Monetizing Higher Education: Can Investors Replace Government Lenders?

Thomas Donlan:

In a mythical country church a long time ago, the minister preached a sermon every year on the subject of coeducation. He was horrified, because, “They take decent boys and girls and make them matriculate together. They even have to use the same curriculum.”

Nowadays matriculation is far more shocking than the fictional minister could have imagined, and not just because coeducation with all of its benefits is nearly universal. Starting college signals the beginning of four years of wretchedly excessive tuition payments for many parents and a decade or more of burdensome loan payments for many students.

Published prices for tuition at private, four-year, nonprofit colleges and universities have more than tripled in real terms, adjusted for inflation, in the past 40 years. The College Board’s annual report on “Trends in Higher Education” says the sticker prices at government-supported four-year colleges have risen almost as fast.

Compare the inflation-adjusted price of room and board—the other main product produced at institutions of higher education. It hasn’t quite doubled in the same period. That doubling would be outrageous if it were not overshadowed by the price of tuition.