Tuition Inflation in #HigherEd & why @SenWarren 's Proposal Won't Fix It

College tuition has been inflating severely since the early 1990s, at a rate far exceeding the CPI. This alarming trend defies simple explanation... and there is no simple cure.

Without question, tuition inflation is one of the most severe challenges for American millennials. Although the data assure impressive long-term (~30 year) return on college investment for most students, tuition inflation has made it almost impossible for students and their families to make that investment without long-term loans. And unfortunately, much student debt is serviced at interest rates far exceeding reasonable benchmarks e.g. the 30-year bond yield or the 30-year mortgage rates.

It is important to note that little of the cumulative student debt is served by the Federal assistance programs such as the Stafford program. This is well known to families with students in college today.

In the most cynical analysis, it appears that some parts of Higher Ed and the loan industry are in collusion, baiting students with promises of remunerative careers while luring them into loans they may never repay. Indeed this analysis seems particularly apt for certain for-profit programs, which have been the target of recent Congressional attention.

Highlighting the impending increase on Stafford loans from 3.4% to 6.8%, Senator Elizabeth Warren recently brought some much-needed attention to the problem of loan repayment; she summarizes her program in this PDF:

http://www.warren.senate.gov/documents/BankonStudentsFactSheet.pdf

One of Senator Warren's most compelling arguments is the following:

"This year, the federal government will make $34 billion on student loans. The government even makes money on its loans to low-income students – 36 cents, on average, for every student loan dollar it puts out. If Congress allows the interest rate on these loans to double, the federal government will bring in even more revenue – money that comes straight from the pockets of college students."


However, as noted before, only a fraction of student loan debt is served by the Stafford program.


Also, it important to note that a very simple market principle: in the debt markets, the demand for loans is inversely proportional to the loan rate. In other words, if the loan rates are depressed, more students will take on debt. Is that really what we want? or do we want to find ways to make it possible for stduents to complete college without a mountain of debt?

Of course, Sen. Warren intends to migrate student debt away from predatory loans to less expensive loans, and is one way to help today's students in debt crisis. But the larger issue -much larger than Sen. Warren's well-intended vision of debt relief- is ongoing tuition inflation in higher ed, which will continue to hit tomorrow's students very hard. And that inflation arises from complicated institutional effects that aren't easily distilled into political sound bites. The uncomfortable truth is that I and many of my colleagues were able to complete college with ~zero debt only a few decades ago, and that is almost impossible today. Why?

In the coming weeks, I'll visit the various sources of tuition inflation in an informal way, and suggest reasonable ways to address them. and I pledge that nothng will be sacred. So stay tuned!

Education Market Enriches Apple and Microsoft

In this letter to the Chronicle of Higher Education, I express my concern about the huge profits taken by companies like Apple and Microsoft in the education market:

http://chronicle.com/blogs/letters/education-market-enriches-apple-and-microsoft/

Looking forward to meeting @jackandraka...

Inspiring and energetic young inventor Jack Andraka will visit me and the students at #UVa next week. First he'll visit my nanoelectronics class, ECE 4140, and then he'll give talk and do some Q&A on Monday at noon in the dome room of the UVa Rotunda. It'll be a lot of fun, and I am expecting a lot of other young inventors to attend.

Biomedical engineer Alex Zorychta, himself a clever inventor whose team recently won a UVa Entrepreneurship Cup and secured substantial funding, has set up a FaceBook Event to help me publicize this event.

Given the source of Jack's inspiration, the topic of his research, and the venue for his talk, I thought it'd be appropriate to comment about Randy Pausch, the brilliant computer scientist who inspired so many people with his "Last Lecture" and "Time Management" during his final days here in Virginia. Here are the introductory ppt slides that I will present on Monday:

Keith Williams' intro slides for Jack Andraka's visit on Monday April 21st

k.w.

Is #CNN wagging the dog over #MH370?

CNN has given me the motivation to blog again… and unfortunately not for a positive reason.

By now, almost everyone on the planet is familiar with the sad mystery of Malaysia Airlines Flight 370, lost for more than two weeks after departing Kuala Lumpur. Certainly, this is a tragic event and the families and friends of the passengers deserve our ongoing support and consolation.

There are two tragedies here: foremost, or course, the loss of the passengers. The second tragedy is the inexplicable and sudden loss of CNN’s credibility as a news organization. The network has been parroting wild speculation, and repeating the same news ad nauseum. Worst still, CNN appears to be manufacturing or at least repurposing old news, to give viewers the impression that they are delivering something significant... when in fact the story has barely advanced in weeks. And some details, presented as sufficient grounds for wild speculation, have been revealed incorrect, e.g. the famous "alright goodnight," now refuted. The truth is that this could be an approximate repeat of the Helios Airways Flight 522 tragedy... we simply don't know yet, and we may not know for months or years.

The tactics that CNN has used to boost ratings are rather obvious. At regular intervals, we see “Breaking News” splashed across the screen. This is accompanied, of course, by the familiar theme reinforcing the urgency. We see a checkerboard of ‘experts’ who, instead of clearly delineating what is known from what is not, as any responsible expert should do, often appear to attempt to outdo each others’ gut feelings. We see two “pilots” installed in a flight simulator, where they game all manner of scenarios, with no apparent relationship to evidence. CNN has entertained virtually (pun intended) every possible scenario… and a few impossible ones too. Anchors of several CNN shows have been pulled into the ratings frenzy, shoving aside many stories for which far more substantive information exists, e.g. the tragedy in Washington, and the annexation of Ukraine and subsequent massing of Russian troops on the Ukrainian border.

It’s not CNN shouldn’t report on MH370- of course they should. But shouldn’t the amount of coverage be proportional to the availability of newsworthy content? That this isn’t the case opens the door to the frightening proposition that CNN is manufacturing a story… wagging the dog, so to speak. Meanwhile, CNN’s ratings have indeed improved. But at what cost?

There is news, there are newsmakers... and then there are journalists. Does anyone at CNN know the difference?