Why Economics Makes Even Fewer People Go to College

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‘Junior is finally going off to college, ‘ sighs his proud parents as he pulls away in his car to his dorm living away from home, perhaps for the first time in his life, his parents proudly waving him off. This scene has been repeated in America countless times. Good old American values always emphasized getting a good education to get a good job and a stable career. But college is not cheap; some parents start saving for their children’s future college education even before they are born. The term ‘dipping into the kid’s college fund’ usually denoted extreme hardship for the family because they were jeopardizing the future of their children. With the economic downturn brought about by the sub-prime crisis and college tuition costs spiraling beyond the ability of the common middle-class family to afford, college is becoming more and more of a pipe dream. This paper will study the low acceptance rates in college and why economics makes even fewer people go to college.

Ivy League schools are said to be the best schools in America. That is why thousands of young aspirants do their best to ‘make the SAT or GPA’ or get a high enough SAT score and Grade Point Average to gain admittance to these ‘good’ schools. Many contemporary TV shows featuring High School age kids have stereotyped kids who are not only overly grade conscious but also work overtime on their extra-curricular activities’ working on their college portfolio’ so to speak. TV may exaggerate somewhat, and it is unlikely that there really are people out there who can not sleep just because they got an A- in a subject and feel they lost their chances at getting into Harvard. However, the fear is very real.

According to the U.S. Department of Education’s College Opportunities Online Locator, of 19,690 students who applied for Harvard in 2004, only 2,504 were accepted. Yale admitted a mere 2,014 or 11.4% of 17.735 aspirants. Princeton University granted the dreams of some 1,733 or 12.7% of 13,695 youths who wanted to get into that school. Stanford University accepts 13% of 19,172 applicants, a paltry 2,486 from the almost twenty thousand. If the Ivy League schools appear to be exclusive with admission rates of under 13%, Massachusetts Institute of Technology is not far behind 1,665 or 15.9% of the 10,466 applicants were given the opportunity to study the latest in Science and Technology there. In total, these five schools turned away about 87% of those who wanted to get into their schools—leaving those tens of thousands of young students disappointed and forced to settle for ‘lesser’ schools.

According to the article Colleges’ Acceptance Rates, Alone Might Not Convey Change in Selectivity; the reason is not wholly because the elite universities are being exclusive and selective.

Part of the cause is that hundred of thousands of college-age children apply every year. American students are not the only competition. Koreans, Chinese, Japanese, and other Asians have been flocking to American Universities for years. Many Latinos from South and Central America also travel to the U.S. to study in college. These people know that American education would greatly raise their stock in their home countries and might even lead to employment and eventually citizenship in America. To a lesser extent Europeans, have also been studying in the U.S., further reducing the number of available slots in ‘good schools.’ After all, if one goes through all the trouble to travel to the U.S. to study, why not go and study in the best school of them all? Unfortunately for the local students, these exchange students are often the cream of the crop, both economically and intellectually, in their home countries.

For example, the average Korean exchange student has to be very wealthy indeed to afford the study trip to begin with because the cost of living is drastically higher working-class Korean parents would have a very hard time financing their child’s education here. Furthermore, Korean is very dissimilar from English as evinced by a large number of Koreans studying in other English lingua franca, or where English the primary mode of instruction, countries so if a Korean student was determined enough to learn a second language that is very different from the one he is used to he must be very diligent and dedicated. Even more aggravating is that many exchange students are government scholars, which means that they were drawn from the very top of the student pool of their countries, and their education is subsidized by their country.

Still, another reason is basic probabilities. With so many people in love with the idea of going to Harvard or Yale, it is likely that some of those aspirants may not even be qualified intellectually at all. Yet they will try their luck anyway with nothing to lose but the testing fees and hope to get in, maybe. Yet another reason is the no child left behind policy of the U.S. Government which actually encourages schools to lower standards to allow those ‘left behind’ kids to catch up and graduate with the expectation that they can make it to college.

It is one thing to get admitted to a school. To be accepted by a prestigious is a great achievement on its own. However, being able to afford to go to college is another matter entirely. There are some students who are deserving but simply do not have the money to pay for the high tuition fees in these exclusive schools. According to the Harvard Crimson, the 2006 tuition and fees in Harvard crossed the $40,000 per semester psychological threshold. At $80,000 per year, not including dorm fees, food, and other school expenses, Harvard has indeed become far out of reach of most students. The recent sub-prime bust and the general economic downturn have also made it worse. Parents are earning less relative to prices and have less to spare for their children’s college education. The government is not helping either; the economic strain of the Wars in Iraq and Afghanistan coupled with the economic slowdown is forcing the federal government to reduce spending on ‘less important items, items like Federal subsidies to universities or student loans. Finally, the students are hard hit by the Outsourcing trend in business and the increasing competition for entry-level jobs.

The United States Bureau of the Census tells us that in 2002 the average annual income for a family is $42,409. Assuming wages have kept pace with inflation, that $42,409 in 2002 would be worth around $50,000 today. Even if ‘Junior’ were an only child and the family would be willing to live in penury and send every cent saved for his studies for the next four years while he’s in college, ‘junior’ would still have to cough up Tens of thousands of dollars to afford Harvard.

Harvard will not require parental contributions from the student’s family if their yearly income is under $40,000 and will reduce expected contributions from families earning between $40,000 and $60,000. Harvard has billions of dollars in endowment money from Alumni and uses significant amounts of that to provide scholarships. Some $84.6 million is earmarked to subsidize the education of deserving but poor students. Most established universities follow this trend of reduced or no contribution from families that earn little. However, while Harvard and other major universities can afford to give out so many scholarships on their own, there are schools that can not do this. Instead, they rely on Federal subsidies or generous benefactors to provide scholarships. With Federal funding drying up for both school subsidies and student loans, fewer students get the chance to go to college in those places.

Many of today’s business processes have been outsourced. Customer care and technical support services of many major corporations have been transferred to India, the Philippines, or another third-world country where labor is cheaper. After all, as the famous internet joke ‘snell tech support’ goes, an Indian gets ripped off working for $20 a week to provide tech support while his counterpart in the U.S. could earn up to $20 an hour doing pretty much the same task. Such low wages for outsourcing make it very hard for local employees to compete. This means that there are fewer low-skilled / entry-level jobs available for the would-be college student to get. Contact center work is relatively easy and can be easily adapted to fit into the schedule of a college student. Unfortunately, contact center jobs have all gone off-shore. A working college student will have to find a different job like minding a store, delivering mail, or some other simple job that will earn him some money without jeopardizing his ability to attend class.

Regrettably, the large population of the U.S. coupled with a large number of legal and illegal immigrants further reduce the already shrinking pool of jobs that a college student can take. This increase competition will reduce the likelihood that a college student can be a working student and shifts the burden on his parents to provide him with support.

Aside from the intimidating out and out the high cost of going to college, another reason that some students are turned off from going to college is the agree upon acceptance to pay the full price that is present in many school admission protocols today. The clause provides that the student will pay the full price of tuition upon acceptance. Now, this is difficult to do, especially in a credit-based society like the U.S., it is doubtful that the student or his parents will have the money to pay full in cash. Instead, they will be forced to ‘charge it’ or put the amount on the tier credit card or take out a loan from the bank. Charging the credit card or getting a loan is a risky move because the loan will gain interest at a rate faster than what it would have gone up if the school had simply offered staggered payment terms.

The agreed upon acceptance to pay full price clause also has the effect of attracting rich students whose parents can afford to pay the whole tuition fee. Intentional or not, another effect is that the alumni who graduate after the adoption of this practice will be generally wealthier and able to provide endowment funds for the school.

With prices steadily going up and government help increasingly hard to find, it seems that ‘Junior’ won’t go driving off to college. Either his parents will have to forgo the car to help pay for college, or his parents will have to take loans at severe post-sub prime bust rates and risk having their home repossessed if they fail to pay it off. He can also try his luck for a student loan, competing with thousands of others who are in dire need. Finally, he can forgo the American Dream completely, spend the rest of his life doing blue-collar work and cursing the fact that his parents “couldn’t afford college for him”

Works Cited

U.S. Department of Education’s College Opportunities Online Locator. Web.

Colleges’ Acceptance Rates Alone Might Not Convey Change in Selectivity. Web.

Harvard Crimson Tuition, Fees To Exceed $40,000. Web.

United States Bureau of the Census. Web.

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Why Economics Makes Even Fewer People Go to College

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