Are College Costs Transforming Family Life?

The New York intellectual establishment has learned via a New York Times op-ed and a New Yorker story/book review that the high cost of college has “changed” (Times) or “transformed” (New Yorker) American family life. That is nothing particularly new or revealing, at least for millions of Americans living, as I do, in that vast wasteland west of the Hudson River and east of California.

A New York University anthropologist, Caitlin Zaloom, has authored a new book, Indebted: How Families Make College Work at Any Cost. Speaking of her research, she says, “the central theme that emerged…was that for middle-class parents, the requirement to help pay for college is seen not merely as a budgetary challenge, but also a moral obligation.” We learn that “saving enough for college would mean compromising on…activities– music education, travel, sports teams, tutoring– that enrich their young children’s lives, that…deliver critical lessons in self-discipline and teach social skills.” All of this has caused a problem because, Zaloom asserts (incorrectly), “The average annual price tag for attending an American college is now around $50,000.” Hence the dilemma: how do we pay for our kid’s college, maintain a robust family life, and finance retirement?

Examining Zaloom’s assertion about college costs, it may be that the children of New York Times and New Yorker readers go to colleges where the average cost is $50,000. However, the “little people” (to borrow from the late Leona Helmsley) from which most college students come largely go to public schools that on average cost a lot less, usually $30,000 and even less after financial aid is considered. While Zaloom is certainly correct college costs have risen substantially, she seems to consider the college experience through the lens of relatively affluent individuals who “enrich” their young children’s lives with European trips, private tutors, and piano lessons. These are amenities unavailable in abundant quantities for most college-bound kids– even the many from families with incomes modestly above the American average.

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A Heroic Picture

Zaloom paints a somewhat heroic picture of today’s college parents – people facing hard choices, but ultimately opting to put their children’s interests ahead of their own, leaving them in debt with inadequate savings for retirement. Part of what Zaloom says seems consistent with empirical evidence —the median annual personal savings rate (savings as a percent of disposable personal income) of Americans in the 2010-2018 period has been noticeably less (6.7 percent) than that of their parents or even grandparents living in, say, the 1970’s or 1980’s (11.2 percent.)

With the parents not saving much for their kid’s college (instead of traveling and engaging in other forms of consumption), the children are forced to go into debt to finance college. Student college loan debt, probably mostly private, was relatively trivial in 1960. As the financial burden of college has grown relative to family incomes, the incremental financing of school has fallen very considerably on the children themselves, not on their parents.

Contra Zaloom, let me offer an alternative thesis to one stressing the altruistic and noble promotion of children by today’s parents and others of this generation who generally run America. We have gone in the past six or seven decades from the Greatest Generation (that of individuals growing up during the Great Depression and fighting in World War II) to the Most Selfish Generation. The current generation not only saves little of record-high incomes, but it also has imposed massive future liabilities on its children via the political process controlled by it. In a period of prolonged prosperity and low unemployment, we are running trillion-dollar budget deficits and failing to deal with gargantuan unfunded liabilities for Social Security and Medicare/Medicaid.

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Too Costly, Too Little Learning

Moreover, the neglect by the current generation of their own children goes even deeper. The government controls most American education in the U.S. and by most honest accounting, it increased the cost while lowering the quality. Americans at the primary and secondary level score low on standard international tests despite spending record amounts. And higher education, once considered the best in the world, is beset with problems: it is too costly, too little learning goes on, and large proportions of those with college educations are underemployed –doing jobs not requiring collegiate training. Instead of the American tradition of continuously doing more with less, thereby raising productivity and living standards, in education we are doing less with more, lowering productivity in order to provide income and the good life for those running both our public schools and universities. We are harming the children (students) in order to facilitate increased consumption by their selfish parents.

This may be too harsh. The current generation, like previous ones, loves their children, and the recent college admissions scandals reveal the extent some parents will go to advance the career prospects of their progeny. Arguably, it is the overprotection of kids by helicopter parents that causes rising mental illness among young Americans.

Zaloom would probably not have written this book if it were not for the federal college student financial assistance programs, especially student loans. The New York Federal Reserve and others have solidly demonstrated that these programs have greatly aggravated the inflation in tuition fees in the past four decades or so. My own estimates are that if student loan programs were frozen at the 1970 embryonic levels (modest support of the very poorest kids), tuition fees today would be roughly one-half of what they actually are. That, in turn, would have led the ratio of college costs to family income to have fallen (as it did in the 1950s and 1960s) instead of risen, and for there to have been little need for massive loan programs. If ever the “law of unintended consequences” was at work, it is regarding student loans and the subsequent parental and student angst that it caused.

3D graphics image by Quince Creative