Thorstein Veblen (1857 – 1929) Veblen was a noted economist and sociologist and a prominent leader of the institutional economics movement. He is widely known for his book, The Theory of the Leisure Class, where he famously discusses a phenomena he called conspicuous consumption.
Scholars have offered several explanations for these high costs including faculty salaries, administrative bloat, and the amenities arms race. These explanations, however, all miss a crucial piece of the puzzle.
Sociologist Charlie Eaton and his colleagues crunched the numbers and found that spending on actual education has stagnated, while financial speculators have been taking an increasing amount of money off of the top.
Higher education fills the pockets of investors in three ways:
Interest on student loans, paid by students and parents.
Interest paid by colleges who take out loans to fund projects — everything from new academic buildings to luxury dorms and stadiums — ultimately repaid with tuition hikes and higher taxes.
And profit from for-profit colleges (with “dismal graduation rates, by the way).
Take a look at this figure breaking down the sources of the rise in the cost of higher education. Interest on debt — taken on by both students and the colleges they attend — has risen. Meanwhile, direct profits from for-profit colleges have skyrocketed.
Overall, Eaton and his colleagues found that Americans are spending $440 billion dollars a year on higher education and that 10% of that goes into the pockets of investors who are skimming profit off of all forms of higher education.
Want more? Read their report or watch their summary:
Thanks to someone for this mash up of academia and Precious Moments figurines! About him or herself, he or she writes:
I’m the sort of person who (a) constantly saw, and was occasionally given, Precious Moments figures as a kid, despite finding them creepy; and (b) now makes a living in, and constantly thinks about, academia, despite finding it creepy.