Paying for College

I'm sure it's true, as the Times reports, that the economic downturn is making it harder for people to pay for college, in that this is true for anything expensive and the cost of college in real dollars is growing robustly every year. But it's important to remember that the example around which the story is framed--a family sending two children to private colleges that each charge $30,000 per year to attend--is not at all typical. 73 percent of all college students are enrolled in public institutions that typically charge far less. Instead of borrowing tens of thousands of dollars, this family could consider fine public universities like Indiana University -- Bloomington, which is only about 50 miles from Salem, where they live, or IU-Columbus, which is about the same distance, or IU-Southeast, which is even closer. 

Indeed, this is the most likely result of a serious recession--not fewer students going to college (higher education attendance can be counter-cyclical) but students going to different colleges than they would have otherwise. Public universities that were anticipating an easing of enrollment pressure as the current demographic wave crests will need to keep finding dorm and classroom space, while small, non-elite, non-wealthy private colleges like Hanover and Franklin (which enroll the two students in the story) are going to be at serious financial risk. More worrisome would be an acceleration of the existing trend whereby the proportion of poor college students who beging their careers in community colleges is steadily increasing. Given the disparities in degree completion among such students, this will exacerbate education-driven income inequality. 

Update: Moody's is also sounding the alarm about the financial vulnerability of small colleges. At the bottom of the article, one commenter proposes what would amount to a luxury tax on college endowments, with some kind of extra levy on earnings from endowments larger than $500 million, the proceeds of which would be distributed to less-wealthy institutions. This strikes me as kind of a good idea. As with baseball, it wouldn't be severely redisributionist--the Red Sox are still the Red Sox, and Harvard would still be Harvard--but it would give the Tampa Bay Devil Rays of higher education a fair shot at competing--or at least staying in business.