I’m at a conference where a twenty-something student is giving an OWS presentation with this title, and he included this graph (click to embiggen). I can’t really argue with him.
Last night, Rochester Police arrested 32 protesters at Occupy Rochester. I have to believe the violence in Oakland influenced the police approach, which included multiple warnings and spaced-out arrests, led by the Chief of Police.
Update: Southern Beale has details on the Nashville arrests, which were thrown out of court.
General Stuck
Looking at memerandum, it looks like the wingers have rallied their cause to ratfuck OWS, with a bevy of dubious charges from dubious sources of protestor violence against cops, news reporters, and apple pie. Not to mention “public masturbation” and the usual smelly drugged out over sexed hippies bullshit. This was to be expected, and I don’t know how to combat it from a movement that purposely is not organized like a political operation to rebut the charges.
Marc
Over the time period in that graph the state of Ohio, for example, went from paying 80% of the cost of higher ed to paying 20%. Returning to a model where taxes pay for college would bring the top line down to where the rest are.
arguingwithsignposts
You might also mention the shitstorm in Nashvegas, where they arrested a reporter last night and the night court judge threw all the arrests out. Southern Beale has been posting about it.
PeakVT
Ugly. And that’s just the homes line.
Here’s one explanation (in two parts) for the increase in college costs.
JPL
Some states colleges are studying the possibility of becoming private schools because of a decrease in state aid. I believe Clemson is one of those schools. The plan appears to be just getting rid of the middle class. Sure the wingnuts will keep some of the top middle class folks but f@#k the rest.
Pell Grants are a ponzi scheme also, too.
I hope that the President keeps on message because this insanity has to stop. The repubs need to look up the word exceptional btw.
arguingwithsignposts
@Marc: I think Marc above has a very important point. States have cut funding dramatically for subsidizing higher ed. I’m sure there’s some other stuff thrown in to make that line spike, but it might be helpful to see another line plotting the amount of public spending on HE.
superdestroyer
@Marc:
What percentage of high school graduates were doing straight to a four year university in 1980 versus 2010. If 50% or more of high school graduates are doing to go to a four year university, then either the state spends a higher percentage of the state’s revenue on higher education or it asks the students to pay a higher costs.
Villago Delenda Est
@JPL:
The University of Oregon is making similar noises.
Occupy Eugene has moved to the UofO campus, and this is especially important as recently the UofO announced salary hikes for high level administrators because they “needed” to be “competitive” with other schools for those positions, but the rest of the faculty and staff would have to make do with cost of living raises, at best. More fat cat assholes feeding at the trough.
jrg
I especially like the fact that contributions to 529 plans are not deductible from federal taxes. In other words, I pay a higher tax rate for saving for my kid’s college than people pay for long-term capital gains.
…which is very important, because trading beans is a productive, job-producing activity, whereas education is a complete fucking waste of time and money.
JPL
GA has the Hope Scholarship which is funded by the lottery. It is the one good thing Zell Miller did. Originally the scholarship money not only had academic requirements, it had a cap on the income level of the parents. They removed the cap early on and now are running out of revenue to pay for it requiring students to pay more. The new fees hit the lower class the hardest of course because that’s only (un)fair but if you maintain the grades there is still some financial help.
Southern Beale
Thanks for the link!
We had TWO nights of arrests and TWO judges laughing in the governor’s face.
The governor just decided to make a new rule requiring a $65 permit to protest at Legislative Plaza, and placing a 10 pm curfew on the plaza, too. Of course, our performing arts center is at the plaza, and no one leaving “Wicked” after 10 pm last night and walking to their cars was arrested. Oh no, the state police waited until midnight when all of the fine upstanding citizens were safely at home to arrest the protestors. FAIL.
And here’s another amazing thing about the Nashville protests: they’re not just upper crust white kids with their iPhones. There are veterans of the Civil Rights era protesting, too. Meet 71-year-old Rip Patton, one of the original Freedom Riders, who joined the protestors and offered himself up for yet another arrest.
JPL
@Villago Delenda Est: I feel like we are frogs in a pot of water. The last three decades the government switched to Hayek’s policies and slowly over time we got cooked.
RossInDetroit
Between ’81 and ’84 my community college tuition rose from $9/credit to $13. Looking at their website I see it’s now $79 for in-district and $280 for International.
smintheus
@PeakVT: I’m not sure that the grossly inflated tuition/fees are a bubble, because I don’t see any impetus for change from the colleges in competition for prestige. Also, the costs to maintain the expensive campuses and services are largely fixed into the system now.
Students and their families would either have to wise up about the rat race aspect of college pricing (but there aren’t many inexpensive high quality colleges for them to migrate to), or accept mediocre but cheap alternatives, or just give up on college altogether. The existence of Pell grants and government sponsored loans helps to keep this bubble inflated long past the point where it should have burst.
RSA
I know that college costs have increased a lot, but I don’t know by how much. It’s hard to tell from the chart, which I think first appeared on this blog. Unfortunately, information about the source of the data for the college cost curve is behind a pay wall. So we can’t tell, for example, whether it includes what people actually pay or is rather the sticker price.
(My college is on a list of best values, with annual tuition and fees around $6500, with the discount being around 50%. In-state tuition and fees at my school are about average for four-year publics [PDF], about half the [real dollar] going rate of a four-year private when I graduated 25 years ago.)
Raven (formerly stuckinred)
@JPL: I disagree, it’s a scam where the underclass pay the tuition for the middle and upper class ans as long as it is grade based instead of need based it will stay that way.
“Critics have claimed that the HOPE scholarship disproportionately benefits students from affluent school districts because they tend to do better academically. The HOPE scholarship is funded primarily through income from lottery ticket sales, and people who buy lottery tickets tend to be from lower economic classes. For these reasons, critics claim that the scholarship represents a type of regressive tax.”
Janet Strange
Most people who attended college more than a few years ago have no idea how much tuition costs have risen. I’m a professor, so I’ve noticed.
It makes me crazy when people my age go on about how they worked their way through college, they didn’t get any help from their struggling working class parents, so if young people today choose to go into debt so they can go to pricey private and/or out of state schools, well, bad decision, kids.
No. Tuition for in state students a public universities is insane.
OK, just went to check. Tuition for 15 hours (standard full time course load), one semester, for a nursing major at UTx Austin. $5181. Per semester. That’s just for tuition.
$10,362 per year.
$41,448 for four years.
At a state school. For Texas residents.
Tell me how the hell anyone 18 to 21 years old can “work their way” though that.
I hate, hate, hate how we’re screwing the young people who want to go to college today.
MikeJ
@Janet Strange:
In Texas yearly income at minimum wage (which is the most common sort of work available if you’re trying to go to school), is $13,624. That’s at 40 hours a week, while going to school.
Working your way through college isn’t really an option.
Rafer Janders
@Janet Strange:
Tell me how the hell anyone 18 to 21 years old can “work their way” though that.
Um, with good old-fashioned grit and gumption?
Also, too, bootstraps, pulling oneself up by.
Rafer Janders
@MikeJ:
Sure, if you want to use “data” instead of knowing, just knowing, that they could do it if they weren’t so lazy and didn’t want life just handed to them on a silver platter.
JPL
@Raven (formerly stuckinred): Good comment. I actually thought about who buys lottery tickets when I was writing the post. I do think that community colleges should be fully funded with the Hope Scholarship. Now a student can apply for Hope and go out of state or to a private school and still receive something. That was never the intent. I hated to see funding cut back for pre-k also. It will be interesting to see what type of bonuses they hand out this year to lottery employees.
Raven (formerly stuckinred)
@JPL:
No, in-state private or public
“Be enrolled as a degree-seeking student at an eligible public or private college or university or technical college in Georgia.”
Minor point but there is no “community college” system in Georgia.
What it was intended to do was reward people who already had a leg up with what Boortz calls “a tax on the stupid”.
Raven (formerly stuckinred)
Georgia 411
wilfred
Jefferson wrote that every generation needed to make its own revolution. The world belongs to the young – they’ve ot to take it.
I’m not so young, meself, but I’ll support this revolution the whole way. This generations seems to get the fact that they are well and truly and the incremental changes they’ll receive from the two-party system will serve the interests of the ruling class long before the crumbs filter down to them.
To the barricades.
PeakVT
@Janet Strange: CCs are the only schools that an 18-year-old can work their way through. Even that is getting to be difficult in some places. CCV charges $214 per credit-hour in-state, or approaching $8k per year. NVCC is still reasonable at $137/hr.
Davis X. Machina
There’s a fairness issue at the bottom of this where two models clash. And we have a hybrid, heading towards the worst of both. More or less like US health care provision.
Model one — teach-the-best-and-shoot-the-rest, where apart from the odd chinless legacy drone paying full freight, universities are ‘if-you-can-get-in-you’re-going’. Backstopped by tuition paid by high, albeit progressive taxation. The European social-democracy model, roughly, from the war to Thatcher.
Model two — fee-for-service, free-market, pay for what you get, sorry-you’re-clever-but-there’s-your-coal-mine, kid, model. Post-secondary education is not a social provision except to the extent provided by charity and the demand for power forwards and cornerbacks. The pre-GI-bill US model, and the model for university education everywhere until very recently, and in most countries to this day.
We’re working like navvies to get the worst of both.
Davis X. Machina
Strictly true, Raven, but what is a Clayton State University, e.g. if not a four-year community college?
Raven (formerly stuckinred)
@wilfred:
Groucho wrote
“Outside of a dog, a book is man’s best friend.
Inside of a dog it’s too dark to read.”
Raven (formerly stuckinred)
@Davis X. Machina: What do you mean “strictly” speaking? Here’s a breakdown of USG institutions.
PeakVT
@smintheus: You’re right – labor costs are sticky downward. But something has to give. Perhaps states need to recognize that not every state institution can be research-oriented, and at some schools the profs will have to focus on teaching.
Have professors gotten any better at teaching after all the salary increases? When I went to school a lot of them were just FSM-awful. They simply should not have been allowed anywhere near a classroom.
Raven (formerly stuckinred)
@PeakVT: Maybe that’s there are only 4 research institutions in Georgia.
eta I work with profs from all the institutions and there are many fine teachers in the system.
JPL
What’s the difference between a community college and junior college? Where I was raised they called them community colleges but in GA they call them junior colleges or at least they did. Both offer associate degrees. Just curious.
jwb
@Janet Strange: What really needs to be looked at is effective tuition, because financial aid is an important component to how this works. Texas has raised its tuition fairly substantially over the past decade but has (supposedly) also increased its financial aid. The idea was that if the state isn’t going to support the school as well, the university would adopt a model more in line with private schools in terms of tuition graded according to income. In theory sharply rising tuition would not be a problem, so long as financial aid was also being increased at a rate sufficient to keep the actual cost of school affordable for everyone.
I do not know how well this is working at Texas, but most private schools outside the Harvards, Yales and Princetons of the world do not have a sufficiently large endowment to make it work all through the applicant pool. Consequently, admission depends to some extent (and at many very good schools to a very large extent) on one’s ability to pay full tuition. This has the effect of skewing the demographics of the school very much toward upper income brackets. The demographics of the college I went to (routinely ranked in the top 10 of small liberal arts colleges) have changed so much since I attended as to be almost unrecognizable: it’s very much a rich kids’ school now.
Linda Featheringill
@wilfred: #24
It has been amazing to watch, hasn’t it?
Raven (formerly stuckinred)
@JPL: I’ve been here 27 years and worked with both what was is now the Technical College System of Georgia and the University System of Georgia. There has never been an institution known as a community or junior college to my knowledge. The governor has direct control of TCSG school funding while the USG is governed by the board of regents who are appointed by the gov but are independent. This was put in place years ago when the systems accreditation was in peril when the gov tried to fire a UGA president. Technical Colleges used to be called Tech Schools but in the early 2000’s started inserting “college” into their names. Their function is much more about preparing students for vocations although their credits in many areas are becoming aligned with those of state schools.
burnspbesq
@jrg:
“I especially like the fact that contributions to 529 plans are not deductible from federal taxes.”
Why should they be? What rational tax policy objective would be served by that? It’s not enough for you that the earnings are tax-free?
burnspbesq
Graph would be more informative if it also plotted the change over time in the availability of financial aid.
Davis X. Machina
@burnspbesq: There are similarly tax-privileged health savings vehicles, already.
Distinguish.
JPL
@Raven (formerly stuckinred): Thanks. I always thought DeKalb (GA Perimeter College) was a junior college. I knew that since you worked in the system you would know.
During the discussion on the Hope Scholarship there was a lot of noise about the Hope causing tuition hikes. If that were true I would think GA state colleges would cost more than other state schools comparatively speaking.
You are a walking encyclopedia when it comes to our state school system.
jwb
@PeakVT: “You’re right – labor costs are sticky downward. But something has to give. Perhaps states need to recognize that not every state institution can be research-oriented, and at some schools the profs will have to focus on teaching.”
Actually, we have an app for that: it’s called adjunct teaching. It’s already been widely implemented. You want $30K a year (if you’re lucky), no benefits? Here’s your 10 classes to teach. Just like high school, only much less pay, no benefits, and the job security of a fast food worker. Pretty much every school makes substantial use of it, the result being a two-tiered faculty: the tenure track faculty and the adjunct faculty. Yes, the economic logic of the situation almost certainly requires that pretty soon the vast majority of faculty at most universities will be adjunct. So you’ll soon be enjoying your utopia.
This, of course, won’t happen at the very top institutions, which cater to the 1%. And that should perhaps make you consider carefully what this debate about teaching and research is really about.
PurpleGirl
@RSA: When I attended NYU College of Arts and Sciences (circa 1969-74), tuition was $1,250 a term (16 credits per term) for a total of $10,000 for four years (excluding all fees and textbooks).
As of the Fall 2011 and Spring 2012 terms tuition is $19,672 or $9,836 a term (12 to 18 credits a term, excluding fees and textbooks).
jurassicpork
Why occupying Wall St. should be only the first phase.
Rafer Janders
@Davis X. Machina:
Ah, as usual, burnesbeqs blunders in with his usual charming mix of unwarranted aggression, careless contempt for facts, and deeply unearned sense of intellectual superiority. This should be fun.
PeakVT
@Raven (formerly stuckinred): I’m sure many are fine teachers, but at today’s prices almost all of them should be. Otherwise there’s been grade inflation in the ranks of professors.
Raven (formerly stuckinred)
@JPL: What has happened is that the legislature has cut our budget every year for the past 12 year so we have had record budget cut and record enrollment. As they have done that the system raised tuition to make up the difference with hope absorbing some of that increase. Last year they tried pass a law tying the amount of tuition increase to the rate of inflation. This is tantamount to the legislature dictating system policy. If that happens the system will lose SAC’s accreditation and we’ll WISH we were jr colleges.
Stillwater
@Rafer Janders: deeply unearned sense of intellectual superiority
Hmmm. don’t know about that one. I mean, he did go to Duke and all. :)
Raven (formerly stuckinred)
@PeakVT: No, there should be an emphasis on teaching in the R-1 schools. Right now it’s pretty low on the totem pole.
catclub
@smintheus: I think that bubble is going to be burst by Internet based college courses. There are amazing amounts of courses already available. Just think if they got organized.
I admit up front that having a learning environment and various types of peer pressure will have to be invented to make internet courses as effective as face to face ones,
but it will happen due the size of the bubble (and thus the amount of wasted resources available).
jwb
@PeakVT: How much do you think the average professor makes?
Linnaeus
My university is increasingly moving to the high-tuition, high-aid model in the face of ongoing massive cuts in state support, with the commensurate shift in the burden of the costs going to students. There’s talk going around that “competition” will push costs downward, but I have a hard time seeing that happen. I’m certainly no economist, but from what I’ve been reading, a degree from a top public university (or private, for that matter) is a positional good, so it derives its value from you having it and someone else not having it. So instead of universities competing for students, students are competing with each other to get into universities. Universities can thus keep raising tuition; any increase in aid (usually in the form of loans) is captured as rent.
jwb
@Raven (formerly stuckinred): This is not true in my experience. Teaching is second only to research in evaluating job performance. And once you have tenure you are more likely to get reprimanded for poor teaching than for inadequate research. (By contrast, you are more likely to be rewarded for superb research than for superb teaching.) Research, however, drives salaries (and other perks), and this is because research is portable. Research generates outside offers in a way that teaching never will.
PeakVT
@jwb: If students are paying a lot more, then shouldn’t they be getting better teaching? That was my question. Are they?
RSA
@PurpleGirl:
Interesting. A CPI inflation calculator says that $10,000 in 1972 (to pick a year in the time you were in school) has the same buying power as $54,279 today. So $19,672 times 4 years is $78,688. That’s an increase (in real dollars) of 45%; in other words, tuition at NYU College of Arts and Sciences has increased annually about 1% faster than inflation as measured by the CPI. If I’ve done the calculations right. The small increases do add up.
Raven (formerly stuckinred)
@jwb: I’m missing your point. Research drives salaries (and tenure) so, once you are tenured and you are a lousy teacher you get reprimanded? So what? Wouldn’t you think that you should have never been tenured if you couldn’t teach? Of course not, you generate $$$.
Raven (formerly stuckinred)
@PeakVT: Ha, that’s really funny. Sounds like these clowns that want to call students “customers”.
jwb
@PeakVT: It depends on what the students are paying for. Are they really paying primarily for the access to the teaching? Most are actually paying for the degree and access to the network that the degree grants. Teaching is important and central to what universities do, but from the students’ perspective I don’t think it’s the most valuable thing the university offers. Too much refocusing from research to teaching would alter the networks and value of the degree to the students in a fairly negative way.
BTW, at most universities, especially state schools, faculty salaries have not kept close to keeping up with the increase in tuition. The increased tuition has primarily covered shortfalls from state aid and increases in the financial aid pool.
elliott.gorelick
“High aid” often just means massive student loans which is different than in the past as well where the percentage of aid offered as grant or scholarship was much higher.
Raven (formerly stuckinred)
@jwb: That’s correct, no raises in three years in Georgia. . .except for senior admins.
Linnaeus
@elliott.gorelick:
Exactly.
jwb
@Raven (formerly stuckinred): You won’t get tenure if you are a poor teacher. You won’t get tenure if you are a mediocre researcher. After tenure, your research can disappear for years on end without it being questioned (especially if you are working in administration), but you can’t routinely be teaching poorly without hearing about it (even if you are working in administration, unless you are at the highest levels, in which case you won’t be teaching). In my department, far more people get reassigned for poor teaching than for poor research; if your research productivity falls off but you are a good teacher eventually you will be assigned more teaching without it affecting job evaluation for merit increases; but if your teaching is poor you will be assigned onerous administrative grunt work, your merit evaluations will be poor, and you will be constantly harassed into taking early retirement even if you are producing good research. Someone who is superb researcher and a lousy teacher poses a conundrum, but they are certainly constantly being talked to by administrators. I would say the institution is satisfied if you are a good teacher and a superb researcher.
Ron
@jwb: This might be true at large research institutions. For the large number of small liberal arts colleges out there, teaching is by far the biggest factor. I can tell you that when I did both annual self-evaluations and my self-evaluation for tenure/promotion, the vast majority of my time and effort was writing about my teaching.
Ron
And “what an average professor makes” varies widely, both by the size of the institution and the type.
Clandee
I sincerely doubt the “tuition” number. I have taught at the same New England University since 1980 and know that the actual tuition at my institution has gone up less than a factor of five during that time, nowhere near a tenfold increase.
Ron
@catclub: I personally feel like the whole idea of “online courses” is anywhere between very bad and truly awful. Of course it depends on the nature of the course. I don’t see how you can effectively teach a science course or a math course online. Also, I can tell you that at least for me, I spend a great deal of time working with students outside the classroom in one on one (or one on few) sessions. Don’t know how that works for the online courses.
jwb
@Ron: Yes, I agree. I’m talking about R-1 universities, since that’s where the discussion was and those are the only schools where research is going to come close to trumping teaching. My point is that even R-1 universities are more concerned about the teaching responsibilities of their faculty than is generally presumed. I would add that the bigger problems with respect to teaching at large research institutions are the heavy reliance on adjuncts, who have no protection and little direct supervision by administrators or faculty (so student evaluations and enrollment are almost the entire basis on which they are rehired), and the extremely large class size of many lower division undergraduate courses, which highly constrains the modes of effective pedagogy that are available.
Raven (formerly stuckinred)
@jwb: I’m not sure your experience is universal.
jwb
@Ron: Agreed. Salaries vary widely by institution and type. But average salaries at a public R-1 university are much lower than what many presume. Essentially, if you don’t get an outside offer, you can figure on an average increase of 1-3%/year with a small bump (about $3K) for promotion to associate and again to full and no increase in years where the state government has a budget crisis. This is true whether tuition stays flat or goes up by 10%/year, more evidence that the tuition increases are not being driven primarily by faculty salaries. One wrinkle is that highly productive full professors can be appointed to named chairs, in which case their compensation increases fairly substantially, but those probably account for less than 10% of the faculty (although perhaps more in the sciences and business).
I’ll add that there have been many years when my take home pay has decreased despite a salary increase because the increase in my portion of the health insurance was higher than the salary increase.
jwb
@Raven (formerly stuckinred): Not saying my experience is universal. I simply offer my experience as evidence against the claim that R-1 universities don’t care about teaching. That simply isn’t the case.
Raven (formerly stuckinred)
@jwb: And I find that it is.
Sly
@PeakVT:
I’m always initially skeptical of anything put in print by Trachtenberg. On the one hand, I would agree that the division of labor between research, teaching, and administrative duties needs a whole lot of tuning. On the other hand, if every university in the country all followed GW’s model, the rate of inflation in college tuition would actually be much, much worse. Tractenberg ran that place more like a billion-dollar a year hedge fund than a university.
jwb
@Raven (formerly stuckinred): Your experience isn’t universal.
Calouste
So at what point is it going to be cost-effective for students to offshore their education and attend something like the Indian Institute of Technology? Can’t be that far off, can it?
schrodinger's cat
@Calouste: Do you know how hard it is to get in one of those?
MC
What really angers me is that this chart was created in June 2010 and no media organization thought it worth highlighting in any way.
Sloegin
Washington State has seen state funding of higher ed drop from 70% of the cost (early eighties) to currently about 8%. The Governor has just proposed another 15-20% wack off that, which would drop schools down to early 1960’s levels of real dollars funding from the state. (D governor, D legislature).
The Republican challenger has made one of his campaign promises increase higher ed funding. What a screwy world.
jrg
@burnspbesq:
I really should not be responding to you, because you’re a notorious troll, but how can you possibly argue that making education savings deductible does not serve a rational tax policy objective? A better education means (statistically speaking), more total taxable earnings from my child once she reaches adulthood.
YoohooCthulhu
@jwb:
I’d also note that at R-1 universities, professors seem to have a much lighter teaching load. So it’s relatively rare that they can’t do an adequate job teaching. But my experiences with Berkeley, UCSD, and UCSF lead me to believe that mediocre teacher/fairly successful researcher model is tolerated well. The problem is that going from average/mediocre to outstanding really offers no career advantages.
YoohooCthulhu
@superdestroyer:
Percentage of high school graduates going to college:
(http://www.census.gov/compendia/statab/2012/tables/12s0276.pdf)
Percent college enrollment by high school graduates has increased from 52% in 1970 to 70% in 2009. So it definitely hasn’t gone up 10 times or anything; more like 50%. For comparison, the university I graduated from in 2005 is about 50% more expensive now in 2011.
Barry
@catclub: “I think that bubble is going to be burst by Internet based college courses. There are amazing amounts of courses already available. Just think if they got organized.”
The two big problems are (a) a boatload of private educational companies are just fraud mills, where they get your tuition check and you end up with bills and nothing else worth anything, and (b) employers are if anything going to be more picky about the status of applicants’ educational credentials, because they can. Maybe in the late 1990’s, there were industries were being trainable was good enough, but not now, and not for the forseeable future.
Sock Puppet of the Great Satan
“Calouste – October 29, 2011 | 4:56 pm · Link
So at what point is it going to be cost-effective for students to offshore their education and attend something like the Indian Institute of Technology? Can’t be that far off, can it?”
The kill ratio to get into an IIT is 100:1. Normally an MIT grad can be sure they’re the smartest one in the room, but not if there’s an IIT grad there.
But yeah, the Brit universities are going to start looking pretty good deals, and most of them are strong and some (Oxbridge, the U. London colleges, Manchester, Edinburgh, Durham) have good name brand even outside the UK.
Dustin
@Sock Puppet of the Great Satan: So what you’re saying is that even as more and more businesses insist that everyone they hire, even the janitors, have a college degree we’re going to accept a system that requires American students to travel abroad for their education? I really can’t see it getting that far without a generational upheaval being close behind.
jpe
529s are taxed at lower rates than cap gains; the latter are 15%, 529s gains aren’t taxed at all.
jrg
@jpe: Contributions to 529s are taxed. They are not tax-deductible like contributions to 401(k)s.
jpe
jrg: No. When I open a 529, I purchase assets. An asset purchase is a non-taxable transaction. I neither get a deduction nor am taxed on it.
Peggy
@Villago Delenda Est:
Fat cat college administrators are a plague. Behind the enormous salary usually sits an incompetent drone.
Twenty years ago I was a grad student in Molecular Biology supported by US government research grants. The standard way this funding works is that the scientists (like me) get 50% of the money and the rest goes to the university as overhead. Some of this is legitimate- buildings, heat, accounting services- but it also provides an administrators dream slush fund. At my university the president implemented his perverted dreams of grandeur from these funds.
Meanwhile, back at the bench- one lab was covered in umbrellas to cope with the leaks. My lab had broken air conditioning so the summer temperatures were often in the high 90’s which made a certain type of temperature sensitive experiment literally impossible. A maintenance guy cut the electrical power for the roof exhaust for the tissue culture hoods, consigning most of our experiments to contamination.
Keep in mind, my 12-15 hr/d 7d/wk efforts towards scientific achievement was paying for this level of luxurious accommodation. Meanwhile the administrators had large air conditioned comfortable offices with computer support. My internationally famous full professor with an endowed chair adviser provided the only computer support for his entire department.
Administrators rule!
jrg
@jpe:
The money that you use to purchase that asset is taxed, unlike a contribution to a 401(k). Jesus Christ, this is not a difficult concept to understand.
jpe
No shit, jrg. The same goes for capital assets. The first commenter said that 529s were taxed at a higher rate than capital assets (which produce capital gains), and that’s obviously and patently false. Gains inside 529 plans aren’t taxed at all. Zero being less than 15%, the conclusion is that tax treatment of 529 plan assets are more advantageous than capital assets.
I’m not sure why you’re going off about health care plans, which have precisely nothing to do w/ this.
jrg
@jpe: I’m not talking about health care plans. I’m talking about education savings plans.
No one is disputing that gains in 529s are not taxed, either. All I’m saying is that contributions to 529s should be deductible from federal taxes.
Barry
@Calouste:
“So at what point is it going to be cost-effective for students to offshore their education and attend something like the Indian Institute of Technology? Can’t be that far off, can it?”
When US employers recognize those degrees as equally valid in the case of native-born US people.