lot of bureaucracy involved in getting, doing, and accounting for that work. It certainly depends—in part—on grad student labor, but it's also not directly linked.
All in all, big research-intensive universities do a lot more than classroom education and the staff sizes reflect that. I'm sure there's room for improvement (I work at one and purchasing is currently a nightmare), but staff/students is not a great metric.
> "The campus provides workspace for about 2,700 employees (including three of the university’s eight vice presidents) working in critical areas such as the School of Medicine administration, libraries and archives, business affairs, human resources, development and Land, Buildings & Real Estate. Stanford will be the city’s third-largest employer in Redwood City."
Administration for the school of medicine is literally the first group cited.
Some of that is administration. Medical research (legally) requires all kinds of oversight committees: DSMBs for clinical trials, IRBs for experiments involving humans and IACUCs for work with animals. The Sponsored Research folks help prepare proposals and make sure that work is done and money is spent in compliance with the sponsors' policies. I'd bet many of those forks are at Redwood City.
The rest of it takes administration. The folks at SLAC need to get paid. Someone needs to check that the doctors and nurses at Stanford Medical are appropriately licensed; once they are, someone also needs to find somewhere for them to park.
As a sibling commenter noted, these figures around "staff" employees are super misleading and tend to cherrypick the most egregious examples of administrative bloat. For example, I worked for several years as a staff researcher at Harvard; along with ~30 other "staff" employees and a few members of faculty we published papers and built open-source software. Firing 9 in 10 staff employees - as the author of the article wants to do - would completely gut a huge amount of the work that big research universities do.
> Stanford has now reached the point that they recently built an entire 35-acre campus just for administrators.
Mmm... I read an article once that pointed out that there are two basic schools of thought on "why college is so expensive today". Some people say it's more expensive to run a college, and so tuition has to cover that. And some people say it's more important to have a degree, or easier to get your college expenses financed, and so tuition expands to meet demand.
It's very easy to distinguish between these two theories at a basic level: one of them says that prices have gone up because supply has fallen, and the other says prices have gone up because demand has risen. But the article pointed out that, while these two causes have the same directional effect on prices, they have opposite effects on quantity sold: if supply has fallen, you see fewer purchases at higher prices, whereas if demand has risen, you see more purchases at higher prices.
And it's very clear that colleges are in the second scenario, with prices and enrollment rising in tandem.
But "it's because of administration costs" is a supply-has-fallen theory. It would make more sense to explain Stanford's luxury campus for administrators by saying that Stanford has so much money coming in, the administrators can afford to help themselves.
Here's an idea: Public, government-owned (but not operated) colleges. Fueled by taxpayers and completely free for students.
Students who wish to pursue higher education shouldn't even have to think about finances for that education, aside from maybe the travel and food expenses (although now with remote work/learning that also is going down)
I think many Americans imagine the above to be infeasible and that university is somehow inherently expensive.
However, university can be very cheap. Here in Sweden university education, which is here funded in the way proposed above (i.e. the government pays for it all, for those students who get in) costs the state less than high school education costs the state (72 000 SEK/a for university, 124 300 SEK/a for high school).
I imagine that it could be the same way in the US.
But surely the goal of university is letting people get a university level education-- become mathematicians, physicians, engineers, teachers etcetera, serving the need of society for diverse types of semi-experts.
Furthermore, surely there is no need for additional facilities; and surely they don't need to be fancy.
It should be pointed out that research universities were always ill-equipped to deal with a high demand of university classes.
What is better is the hub approach of key-research public universities, say five per state and then ten commuter campuses that re-use courseware from the research facalities.
In fact in the USA several states are moving to this model, including such states as Indiana.
They can only get away with this crap due to government subsidized student loans. Remove the artificial inflation of cheap government money and this crap would self-correct overnight.
Even better - make colleges guarantee loans. If people can't get a job after 2 years of graduation make the schools start making the loan payments until they do get a job. BS degrees would dry up overnight too.
I couldn't agree more with your second point. But we'd need some sort of safety net for the humanities or else basically all but a few hollywood-feeding schools would drop them. Right now they're bloated and giving worthless credentials to kids for intersectional harry potter phd theses, but it would be good to keep the cores of the departments alive (if there's anything left).
The same humanities who championed that it’s in our Iranian culture to beat our people to death for having “improper” hijab? The sooner these leeches get defunded the better.
Subsidized loans cap out at $23,000 for all four years. After that you're taking private loans at high rates. A relative was quoted 9.9% for most of his loans with a strong-credit adult co-signer, and that was well before the recent interest rate hikes.
371 comments
[ 4.2 ms ] story [ 297 ms ] threadSurely the rationally-acting rational actors at all of these institutions are acting rationally in accordance with rationality?
After all, we live in a time when any "entrepreneur" can affix his name to a suburban sprawl wasteland strip mall storefront, open a University, and get accredited by at least SOMEONE and drive all of the wasteful and bloated (and liberal sissy-manchild-- their words not mine) institutions out of business, using the holy and righteous motive of PROFIT to deliver a better, cheaper, more rationally rational product to all of the young impressionable minds out there, right?
They’re kinda the worst of both worlds: massively subsidized by the state and federal governments, with very little government oversight.
None.
Several open every year. All you need is the capital and that’s what we’re all about, baby!
And then you can get the same subsidies and low levels of oversight as the big boys!
It would be interesting to see the trends in the costs of getting accredited over the decades.
People really lost patience with that crap after Corinthian, Capella, etc. so there are a lot of new limits and regulations. Basically the only non-accredited colleges that can make a go of it are those that have some other kind of rich sponsor - most often a religious one.
You can't make risk disappear magically.
https://www.manhattan-institute.org/html/underfunded-teacher...
Just grabbed a random link for the above, but underfunded retirement accounts and underfunded pensions explain math in 2022 quite well.
Any inferior integer is good enough /s
A few links that date back to 1993 (pulled at random):
https://www.investors.com/etfs-and-funds/sectors/sp500-ge-no...
https://www.deseret.com/1993/12/12/19081151/list-of-underfun...
https://nrtwc.org/underfunded-union-pensions/
Many industries are "beyond a crisis", its not a permacrisis :p
The public employee pensions are their own mess too
Only if you assume that the purpose of a bachelor's is to provide job training in one specific profession. Not so much if you believe in the value of a well-rounded education, for people who are likely to change careers multiple times, maybe also be civic leaders, etc.
I'm not saying you're wrong, but the debate between these two visions has been going on for centuries and IMO it's not very useful to assume one answer (especially without recognizing the assumption as such).
Do you think university graduates in France, for example, are less “well-rounded” than those in the US?
It's hard to totally dissociate this from second-language issues, but I've noticed that international science grad students sometimes struggle to organize their writing, often in ways that go beyond grammar/vocab. I didn't realize this at the time, but writing essays on (e.g.,) feminism in The Canterbury Tales are really just exercises in putting together a cogent argument. Those skills transfer over to project proposals and design docs too.
In a similar vein, European PhDs are also laser-focused on one topic so that they can be finished in 3-4 years. I think there's a pretty widespread sense that many need to spend a little longer as a postdoc to "round" out vs. Americans with slower PhDs.
In STEM? Certainly not.
Calculus I/II/III(vector)/IV(linera algebra) Physics I/II Chem I/II
That's two whole semesters just getting the basics. You've only got 8 courses left.
In EE, that gets you: Circuits I/II, Digital I, Data Structures I, Computer Arch I, Signals & Systems, Electrostatics, Electrodynamics,
You're out of courses, and you haven't even gotten outside of the minimal major basics--and no labs either.
First year is general math and science. Many people earn some of those credits in high school, so it's already effectively on an as-needed basis.
Second and third year are the core engineering curriculum. At that point, you have all the specific course prerequisites to start a master's program.
Fourth year is a capstone project. You could do that over a summer in the second calendar year. The electives are redundant if you're going to do a master's.
General education requirement is also redundant with high school, and is about a semester's worth of classes.
So depending on your first year preparation needs, it could be as little as two calendar years. Assuming the program requirements are reformed.
A big part of education is studying what you don't necessarily want because it helps inform your intellectual interests.
Is your suggestion that YouTube could function as a way to audit potential college courses? Good idea, except you would already need to know what you're looking for to not be captured by the recommendation algorithm.
We haven't been trapped in a world where the only access to the arcane and the esoteric is held in hand copied, gilded manuscripts, we've even largely transcended the need for libraries.
"Higher education" is, at best, internally conflicted with two very different motives. On one hand it is the arbiter of the gates of the middle class. On the other it operates under the pretense of being the authority of intellect. Frankly my experience with the latter half is a joke, a mixed bag of disinterested people that are just there for the class, some that are disinterested in education in general, some egregiously incompetent at the coursework, and the very few (often none) who are passionate about it. This isn't uniquely on the side of the students, but that of the pedagogues as well. And it is contagious. If anything I'd be willing to bet that it does just enough trauma to people that they put a terminal end to their curiosities.
Anyways, I don't agree, I think the old approach is wrong, I expect it's harmful from the many anecdotes I have. I think it's one of the many coats of lacquer varnishing the piles of shit that these institutions represent to ensure their continuity, and justify their ability to arbitrate so much of the world around us.
Demand is through the roof - there are 20 candidates for every 1 place, and those candidates have almost unlimited access to loans. So the price is immaterial, if you get a place, you pay whatever they ask.
So sure, there's going to be administrative bloat - because there's literally no limit to the purse strings. And this is exacerbated by university rankings which will literally list staff:student ratio as a metric. But none of this has anything to do with Quillette's racist agenda.
https://www.cbpp.org/research/state-budget-and-tax/state-hig...
The same school is now $46/unit with no cap.
Though, through the google, it looks like there’s some sort of two years of free tuition program so it’s probably a wash practically speaking.
So why bring it up?
The last 40 years has seen interest rates steadily fall, allowing students to pay the cost of education further in the future. This in turn allowed students to bid more for education that they otherwise would have paid less for.
If interest rates and inflation reverse their long term course, then there is no reason to believe that students will be able to afford their previous rates.
And the banksters who make the student loans which are difficult to discharge in bankruptcy. The price ramp started after the no bankruptcy provision was made law.
https://thehill.com/blogs/congress-blog/economy-budget/28362...
Simply repeal this law which was a gift to the banksters in the 1990s.
https://www.pewtrusts.org/en/research-and-analysis/issue-bri...
If you look at Figure 4, within the last 10 years, and for the first time ever, the amount of federal money flowing into state universities exceeded state money. There are all sorts of consequences for this. Mostly, I mention this to echo that state contributions to higher education have gone down consistently and the editorial's assertion that the high cost of a university education can be reduced to a bloated administration is a simplified argument of a complex issue that is likely made in bad faith.
> In 2018, the United States spent $14,400 per full-time-equivalent (FTE) student on elementary and secondary education, which was 34 percent higher than the average of Organization for Economic Cooperation and Development (OECD) member countries of $10,800 (in constant 2020 U.S. dollars). At the postsecondary level, the United States spent $35,100 per FTE student, which was double the average of OECD countries ($17,600).
https://nces.ed.gov/programs/coe/indicator/cmd
How much spending is enough?
1. State cuts funding
2. Public schools need to raise tuition to make up the difference
3. The gap in price between public and private school decreases
4. Schools need to improve their product to attract students in order to make up for this lost savings
5. Schools work to improve amenities and add ancillary services (and this can now become cyclical when other schools improve, sending you back to step 4 again)
6. The administration bloats as they hire people to work in these new areas.
Basically one person's "administrative bloat" is another persons "investment in attracting students". I think really the only difference between the two is whether the return on investment is positive or not.
In principle, this helps two ways. It increases the prestige of the school, thereby attracting students. More directly, it brings in new revenue streams, both from tuition (paid directly or via federal training grants) and via overhead on research grants. However, it requires more--and fundamentally different--kinds of admin.
I don't think the system you're proposing would work for open-ended subjects.
"Hey Siri, could you go back over step 3 for me? Where did you get the X-squared term in the denominator?"
a growing portion of the bloat discussed in this thread goes toward increasingly luxurious lodging, amenities and services
generally agree with your broader point, with caveats (e.g., how the credentialism encouraged by the university system might be considered an obstacle to personal and civic development)
https://www.forbes.com/sites/noodleeducation/2015/05/28/more...
The evolution of education has already been diluted (die looted :p).
I just saw a video on California's education system in the middle of the 20th century, compared to where it is today (actually thier ecomony). Not the finest of the bunch in the 21st century.
https://worldpopulationreview.com/state-rankings/public-scho...
Economic evolution happens :)
If the underlying cause were primarily administrative overhead, that should be readily apparent in the (public) budget of any public university. I’m not going to go do Silvergate’s research for him, but I’m surprised he doesn’t cite such a readily available piece of compelling evidence, which at best suggests he’s too lazy to track it down, and at worst that reality does not support his hypothesis.
I think Baumol's cost disease explains a lot of the increase. I find it suspicious that it's not mentioned in TFA. But there are other drivers, of which much higher student expectations play a part. A school patterned after a typical university in the 60s would have some charm but probably students would not enjoy the Spartan living environment or the lack of support services.
In fact given that the numbers of admin staff per student and per graduate has increased, you could credibly argue admin productivity has declined.
Per https://nces.ed.gov/programs/digest/d21/tables/dt21_334.30.a..., after two minutes of googling, if I am reading correctly, the percentage spent by four year institutions on “academic support”, which includes admissions, has remained at about 8% from 2000 to 2020. That seems like a basic statistic Silvergate should have on hand, and one that invalidates his hypothesis, right?
Why do you assume these influences to be mutually exclusive? Upward price pressure for unnecessary bureaucratic positions does not invalidate the problems with those positions, but rather exacerbates them.
That was my point: not addressing alternative theories, while failing to furnish seemingly readily available supporting evidence, seems on its face dishonest.
You get what you pay for. Student and parent expectations have changed and so have college and universities. If you want what colleges used to be like 50 years ago go to a small private or public school that is just barely staying afloat, it will be more or less similar to the so called halcyon days of low cost, no frills college.
The thing is—people don’t want this as voted for by their choice in school. The biggest drops in enrollment are at community colleges, state schools, and small private schools. If people were price sensitive cheap schools would have people busting down the doors to get in. They don’t. In fact, when a college lowers their tuition, they paradoxically often see a dip in enrollments.
Why? Because human brains are broken. We connate price with prestige and prestige with quality.
Colleges get punished if they lower the price, so what do they do instead? They increase the discount rate. Rarely do families pay the sticker price. Google any college tuition and you will see average price paid. It is typically anywhere from 50-75% of sticker price.
The government backs the debt.
The schools get cash.
> The government backs the debt.
I'm not sure if there's a name for this style of argument, but it happens a lot, particularly in defenses of uniquely or primarily American phenomena.
If you want what colleges used to be like 50 years ago — more power in the faculty senate, greater academic freedom, more focus on doing research and less on grantwriting, greater freedom to research moonshots, very few adjuncts — you aren't going to find it at small private or public schools that are barely staying afloat.
How do you define quality in this sense?
It sounds like you need to read Zen and the Art of Motorcycle Maintenance.
But as a former reliability engineer, i bristle as Persig’s claim that quality can’t be defined.
But i fail to see it’s pragmatic application here. Prestige implies hierarchy, and hierarchy implies ranked measurement. But we can’t define what we’re measuring in terms of quality research or teaching. Apparently, like porn, we’re suppose to just know it when we see it. Like a lot of Pirsigs dialog, it feels a little too precious, without necessarily adding much.
That seems to just be a reduction to subjective relativism, which is often the last refuge of people who don’t know what they’re talking about but still want to feel smart. (Or, alternatively, hiding behind rhetorical gimmicks like the “no true Scotsman” fallacy). If they know what they were talking about, I would suspect they could define it. To paraphrase Feynman, if you can’t explain it to a first year student, you don’t really understand.
I think I’ve met two reliability engineers ever and they were both professors so I’m not sure I follow your point.
The other side to the problem that most commenters here are missing is something that is much easier to see if you are employed by the school (as I used to be). There are dozens of layers of bloat and positions that exist only to make Doing Stuff (for values of Stuff that include both Research and Teaching) as slow as possible. Even getting a door fixed -- to stop the door stuck open alarm going off -- took multiple days and multiple people, and not because we had trouble getting a hold of someone. I got decent at navigating this stuff and acquired a reputation as a fixer, which I was all too pleased to move on from, but I sure did become aware of all the people I had to keep happy. There were a lot of them.
I firmly believe that at least half of those staff positions (not people, but positions) could have been eliminated with nothing of value lost. It was kind of ridiculous, and it's one of the reasons I don't work for a tier 1 research university anymore.
(These jobs also tend to be excellent sinecures and attract the difficult sort of person, often by virtue of who your coworkers are going to be, but that's another story.)
But, honestly, what sticks out in my mind with the Door Saga, what I remember years later, is what the union maintenance guy did. He showed up at 11:55, set up his ladder, then "noticed" it was noon, and left to go on break because that was The Rule. I don't remember what he did with the ladder, but it sure did piss the next guy off... so he left too, because he needed the first guy to do his job. Fun all around!
I have union blood in my veins. I don't cross picket lines. UFCW scholarships helped put me through college. So I don't say this lightly: Fuck. That. Union. Utterly destructive leeches. Unions have so much more to offer our workers and our society, and instead they do... this bullshit. Thanks for giving everyone a reason to hate you, you greedy assholes.
It is true—prestige grants price flexibility for the college. They can charge more equivalent to their relative standing. But what leads to that reputation? How do you measure quality of education?What makes Harvard better than any other college at educating students? How much better? What percentage? Okay now prove it. At least in a succinct explainable way.
No, prestige is based on awareness and reputation. That can be gained a lot of ways. Recently a lot of schools have gained reputation through athletics. If you are good at one thing people think you are good at everything and so that reputation becomes overall reputation.
Three repeatable anecdotes regarding college enrollments:
1. When a college builds a new fancy building they see an enrollment spike. Almost every time. Especially if it is student quality of life focused.
2. Colleges that have lowered tuition to increase price transparency have consistently seen enrollment drops.
3. When a college or University makes it to March Madness they see an enrollment bump.
Reputation is tied to many things. Academic quality is hard to quantify or measure and so any reputation based on academics is apocryphal and based in word of mouth.
Others, like selectivity, are known to be gamed by encouraging students to apply even when they have no chance of getting in (which carries the additional income of the application fee).
An athletic conference.
Aren't most colleges turning away qualified students? If so, an enrollment spike is a decision by the college, not the result of increased demand.
Even dropouts make more money after being there, not to put too fine a point on it.
Yes - loudly signalling that the parents can blow $100K/year on an exclusive country club-cum-college for their kids, and never miss it.
Treatment #1 - Immediately start treating the $$$$$$-no-object "colleges" as for-profit luxury resort corporations. Donations NOT deductible, fully subject to property taxes, zero state/federal money for anything, rights to have their own police forces yanked, subject to all SEC regulations, degree-granting powers revoked, etc., etc.
I think government backed so urgent loans are a big reason why people are not price sensitive.
On top of that students are sold the idea that, as the above poster said, "you get what you pay for," and that cheaper schools are somehow worse and will mean they'll earn less money. If you're getting into debt to increase your earning potential anyway, it makes sense that you would try to maximize things. But you're 17, and might not realize that these adults who are in positions of power are likely misleading you.
Also, honestly, a lot of 17 year olds don't seem to be able to grasp the idea that debt is something you actually have to pay back (a lot of adults even don't seem to grasp that). What do people think would happen if they gave every 17 year old a credit card? Yet their financial competence is somehow expected to be completely different if we give them a much larger loan?
I was actually surprised with how beautiful the university grounds were. They likely spend a fortune on landscaping alone.
Our older grandson went to the same school studying CS and EE. I’d say he’s doing very well.
I agree education is over priced, much like any other investment or asset in this day and age.
Perhaps my world view is narrow, but what are examples of these “affordable” schools with spotty wifi?
I think the old buildings or drab dorm argument isn’t a huge deal. Call me old fashioned, but I’d prefer my grand kids being safe but having some challenges. Otherwise, we’re keeping them in a bubble. As long as their is climate control and cleanliness, I’m fine with them not getting a 4.5 star hotel treatment.
The price increases are massive, across the board, and not obviously linked to quality of facilities. There's definitely something more than you're suggesting at work here.
I have the feeling that you're looking only at elite institutions. At the time I was in college, the place came in around #100 on the list of top liberal arts schools in the country, which while not especially shabby, also wasn't in any way elite. In comparison, the one elite university that I'd applied to back then was $36k/year for tuition, and is now $59k/year. Surprisingly, its tuition has grown at a slower rate.
Agree. Part of what is enabling this is all the easy money to pay that tuition.
How is this related to tuition? Do you not cook your own food or eat from private restaurants in US universities?
The article nails the cause of more administrators--the schools have more money to spend and need to spend it--but completely misses the reason schools are able to charge so much more these days.
Yeah, but you're ignoring the mechanics of that happening.
> completely misses the reason schools are able to charge so much more these days.
I don't think it misses it. I think it just ignores it as a matter of practicality. It would take an act of god to get money removed from the system, but there is a very real chance he could cut some cost and bloat from single, incredibly influential, school.
Collage is largely an exception to that as elite schools don’t charge 100+x the average the way say watches, clothing, etc do, and most people aren’t going with the low cost options.
Do you have an example?
Supply and demand is exactly what drives the prices up. People have a huge supply of dollars due to financial aid loans, and cannot spend those dollars on anything but education. With more money available, schools charge more.
It’s the same mechanism as inflation.
Commodities often follow a similar trend with global Steel production resulting in lower prices per pound over long stretches of time. The trend is less obvious over short periods of time but compare steel prices every 50 years say 1820, 1870, 1920, 1970, and 2020.
Some things like beachfront property are inherently in short supply, but it’s hard to argue that applies to collages across decades.
Easy credit made it so demand for degrees outstripped capacity. Schools raised prices to meter demand. At these increased prices, schools felt compelled to invest in programs and administration.
Also, as I understand it, the accreditation process is pretty broken in the country. Whatever the top programs are doing becomes the benchmark for everyone else to match. So it's a never ending treadmill to keep up.
a lot of cultural differences (and other historic path dependencies) led to using degrees and other signals for hiring instead of actual performance.
even by-definition woke (and I'm not using it pejoratively here) employers have trouble letting go of their mindless credentialism.
https://twitter.com/mattyglesias/status/1539188973553299457 [audio version seems non-paywalled https://curio.io/publications/matthew-yglesias/matthew-ygles... see also https://www.slowboring.com/p/crt-school ]
Save for most STEM and subjects that have an external certification (bar exams).
College is too expensive, but it's not because people who work at universities are overpaid.
I worked in EDU.
Colleges are investing in amenities instead of quality, affordable education, because the bloated admin is useless and corrupt, so they spend on big ticket sports facilities and buildings (where does the money go?) to justify the administrative excesses (if you build a $100 million stadium it's easier to justify a few million to renovate the presidents office).
The root of the problem is the terrible leadership, that is enabled by the broken funding model. Fixing the funding model won't resolve the leadership problems.
There should be a middle ground in reducing costs of overpaid bureaucratic bloat while also providing everyone on campus enough support, from undergrads to grad students to professors, etc.
The best solution here is just to start enforcing pip quotas lol.
Where the taxpayer money should have gone: on the supply side. For example, the number of UC campuses in California should have doubled as the population doubled. The last UC campus to open was Merced in 2005. Before that was Irvine and Santa Cruz in 1965. And we wonder why tuition keeps increasing? 1) Demand increases with population increase. 2) Demand increase with more people seeking 4 yr degrees. 3) Demand increases with the US subsidizing the ever living shit out of college tuition. 4) Supply stays relatively constant.
Similarly Obamacare drove the demand side by subsidizing health insurance and onboarding millions of new members. It did almost nothing on the supply side - same number of hospital beds and doctors. Insurers and medical groups made a killing as the price of their services grew dramatically.
In both cases, political stability was achieved in shoveling taxpayer money at education and healthcare without increasing competition. This is a very clever way for existing vendors in healthcare and education to soak the government.
Solution: drive prices down by investing in supply of education and healthcare.
The seats have increased dramatically.
You won't be able to create efficient competition. The value shoppers already go to state schools. The other people are looking for a specific "quality" or just plain emotion (my family went here, this school is prestigious, etc).
Supply isn't the real issue in most disciplines. The problem is the demand side individuals making economically dumb choices (sometimes semi-forced by the larger societal situation).
I'm not sure how you compel schools to compete on price, because the consumers don't care about price. They'd rather get they "good college experience" for $50k a year than the "sufficiently good education" for $7k a year, even though both options are available to choose.
I really wish we had 4 year institutions managed like our community colleges, though. I remember my 2 years there much more fondly than I do my time spent at a "real" university.
[1]: https://www.usnews.com/object/image/00000183-138c-db49-a3a3-...
https://admissions.fsu.edu/first-year/finances/
https://hechingerreport.org/from-associate-to-b-a-more-peopl...
New research from the think tank New America shows that 24 states have approved at least some community colleges’ plans to launch bachelor’s degree programs; at least seven have been approved in the past five years.
Genuinely curious, what was it you liked about CC?
A few things that stick out in my memory are the greater number of non-traditional students, several of whom I made acquaintances with. They had more stories and life experience than the average 18/19/20 y/old and I thought were more interesting to talk to. Also, my CC had some vocational/non-academic tracks with accredited classes available as general electives, and I enjoyed stuff like some aviation classes, where again I got to hang around a totally different group of students.
It feels like it all was more developmentally important than the by-the-books liberal arts education I got at a private university, full of self-important pep-talks by upper level college administration, and professors who were only paid marginally better than the instructors at my CC...
(I want to emphasize this is about cookie cutter undergrad studies, and leaves out the other functions of universities, which a CC obviously couldn't compete with)
So, people picked the 'best' school they could get into. Not just for the 'experience', but to make sure they got the best education they could and opened as many doors as possible. Because you don't really get a do-over.
After having gone through it all, do you think if it matters how many doors open for a person based on the college they went? I suppose if someone went to a highly ranked school, it might matter.
But being able to get into a highly ranked school is probably because of what the person had (money, life experiences) or what they did (crushed some standardized test).
So, in the end, does it actually matter?
Interestingly, the renowned private universities don’t seem to have any better of a curriculum than the high-grade public research universities. So from an education point of view, there still exists a ‘good enough’, it’s just not the budget state college.
I did physics at a world top 10 university and the course work was basically day care. The vast majority of the 'difficulty' of the subject matter was because the majority of students were bad at algebra. The outcomes would have been better for everyone if we completely ignored first year and just taught people the Knuth Bendix algorithm instead.
Demand is increasing due to the college wage premium, which keeps widening with no end in sight even despite Covid and online learning.
The college wage premium is the number one culprit for all these problems . For whatever reason, employers derive enough benefit from college grads to pay them waaaayyy more than high school grads
https://greyenlightenment.com/2022/09/22/blame-college-wage-...
The vast majority of people attend college to earn more money and be employable, as a sort of ticket the middle class. If college degrees only paid slightly more than high school instead of 2x more, demand would probably fall a lot, so would borrowing and tuition. Same for unemployment: high school grads have to 2x the unemployment rate. Maybe the onus is on employers: start finding ways to find hire more high school grads for better paying work...huge labor pool of high school grads..they cannot all be bad.
> The college wage premium is the number one culprit for all these problems . For whatever reason, employers derive enough benefit from college grads to pay them waaaayyy more than high school grads
That may be true. But there's an easy fix: any job requirements that ask for any college degree (e.g. "a 4 year degree" not "a BS in chemical engineering") should be illegal.
Honestly, I don't really understand why they aren't already: they clearly violate the 4/5ths rule. And it's hard for me to believe that some enterprising lawyer hasn't already brought suit under this theory.
My guess is because 'not having a college degree' is not any kind of protected class. Not an immutable characteristic. It is a behavior choice. Do we really want to get the gov't involved in telling private companies what qualifications they can require for a particular job?
That is true.
But race and sex are protected classes. And the 4/5ths rule says that if a particular requirement generates a resulting distribution that is more than 4/5ths different from the general population, then it is presumed to be a form of structural discrimination[1].
From what I understand, a requirement that is necessary for the job - for example, a particular degree like Chemical Engineering - would be exempt. But I doubt that the requirement for a college degree without regard to the subject would be similarly protected.
---
1. This is not idle conjecture on my part. There were a number of pretty high profile firefighting tests that were the subject of lawsuits for this very reason. And the cities lost. Sadly, I didn't save the test at the time and I suspect that they've been lost of the mists of time, but I did read at least one of the tests in question, and it was a bunch of firefighting related questions.
If you compare them in that light, the difference reduces quite significantly.
If/when I become President of the United States, I will hold back all education dollars on cartel-controlled education institutions, and heavily tax their endownments.
I wonder if it legal to completely clone a curriculum? Like could you clone an MIT EECS education? Down to the coursework? Or alternatively - force elite schools to license and manage franchisees?
I'd vote for you.
> is it legal to completely clone a curriculum?
Gray area. I'm no lawyer but AFAIK professor's syllabus/tests/etc. (being written documents) are subject to automatic copyright, I imagine the university is the holder of the copyright given that the prof is an employee. That being said, how many profs clone their syllabus/coursework directly from textbooks? The content of most online universities (Khan Academy, Coursera, etc.) is already superior to Ivy League based on first-hand experience of both.
The bigger problem IMHO is that very little of the overall $$$ and energy at Ivy League is actually spent on course content. For many profs, esp. in STEM, teaching undergrad courses is a "chore" / distraction from their research work. I think there is opportunity to make a "lean-and-mean" physical university (perhaps online hybrid) with minimal admin overhead, which a degree could be on-par with MIT in terms of prestige. Is anyone doing this?
MIT will do that for you themselves. https://ocw.mit.edu/
Schools don't compete on curriculum. Nobody pays for it. Nobody cares about it.
And in one particular case, I think the "conventional wisdom" has it right - the lectures don't really matter. You can record a lecture and then play it for any number of people, very cheaply. I recently watched a Chinese drama in which a minor plot element was a character (in the 80s) getting a degree from "the TV university", lectures available to the television-viewing public. (Having your own TV was out of the question, so she and her "classmates" would make long commutes to places that had a TV showing the lectures. This educational format has been very affordable for a very long time.)
That format is not as good as actually having a lecturer, or a TA, who you can ask questions of. If you lose track of a recorded lecture, it will not help you find the thread. All a recorded lecture can ever do is repeat itself. A lecturer versus a lecture is the difference between moving forward and getting stuck.
In western Europe and Asia all college education is more rigorous than American college.
And yet I don’t have the overall impression that the international bachelor’s people I know got something correlated out of the difference in rigor. It would be as obvious as the difference in rigor itself. It’s not.
Well, there are many functions (mostly to do with abrading things) where diamonds are useful for the purpose and a substitute is much, much less so. If you're distinguishing "precious" from "rare", this would seem to be proof that they are precious.
Also there is heavy rhethoric from diamond industry that "natural" are better
Many industries in the USA are quasi cartels, 2-5 companies own most of the market and competition is quashed by it being very difficult to break in. The airlines are a cartel but occasionally you see a new airline or there is a private equity attempt to cartel the vet business dispite the fact that some new independent vets can enter the market.
https://www.forbes.com/sites/michaeltnietzel/2022/01/10/fede...
The story doesn't even claim they collude on pricing! It just says that admissions is not needs blind, the way that these universities claim it is.
"Back in the 1990s, the Justice Department charged several elite colleges with price-fixing, including many current members of the 568 Presidents Group. Those colleges regularly communicated and gave "essentially the same financial aid award" to any student who was admitted to multiple schools, according to congressional research. The suit ended with a settlement, and a 1994 law allowed colleges to keep working together on financial aid packages."
"In writing the law, Congress specified that its goal was to spread the benefits of financial aid as broadly as possible."
And if they're discriminating against lower-income families, that aid won't go to those who ostensibly need it most. Being that the filthy poors won't receive that aid, they will pay more.
The dismissal was refused in August, the case is proceeding, I expect there is something veracious about it, huh?
The plural of (obsolete) anecdotes isn’t evidence!
Limit competition: How many new entrants to the prestiguous university club (Ivy League, Stanford, MIT, etc.) have there been in the last 50 years?
Fix prices: How do you explain tuitions growing at 5x inflation consistently since 1990, in an era where information itself has become dirt cheap (the internet.)
There does likely not need to be quid-pro-quo "collusion". I am not envisioning a shadowy meeting room where all the university heads smoke cigars and agree on tuitions. There doesn't need to be. Has any of the elite universities ever cut tuitions, in order to compete with the others?
The fact that most people can name the most famous schools seems to imply they are rare.
They are perceived as having better outcomes than regular state schools. Do they or dont they? If their grads do get better jobs and end up more successful - then they are genuinely better? People from state Universities end up sitting next to Ivys etc there is no difference - this is what I believe. We'll see if everyone else's perceptions change in the future as well.
https://www.washingtonpost.com/news/wonk/wp/2015/09/14/this-...
The US median income is still around $70k. An extra 40k - $3 grand a month - goes far.
All the people I know who went to Stanford got very nice, “cushy” jobs straight out of college. Most of the people I know who went to state schools had to bust their asses for years at much less pleasant work before they worked their way up to the nicer jobs.
The head start you get from an elite school in the US, in things that have nothing to do with education per se, can not be overstated.
Yes it can be, and you just did.
The people who routinely get the best jobs and keep them into their 30s and beyond are well connected people. It doesn’t matter whether they go to Ivies or other schools.
If connectedness could be controlled for, I think you would find that the most connected people at Ivies, Stanford, UMich, UTexas, NYU, etc. (let’s call it top 10%) are much more similar in terms of steep career trajectory than less connected top graduates (e.g., top 10% in gpa) even from the most prestigious schools. This is doubly true if you control for SES in addition to connectedness.
For folks who are not natively from these well-connected classes of people, it is possible to make a big jump in “opportunities”, but in practice that means socially integrating oneself into the elite class as an outsider (tough to do and rare) or finding work in a handful of places that facilitate social climbing (e.g., Goldman, also relatively rare).
Your median elite school grad will find it slightly easier to end up on the higher end of the SES class that they were already in, although even that is not a guarantee.
This is not nearly as life-changing as you make it out it be.
> All the people I know who went to Stanford got very nice, “cushy” jobs straight out of college. Most of the people I know who went to state schools had to bust their asses for years at much less pleasant work before they worked their way up to the nicer jobs.
I’m pretty sure that there are a large number of SJSU grads (a CSU school, of all things!) who would like to say hello. Plenty of them got and get “cushy” jobs straight out of school, with the folks who were already connected and/or worked on their connections taking the lead.
I have posted about this before on HN: One thing that is frequently overlooked, better schools (usually) have better/smarter students. My first uni was medium famous. My second uni was part of Cal[ifornia] State. The first was full of intelligent, highly engaging students. The second was... well, much less. The best parts of my uni education were working with other highly intelligent people on hard engineering problems. My second uni felt like an intellectual desert, but, hey, I got my degree.
More: Good schools act as a filter for employers. Why look for "diamonds in the rough" at a low quality school, when you can pay marginally more salary and get much better students at medium quality and above schools? I am on the hiring side now. I rarely find a diamond in the rough from a low quality school. The best candidates are mostly from the best unis. The same is true for former employer. If your CV has a bunch of low quality companies, you are also likely low quality. Again, rare exceptions exist. I won't name the employer: But one has had a 100% failure rate during interviewing. It is so bad, that I now regularly discard CVs with this current employer... unless the CV has something exceptional.
In closing, what if you are a diamond in the rough? My advice: Change employers as often as possible in your industry & country. Each change needs to be a step up the reputation ladder. If a sideways move, make sure you get title and/or money. In my last employer move, I move down one step in reputation. The quality of employees is much lower here than my other higher rep employers.
As for whether these schools are "precious", well, their students certainly are judging by the number of trigger warnings and emotional support pets.
Removing government help won't end the college dream... but it might, in time - since it took time to get this fucked up - restore some semblance of reasonable to the equation.
She has no conceivable way to pay that loan off on that salary. She will never qualify for a mortgage with that kind of debt to income ratio. The university promised this hopeful 18 year old child a dream job and a good wage to go with it and instead they basically destroyed her future.
The fraud universities are perpetuating makes the banks look like a freaking soup kitchen. The first politician who recognizes that this is modern day feudalism and has the guts to call it as such is going to be very successful.
I believe the reason is that since we print the global reserve currency, we can always borrow money at the Federal level and spend more.
I think that by looking for an excuse as to why the government messes up everything and using that as a way to remove government from things, you haven't changed the need for that thing, you just make it so that in order to fill a public need the government has to enable it in some way that is probably less efficient -- like giving out lots of loans for education, or by having people forgo basic care and then ending up in the hospital with a huge bill that the government pays for because they cannot.
There is usually a medium between these things and it would be great to get off of our collective ideological horses and find them instead of blasting rhetoric at each other.
"it would be great to get off of our collective ideological horses and find them instead of blasting rhetoric at each other."
Obamacare also has a huge positive impact besides just access to healthcare. For instance I couldn't have started a startup without it, and it's much easier to hire contract workers because of it.
Still, the supply side support necessary would also be an issue. For markets where the local going rate is expensive enough it would make a ton of sense to allocate military medical units to supplant the local market until more doctors of that type were in the area. If it takes long enough the military supply might even retire from the forces to open practices in that area.
What about between 35 and 50?
I mean I know only two interesting facts about you, the difference in time, and I already know a common sense reason why your price today is much higher than it would be when you were 15 years younger, in “literally” any time in history, and perhaps it was always about 3x more expensive premiums.
https://www.healthcare.gov/how-plans-set-your-premiums
> Age: Premiums can be up to 3 times higher for older people than for younger ones.
It is actually very available information. See age rating factors in these pdfs:
https://www.state.nj.us/dobi/division_insurance/ihcseh/ihcra...
For example, in New Jersey, a gold metal level plan would cost a 64 year old 3 * $730.86 ~ $2,200 per month, which legally has to cover 80% of a person’s expected healthcare costs.
For a silver level plan, ~$1,300 per month will cover 70% of the healthcare costs.
That just shows how much more healthcare people need as they get older.
SPY: about 4X
QQQ: about 6X
GOOGL: about 6X
CI: about 9X (Cigna health)
ELV: about 10x (formerly Anthem)
AAPL: about 19X
UNH: about 20X (united healthcare)
Health Insurance stocks in the US did better than tech stocks after Obamacare passed. Why?
This analysis shows the majority of health insurers becoming less profitable after Obamacare?
https://www.commonwealthfund.org/publications/issue-briefs/2...
Considering that an out of pocket maximum did not exist prior to affordable care act, and insurers were allowed to deny people with pre existing conditions, I would expect drastically higher spending on new insureds because they would finally start getting healthcare.
Now the insurance company has to pay the hundreds of thousands and millions per NICU/hemophiliacs/cancer patients etc, so why wouldn’t their expenses go drastically higher?
I'm asking why their revenue for increased exponentially for having 10% more clients.
Not to mention that the ACA forced insurers to subsidize old people from the young (maximum age rating factor), health to sick (can only price based on age, location, and tobacco status), and imposed out of pocket maximums. All of these mean the insurance company is spending a lot more after ACA than before ACA, and all of that had to be recouped as revenue from premiums, otherwise you have bankruptcy.
Also, all the US health insurance company financials are public. You can see their profit margin is a steady ~5% for over a decade. They are spending $95 for every $100 in premiums they take in.
> Also, all the US health insurance company financials are public. You can see their profit margin is a steady ~5% for over a decade.
https://www.macrotrends.net/stocks/charts/UNH/unitedhealth-g...
https://www.macrotrends.net/stocks/charts/ELV/elevance-healt...
https://www.macrotrends.net/stocks/charts/CVS/cvs-health/pro...
https://www.macrotrends.net/stocks/charts/CI/cigna/profit-ma...
https://www.macrotrends.net/stocks/charts/HUM/humana/profit-...
https://www.macrotrends.net/stocks/charts/CNC/centene/profit...
https://www.macrotrends.net/stocks/charts/MOH/molina-healthc...
Going back to testfoobar’s comment comparing tech companies and health insurers, I do not think any investors will be impressed by health insurance companies’ low single digit profit margins compared to tech’s 20%+ profit margins.
Is this a genuine question or is it rhetorical? I can’t really tell these days.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5145008/
Short answer is that insurance companies were “limited” to 20% profits and 80% expenses by ACA.
Smarter insurance companies realized quickly that they not only had zero incentives to cut costs, but they were actually incentivized to let costs increase to be as high as legally possible, thereby increasing their profit cap in absolute dollars.
I don’t know if this was the idea of one party, a bilateral backroom negotiation with the insurance companies, or a comprehensive lobbying victory, but it ended up being a massive boon for insurance companies and hospitals and a complete shitshow for consumers.
If this part of the ACA doesn’t change, it will break the US healthcare system.
It is a competitive business without a lot of pricing power. But what it will do is provide consistent, reliable returns. And since more people are getting more healthcare, the magnitude of the profits will obviously be higher, hence the increase in stock price.
Basically, the market caps now reflects what are essentially utilities that earn ~5% profit margin on huge revenues. This was not clear in the early ACA days, but investors have obviously warmed up to them.
It seems like you’re theory-crafting here rather that describing what is actually happening in the industry.
1. I somewhat sloppily used the term “profits” in my previous post, and I should have used “gross margins”. Specifically, 80% of premium payments have to be used on healthcare expenses. Their profit (~5% as you mentioned) comes after they pay their relatively consistent operating expenses out of their gross margins.
2. The increased number of people getting insured is not what has driven up the insurance companies profits. Those numbers don’t add up.
3. The prices of name brand insurance have increased fairly consistently. It’s not competitive at all, imho. It’s an oligopoly.
4. If you know people who work in medical billing and/or you’ve known a handful of people with substantial medical bills, you will know that hospitals have increased prices for many things to ridiculous levels, and they “nickel and dime” patients at ridiculous markups for anything possible. Why? Insurance companies don’t bat an eye at these expenses any more, and they are not incentivized to do so. As money out increases via payments to providers, money in can increase via premiums, and thereby absolute gross margin can increase proportionally. If you need further proof, check out the actual prices that people pay when insurance doesn’t cover something. Miraculously, charges come down and substantial portions of the bill will be forgiven/waived.
5. Investors have warmed up to the idea that health insurance is a government-supported racket that ultimately screws people who have to pay their own premiums in part or in whole.
Note that I am a fan of most parts of the ACA, but the 80/20 rule (and the misaligned incentives that it facilitated) needs to be fixed. That said, the hospitals and insurance companies are feeding at the trough, they have established a new excessive normal, and they will fight any change to the 80/20 rule by comically pleading poverty.
>Their profit (~5% as you mentioned) comes after they pay their relatively consistent operating expenses out of their gross margins.
Just like in any other business.
>The increased number of people getting insured is not what has driven up the insurance companies profits. Those numbers don’t add up.
Their profit margin has not been driven up [0].
>It’s not competitive at all, imho. It’s an oligopoly.
In an adjacent comment [0], I posted profit margins for 7 different publicly listed multi billion dollar health insurance businesses, which excludes Kaiser Permanente. If that is not a competitive business sector, I don’t know what is. If you are claiming collusion, I would need proof.
>That said, the hospitals and insurance companies are feeding at the trough, they have established a new excessive normal, and they will fight any change to the 80/20 rule by comically pleading poverty.
How are sub 5% profit margins feeding at the trough? If that is feeding at the trough, what is Apple, Microsoft, Visa, Alphabet, etc doing?
If insurance companies had the pricing power you are claiming they have, why would the shareholders accept anemic profit margins?
[0] https://news.ycombinator.com/item?id=33503127
It really seems like you are arm-chair quarterbacking your comments based on some quick online searches. I strongly encourage you to talk to folks who have worked in hospital billing pre- and post-ACA and (if possible) actuaries who work in the health insurance industry who will speak to you frankly (rather than toeing the industry line). The misaligned incentives are a complete shit show.
> Why is gross margin relevant?
If you can increase gross margin number while maintaining operation costs at about the same proportional level, then you end up with more absolute profit. So 100 premium, 20 gm and 5 profit can become 150 premium, 30 gm, and 7.5 profit.
> How are sub 5% profit margins feeding at the trough?
The percentage is not the issue. The absolute amount is.
Some examples:
- My premiums pre-ACA to now have almost quintupled. There are some good reasons to explain a small part of that increase (e.g., I’m older), but 4-5x is absurd. Way higher than inflation, and way higher than the quality of care has improved (for me specially, but also in general).
- This link (https://khn.org/news/article/surprise-bill-iv-push-hospital-...) is an example of hospitals feeding at the trough. Imagine this happening hundreds or thousands of times a day at every hospital. It’s absurd. I realize that this is basically a marketing piece by Kaiser, but the article is directionally correct based on folks I know who work in medicine, health insurance, and hospital billing. Their stories are all very consistent.
- There are many other countries with functional healthcare systems that do not charge anywhere near this much (for most people). Japan comes to mind. I have lived there. Premiums are based on a percentage of your salary, and the cost is much less than the US for 95%+ of the population. If you have no salary, it’s about $100 a year. When the US system reforms, I hope that the reformers take lessons from Japan since the transition from our current system to something like theirs will be relatively easier than many/most other options.
> If you are claiming collusion, I would need proof.
This isn’t CSI, and collusion doesn’t have to be explicit, especially with oligopolies.
Once the major players in any market in the US realize that they can take a win-win game theory approach to their pricing, they pretty much do so. They don’t have to have surreptitious back room meetings in order to realize that increasing prices more or less in step is mutually beneficial, especially in health insurance, which has a wide moat.
Do you expect profit margins to approach 0% over time?
> If you can increase gross margin number while maintaining operation costs at about the same proportional level, then you end up with more absolute profit. So 100 premium, 20 gm and 5 profit can become 150 premium, 30 gm, and 7.5 profit.
Sure, but because of competition, this is not happening. The premium payer will shop around and choose a different insurer offering 130 premium. If this is happening, there would be clear evidence, since all of these publicly listed companies have public financials.
> is an example of hospitals feeding at the trough.
This discussion is about insurance companies, not hospitals.
In any case, I will simply rest my case that a business with low single digit profit margins is, by definition, not “feeding at the trough”. Lots of competition, low profit margins, all lead to a pretty cutthroat business environment.
I suggest people direct their ire at drug manufacturers, healthcare providers, software providers, and others in the healthcare business with 20%+ profit margins. And increasing the supply of healthcare in general.
Or people can keep wasting energy on blaming the 3% middleman, which is beneficial for the 20%+ profit margin businesses.
Edit: final note:
> - My premiums pre-ACA to now have almost quintupled. There are some good reasons to explain a small part of that increase (e.g., I’m older), but 4-5x is absurd. Way higher than inflation, and way higher than the quality of care has improved (for me specially, but also in general).
Premiums pre ACA and post ACA cannot be compared due to drastic changes in laws about the terms is the insurance. Namely, the limitation of pricing insurance on only age/location/smoking status, and the implementation of out of pocket maximums. In addition, as of 2022, the no surprises act bill means out of network emergency costs are included in the out of pocket maximums.
Effectively, even though you feel you are getting less quality of care (and you very well might be), the insurance product is much different than before with much higher (nominal) coverage, much more expensive treatment options, and more subsidies for others in the insurance pool.
Based on aging demographics and declining labor force participation rates, I would not expect the situation to get any better. Healthcare, especially labor intensive, will cost more and more.
<rant-on>
Sure. On my back, and that of countless others. It's fucking highway robbery.
Before Obamacare we had excellent health insurance with excellent coverage, doctors and low deductibles for $650 per month.
When we were shoved into Obamacare, our rate TRIPLED to $1,800 per month. Today we are paying nearly $2,300 per month. This is equivalent to a mortgage payment or non-trivial savings either for personal use or to help your kids with college.
There is no other way to put it: We are being robbed.
Put some numbers to it for context:
Over ten years the increase amounts to about TWO HUNDRED THOUSAND DOLLARS. Money taken from us, by law. This doesn't even include a calculation of what this would be if invested in a low risk mutual fund or real estate.
The concept that a family has to pay so much PER MONTH for health insurance should make everyone take pause. This kind of thing is why I have always had a strong negative reaction to anything government-driven. It never ends well.
Even worse, Obama lied to all of us. His promise to the nation, easily found on countless videos, was that families would save in the order of $2,500 per year on health insurance. Right.
How do these people get a free pass on shit like that? Why?
I don't know if this is even possible. I wish someone could organize a massive class action lawsuit against all who forced this on us. I am happy for those for whom things improved. I truly am. However, doing it by causing serious financial harm to likely millions of families is not right, at all.
We (my family) are burning --quite literally-- tens of thousands of dollars per year on healthcare because of Obamacare. The other part people don't understand is that deductibles have gone up and insurance does not trigger until you spent a certain amount per person per year. In our case my entire family would have to be run over by a semi truck before we actually start to see significant benefits. In other words, the cost isn't just the premiums, but the expenses we have to incur before benefits actually kick in.
Here's an example: One of my kids ended-up in the hospital with myocarditis due to the Covid vaccine. That cost us over TEN THOUSAND DOLLARS, cash.
Needless to say, every time I see Obama, Pelosi and the bunch I have to try very hard not to launch into projectile vomiting. I know many people idolize them. Sorry, you have chosen to admire liars and criminals.
<rant-off>
I cant fathom why the majority of Americans are ok with their weird sociopathic Job = Health Insurance based system. While not as nearly unanimous as the metric system, well funded Public Health Care to a level where most people don't need health insurance to cover an emergency hospital visit for say a broken leg... is basically what everyone else around the world in other countries considers a normal and good thing...
In essence... You were already getting ripped off, now you're getting ripped off even more.
In England, Australia, Germany, France, Canada, etc, etc, etc... The treatment for your child would likely have cost you nothing, or nearly nothing. The fact it cost you over $10,000 is not entirely the Obama's fault, it's the collective fault of nearly a century of American citizens who have accepted the status quo and not pressed for any sort of change prior to Obama promising to change it single handedly, since that worked about as well as most people watching from other developed countries with modern socially supported public health care expected it to... it was a best case train wreck because of health care industry self interested lobbying efforts from pharmaceutical companies, insurance companies, hospital management companies, all the companies... not because it was a bad idea to stop the fright train that is employer provided health care in the USA. They just managed to convince them to stop the metaphorical train in such a way they could profit even more, and thus cost everyone including the government even more money...
Americans were simply going without healthcare, so it was unavoidable that it was going to cost the whole country more money.
>I cant fathom why the majority of Americans are ok with their weird sociopathic Job = Health Insurance based system.
Because once the government gives a subsidy to a certain tribe, that tribe no longer has an incentive to vote to increase that subsidy to members of other tribes.
For example, in the US, old people have had healthcare for many decades. And they have the highest voting rates. But as a politician, you are not going to get far advertising that you will increase their taxes so that non old people can receive healthcare, especially if many of those non old people do not look like the old people.
But, completely screwing people is also politically unpopular, so what can pass is a half measure, like Medicaid, where politicians can say they helped people get healthcare, but also keep taxes low. How? Well, you simply pay the doctors and drug makers and dentists less for people covered by Medicaid. And you pay more for people covered by Medicare.
And as the tribes get more and more politically influential, you can keep adding various tiers of subsidy recipients. And that is the beauty of “health insurance companies”, or rather, “managed care organizations”.
Businesses with young, healthy, office workers can pool their health risks into less risky pools and pay much higher reimbursements so they get premium healthcare.
Poor people get directed to Medicaid, which will have a network of fewer and overburden doctors so they get less care, and less quality care.
Medicare will provide old people with enough healthcare to keep their votes coming.
Federal and military employees get decent healthcare because their coverage pays more.
Others get dumped onto the statewide exchanges that are you get what you pay for type deals.
And all of this is funneled through the managed care organizations so that people cannot easily measure who is getting what and who is getting more from the system versus less.
So tl:dr is that as a country, we do not actually want to help everyone equally. Just enough to say they were helped, but at the same time, make sure we get as much of the pie for ourselves as possible, and give up as little as possible.
> I cant fathom why the majority of Americans are ok with their weird sociopathic Job = Health Insurance based system.
Agree with everything in your comment. I think I can say everyone in the US wants a solution for this, including the idea of healthcare not being financially crippling for anyone.
It is easy to wrongly reduce any issue to a single variable. Politicians love doing this because they can then identify good and bad and use that to divide the population for votes. The truth is that everything in life is a complex multivariate problem. Few take the time to take a deep dive into the tree of variables in order to understand.
While not a comprehensive explanation, I'll attempt to at least provide some perspective, particularly for those not living in the US and likely, because of that, not having direct visibility into the web of issues. From my perspective, there are four macro issues that drive our cost structures. I'll keep it short. Happy to expand on any of these if interested.
Like I said, there are many variables beyond these. We send our kids to school from 5 to 17/18 years of age. After twelve years of schooling young adults come out of these institutions with no marketable skills whatsoever. Our high school graduates are only good for stacking boxes and, with training, making coffee. They are ignorant and pretty much useless without an additional 6 to 24 months of training.They are sold the idea that minimum wage should be a living wage because we are training people who can only qualify for minimum wage jobs. Except that faulty economic ideologies is constantly eroding living standards at every level. Politicians pushed the $15/hr minimum wage as a solution for all the problems. Today, with inflation and rising cost structures (some of it driven by the doubling of the minimum wage), earning $15 per hour is likely less --in terms of purchasing power-- than it was before selling people that fantasy.
Education is at the core of a number of problems in this country. How does that affect healthcare? You are creating generations of poor people with no or low skills. This means they have trouble financially contributing to the greater good.
If I remember correctly, the university drop-out rate is such that only about 25% (if not less) of first year students in the US graduate. This is connected to the prior issue as well as other factors. Once again, we end-up with a massive number of people who will likely suffer from financial struggles for life.The fact that K-12 schools do not prepare students well means a significant number of them have to either take (and pay for) remedial coursework or eventually drop out. Most drop out.
In addition to this, our university programs waste student time by forcing them to take irrelevant coursework. This is particularly visible in the STEM fields. Students have to engage in about a years' worth of irrelevant non-STEM coursework. I define "irrelevant" to mean: Coursework that no employer cares about at all and will have no effect in advancing anyone professionally. We could graduate people 25% faster and with 25% lower student debt if we just excised irrelevant coursework.
What's ironic about this is that anyone would agree that someone pursuing a degree in art would be wasting their time and money if forced to take a year filled with mathematics, physics, chemistry and other STEM topics. And yet, for some strange reason, we force our STEM students to spend tens of thousands of dollars and waste an entire year taking courses like "Young Karl Marx". No bullshit, my son was force...
One particularly sad example I have of this is a young lady who was a member of the FRC robotics team I mentored for many years. She was duped --I have to use the word, no other way to describe it-- into accepting admission into a university that was going to charge her $300K for a degree in mechanical engineering. I and other professionals mentoring the team advised her against doing this. We explained what $300K in debt for a degree in mechanical engineering was a formula for financial slavery for three decades, or more. Well, we could not beat the marketing machine. She graduated with a little over $300K in debt and is absolutely hating life today.
This is where we make a connection that starts with K-12 and culminates with university outcomes and the healthcare systems.
An MD, depending on specialty, graduates with about $300K in debt. That's actually a bad number because it is an average, and averages are horrible metrics to apply to a population. The number can easily reach $500K, particularly when you include all elements, not just tuition.
Here's the connection: There's an ecosystem of professionals, all of whom participate in delivering healthcare through their own specialties. The MD, nurses, PA's, radiologists, etc. are the most visible layer. The next layer is likely an array of engineers, biologists, chemists and other university-degreed professionals working either directly for the hospitals or for tech and pharmaceutical companies that are an integral part of the healthcare dependency tree.
When you are on the table in an operating room, the team surrounding you likely has a collective student loan debt in the order of two million dollars, if not more. One layer removed are other nurses and support personnel at the hospital. That is also likely debt that must be serviced in the millions of dollars. The people who build the equipment in that operating room, conduct research and develop drugs and other tools represent hundreds of millions of dollars in student debt.
One can follow that cost structure tree as far as one might wish.
This means that healthcare in the US has a non-trivial baseline cost of doing business that is inextricably linked to the quality and cost of our education. That's an important baseline to understand. You cannot fix healthcare costs in the US without fixing this complex element of a complex equation. At a minimum, the government should have nothing to do with student loans. University costs should not be subsidized. Students should pay fair market value for what their degrees can actually deliver. Curriculum would also be fine-tuned as part of this process. Nobody wants to spend thousands of dollars for a course on "Underwater Basket Weaving" when it is irrelevant and has no value. Let the student decide, do not force irrelevant material on them and charge inflated rates for it.
The journey to this point includes additional variables that have not been accounted for. One example of this is the fact that K-12 education is dominated and ruled by regional teacher unions, none of which truly exists as real advocates for excellence in education. The effects of such a structure ripple all the way up into university, graduation rates and the cost of remedial education. These result also dominate life outcomes for those who either don't attend university or drop out. They leave K-12 without marketable skills that could seriously improve their lives and...
Our medical establishment is very inefficient, pays for lots of useless shit, and subsidizes the world's medical research. All those things cost money.
Yes, that was the point. People who could not afford healthcare, are now receiving it. Hence people who can afford to pay for others to get healthcare, have to pay for others to get healthcare.
>However, doing it by causing serious financial harm to likely millions of families is not right, at all.
There was never going to be a way to redistribute wealth without taking to from those who have it or to give it to those who do not.
>Here's an example: One of my kids ended-up in the hospital with myocarditis due to the Covid vaccine. That cost us over TEN THOUSAND DOLLARS, cash.
And you are insured for amounts that go over the out of pocket maximum, which is legally around $17k for families. So if you need a $500k heart surgery tomorrow, you only have to spend a maximum of $17k.
Obviously, the price of healthcare is a problem, and the only way to fix that is to lower demand (let people die) and increase supply (more doctors, more taxpayer funded R&D into medicines that go into public domain, and tort reform).
Yeah, that’s why they had to resort to blatant lying to get it passed. But hey, it was for the greater good! Take one for the team and be a good sport about it. “We have to pass the bill to see what’s in it,” and all that.
> And you are insured
You are intentionally missing his point. The cost of that insurance has gone up massively the past 15 years. The same level of insurance cost at least an order of magnitude less 15 years ago.
again, because,
>There was never going to be a way to redistribute wealth without taking to from those who have it or to give it to those who do not.
Health insurance premiums are an explicit wealth transfer, from young to old, and sick to healthy. For all intents and purposes, you can consider them a tax (hence the individual mandate that was later removed).
https://www.healthcare.gov/how-plans-set-your-premiums
> Five factors can affect a plan’s monthly premium: location, age, tobacco use, plan category, and whether the plan covers dependents.
>Notice: FYI Your health, medical history, or gender can’t affect your premium.
You have more poor and more sick people getting healthcare, without commensurate increase in the supply of healthcare, so obviously costs are going to go up.
No, the point was to use healthcare to buy votes.
> People who could not afford healthcare, are now receiving it.
Nobody I know has a problem with the concept of helping others. Nobody. Helping others might be to tack-on $100 per month to help cover the under-insured. We do this with auto insurance already, everyone pays a little more for uninsured motorists. A QUADRUPLING of health insurance costs is theft. It isn't equitable by any stretch of the imagination.
And then there's the fact that the US President and everyone from his party who supported this told us, promised us, families would save $2,500 per year. Instead of that, we were forced --FORCED-- by law to buy a product that today costs four times what we used to pay for a better product.
We have a situation where the US government is forcing us to pay an exorbitant amount of money for a substandard product. Forced. So much for the land of the free.
> Hence people who can afford to pay for others to get healthcare, have to pay for others to get healthcare.
What's next? Pay for those who can't afford to buy a house? By that logic one can justify just-about anything.
Sorry, that's not justification for any government to force people to buy a bad product that financially brutalizes them.
Yes, we need solutions for healthcare. Obamacare isn't even close to a solution. It's a travesty. In the long term it has actually degraded our healthcare system. The problem is it will take years for the less informed and easily impressed among us to understand this.
Apparently you do, if the help costs more than $100 per month.
>We do this with auto insurance already, everyone pays a little more for uninsured motorists.
Uninsured and underinsured auto insurance does not help anyone else, it only helps the premium payer.
>what we used to pay for a better product.
I do not see how this can be true when there were benefit maximums, as opposed to out of pocket maximums, and pre existing health condition exclusions existed.
>What's next? Pay for those who can't afford to buy a house? By that logic one can justify just-about anything.
Yes, that is the crux of politics today. How much wealth redistribution should the government perform?
Previously, a few tribes in society had it made in the shade. Old people, government employees, employees of large businesses, especially white collar or ones with large union presence. Then sufficient amount of Americans no longer belonged to those tribes, hence the political will to pass reform. Which I guess you characterize as “buying votes”.
>Sorry, that's not justification for any government to force people to buy a bad product that financially brutalizes them.
You are not buying a bad product, you are paying a tax since your premiums explicitly subsidize others, just not paid directly to the government. Also, there is no penalty for not purchasing health insurance since 2018, so the government has not been forcing anyone to pay the “tax”.
BTW, and because the accusation is always made, implicitly or explicitly: I am not a right-winger/conservative. Not even close. I am driven by data and facts, not fantasies. Pure and simple. If I had to classify myself politically I would be a classical liberal. In other words, socially liberal and fiscally conservative. That, I believe, is, for the most part, the balanced formula that lifts all boats, not the madness both political parties force upon us.
https://en.wikipedia.org/wiki/Classical_liberalism
Live long and prosper.
What would happen if suddenly hundreds of additional institutions as good as MIT, Stanford and Harvard appeared out of thin air in the US?
Wouldn't we quickly revert back to the current state of things, once US News and marketers figured out a way of creating another "Top 100" hierarchy of schools, with parents shoving their kids into violin practice, water polo and building-orphanages-in-Nicaragua photo ops to make it into the new top 5 luxury brand name universities?
The scarcity IS the product of these institutions. This is the nature of positional goods.
Neither education nor health care make sense to organize by competition - the consumer lacks the ability to make the informed choices that an effective market requires. Obama care, in fact, contained a variety of pseudo-competition schemes to bring down costs, all of which predictably failed. And we're seen the disaster of various for-profit colleges.
> For example, the number of UC campuses in California should have doubled as the population doubled.
Maybe. But the number of students at UC campuses in California has doubled since 1965 — even though the number of campuses hasn’t.
I think the issue is that demand has more than doubled as the population of California has doubled—because college is more of a requirement than ever.
https://savegme.org/
While more healthcare supply is definitely needed, this is ultimately a bottomless pit. Patients with complex chronic conditions have essentially infinite demand for healthcare services. The majority of those chronic conditions are caused by lifestyle issues including overeating, lack of exercise, and substance abuse. As a society there has to be a limit to what percentage of our GDP that we devote to healthcare.
Yup.
Early 70s, we started transformation from a manufacturing to a rent seeking economy. Cleverly branded as "supply side", "knowledge worker", and "service industry".
I still can't get over the fact that I have to spend money to use my money. Even more so the less money a person has.
https://wtfhappenedin1971.com
This isn't really true. Obamacare was integral to the push toward increased capitation. Health care insurance paying for services provided instead of patients covered leads to incredibly perverse incentives that have been a huge part of why costs are so high. Capitation solves that by aligning provider incentives with patient incentives; provide timely, high quality care and not unnecessary treatments.
"The campus provides workspace for about 2,700 employees (including three of the university’s eight vice presidents) working in critical areas such as the School of Medicine administration, libraries and archives, business affairs, human resources, development and Land, Buildings & Real Estate. Stanford will be the city’s third-largest employer in Redwood City."
Amenities:
* Cardinal Café -- Located on the first floor of Cardinal Hall, serving globally- and regionally-inspired cuisine for breakfast and lunch.
* Recreation & Wellness Center -- The 28,000 square foot facility includes a six-lane rooftop pool, indoor basketball court, state-of-the-art fitness equipment, locker rooms, showers and an outdoor fitness courtyard.
* Stanford Transportation
* Digital Media Production Studio
* Wellness and Lactation Rooms
* Dry Cleaning
* Pine Cone Children's Center
* Stanford Catering & Conferences
* Stanford Federal Credit Union
[1] https://redwoodcity.stanford.edu/
That said, Stanford is private, so I'm not sure they're a good example. Various state universities seem like they would be a more apt target to look at to see what this is like in reality.
Stanford University has 24,916 employees.Jul 11, 2022
In 2021 15,750 staff members supported teaching, learning, research and core operations at Stanford ...This includes ... 1,603 staff at SLAC National Accelerator Laboratory .. Includes clinical educator and research staff.
Higher ed's admin:student ratios are closer to resort hotels.
My local uni has definitely transformed into a resort.
One of the consequences of charging full enrollment are the customers now expect a comparable (material) experience.
To understand administrative bloat in the US it's much more instructive to look somewhere like University of Idaho where the business of charging students for services rendered is the main game in town. It's there you can see how administrative services have drastically ballooned costs for just the education.
https://www.usnews.com/education/best-colleges/the-short-lis...
https://www.collegexpress.com/interests/international-studen...
Tax-funded universities are less generous, though.
That means for income <= 75K, Harvard tuition is free! That is impressive. Their system looks fair in comparison to other US universities. This system looks similar to progressive taxation (higher income pays more taxes).
For readers not familiar with US university system: This will not include "room & board" (housing & food).
(There is a student contribution of ~$3,000/year, which is fairly easily met through on campus jobs).
You forgot about the massive hedge fund – and the professional sports teams.
Then they are welcome to stop charging students fees.
"Student income" was 15% of Stanford's $7.4B budget (excluding capital improvement and hospitals) in 2021-22.
So... only $1.11 billion or so.
source: https://facts.stanford.edu/administration/finances/
Price sets expectations. If you tie your service to lower tier pricing , you are indirectly communicating that your service value is substantially lower.
This calculus is literally happening in administrators minds. They so much have admitted this in the past.
SLAC National Accelerator, a National Lab that Stanford happens to run, employs about 1,600 people. They don't necessarily need to interact with students; other national labs are run by corporations (e.g., Sandia is run by Honeywell).
Stanford has a massive medical system, including an adult and children's hospital. They are teaching hospitals, and so part of the point is to train medical students and residents, but they also need all the staff of a regular (actually, top-of-the-line) hospital: doctors, nurses, techs, porters, billing, payroll, etc.
On top of that, Stanford also has a massive research program funded by grants from (e.g.,) the NIH, NSF, and DOD This requires people to actually do the research (heavily-funded profs rarely teach, plus postdocs and research scientists) and support it (animal health techs, machinists, etc). There is also a lot of bureaucracy involved in getting, doing, and accounting for that work. It certainly depends—in part—on grad student labor, but it's also not directly linked.
All in all, big research-intensive universities do a lot more than classroom education and the staff sizes reflect that. I'm sure there's room for improvement (I work at one and purchasing is currently a nightmare), but staff/students is not a great metric.
> "The campus provides workspace for about 2,700 employees (including three of the university’s eight vice presidents) working in critical areas such as the School of Medicine administration, libraries and archives, business affairs, human resources, development and Land, Buildings & Real Estate. Stanford will be the city’s third-largest employer in Redwood City."
Administration for the school of medicine is literally the first group cited.
Stanford Medical is everywhere around here.
The rest of it takes administration. The folks at SLAC need to get paid. Someone needs to check that the doctors and nurses at Stanford Medical are appropriately licensed; once they are, someone also needs to find somewhere for them to park.
They list what's out there: https://redwoodcity.stanford.edu/about/campus-directory, which also includes Stanford University Press and the Tech Transfer Office.
This is a legit function of a university.
Mmm... I read an article once that pointed out that there are two basic schools of thought on "why college is so expensive today". Some people say it's more expensive to run a college, and so tuition has to cover that. And some people say it's more important to have a degree, or easier to get your college expenses financed, and so tuition expands to meet demand.
It's very easy to distinguish between these two theories at a basic level: one of them says that prices have gone up because supply has fallen, and the other says prices have gone up because demand has risen. But the article pointed out that, while these two causes have the same directional effect on prices, they have opposite effects on quantity sold: if supply has fallen, you see fewer purchases at higher prices, whereas if demand has risen, you see more purchases at higher prices.
And it's very clear that colleges are in the second scenario, with prices and enrollment rising in tandem.
But "it's because of administration costs" is a supply-has-fallen theory. It would make more sense to explain Stanford's luxury campus for administrators by saying that Stanford has so much money coming in, the administrators can afford to help themselves.
Students who wish to pursue higher education shouldn't even have to think about finances for that education, aside from maybe the travel and food expenses (although now with remote work/learning that also is going down)
However, university can be very cheap. Here in Sweden university education, which is here funded in the way proposed above (i.e. the government pays for it all, for those students who get in) costs the state less than high school education costs the state (72 000 SEK/a for university, 124 300 SEK/a for high school).
I imagine that it could be the same way in the US.
Quite few people play it anyway.
In the US? No we absolutely can't. College football is practically a religion. Its cultural importance cannot be overstated.
I don't care about it at all and never have but oh biy do other people ever. People's lives revolve around it.
Furthermore, surely there is no need for additional facilities; and surely they don't need to be fancy.
What is better is the hub approach of key-research public universities, say five per state and then ten commuter campuses that re-use courseware from the research facalities.
In fact in the USA several states are moving to this model, including such states as Indiana.
Even better - make colleges guarantee loans. If people can't get a job after 2 years of graduation make the schools start making the loan payments until they do get a job. BS degrees would dry up overnight too.
https://studentaid.gov/understand-aid/types/loans/subsidized...