Monday, March 5, 2012

Market Economy at Work

This front page news in our local SJ Mercury News is one of the best example of how Market Economy works best under most of the circumstances. Which is one of the best thing about this country. We all agree, no single system is perfect. However, overall, there is no comparison of true market forces at work.

It is possible that these claims below might be exaggerated but it still shows that Public or Government mostly breeds in-efficiency which ultimately results in higher costs to the public which owns them. Whatever can be privatized should be..

Off-course, this is kind of skewed but reality is, that once huge gap in Public and Private universities cost is shrinking. This gap was earlier due to huge funding from State to and free capital to bootstrap these public universities. Due to budgetary constraints, this free money is going away and is resulting in reality hitting these universities. Instead of cleaning their mess, public universities are mostly resorting to fees increase.. thereby, decreasing gap between them and private universities.

In my view, these public universities should be forced to operate as "for profit" and whatever aid they are suppose to get should be given at the end to students directly. In that case, their fees wil shoot up further and they will be forced to weed out their inefficiencies..

Here is complete coverage..


Fees ‘pricing out’ middle class?

Rising public school costs putting the squeeze on many of state’s students



By Matt Krupnick


 


The impossible has happened: Harvard is now thousands of dollars cheaper than Cal State East Bay for middle-income California students.

So is Princeton. And Williams . And Yale.

Top private schools, with their generous aid, have been among the most affordable options for poor students for a few years, but rising tuition has only recently sent California State University and University of California prices shooting past the Harvards and Yales for middle-class students.

The revelation comes as thousands of college and university students on Monday march to protest budget cuts in Sacramento that have forced up tuition and shaken campuses.

It’s almost unthinkable in a state that once prac­
tically gave away college educations. 

“We are coming close to pricing out many of our middle-class students,” said Rhonda Johnson, Cal State East Bay’s financial-aid director. “Now we’re seeing a disadvantaged middle class.” College-cost calculators illuminate the dramatic shifts. Consider a family of four — married parents, a highschool senior and a 14-yearold child — making $130,000 a year. 

With typical aid, the family should expect to pay nearly $24,000 for a Cal State freshman’s tuition, on-campus room and board, supplies and other expenses. At Harvard? Just $17,000, even though its stated annual tuition is $36,305. 

The same family would pay about $33,000 for a freshman year at UC Santa Cruz. UC Berkeley, which recently followed the lead of private colleges by boosting aid for middle-class families, would cost $19,500. 

“It does sort of put you in an awkward spot,” said Dean Kulju, financial-aid director of the 400,000-student Cal State system, which has more than doubled tuition since 2007. 

It is more than awkward, one student said. 

“That’s ridiculous,” said Fresno State senior Chucho Mendoza, who said he has spent seven years in college because he also works to support his parents and siblings. “Students think they’re getting a pretty good deal here,” he said. “I think they’re in denial.” 

Add to the equation that students at smaller private colleges often can graduate sooner, saving thousands of dollars over California’s public universities, where cuts have made it difficult to get all required classes in four years. 

Families and students considering Cal State “do have to think of it as a fiveyear proposition, at least,” said Vicki O’Day, a Menlo Park college admissions consultant. 

Public university leaders say they are frustrated that budget cuts have sent tuition soaring. And so are state and federal lawmakers. 

President Barack Obama announced in January a plan to force colleges to slow tuition increases or risk losing student aid. And California Assembly Speaker John Perez recently proposed scholarships for students whose families make up to $150,000. 

The 10-campus UC system has tried to help lowand middle-income students, covering tuition — but not room and board — for those whose families make less than $80,000. 

UC President Mark Yudof said the university is still a better deal than all but the wealthiest private colleges. 

“If you move away from the Harvards and Stanfords of the world, I’m not sure it’s as affordable at other private schools,” he said. “I hate to lose any students, but how many students can go to Stanford?” 

Aid at UC Berkeley 

UC Berkeley, where Chancellor Robert Birgeneau has repeatedly voiced worry about middle-class students, this year will offer scholarships for students whose families make up to $140,000. 

At UC, “we hear from students who say, ‘I was accepted at Cal, but such-andsuch private university offered this aid. Can Cal match that?’” said Anne De Luca, UC Berkeley’s acting admissions director. 

College applicants are often surprised to discover that the state’s public universities no longer are the most affordable options. 

“That’s what we’ve been told our entire lives, since we were kids.” said Greg Washington, a Cal State Fullerton student and president of the California State Student Association. 

Stanford is spending twice as much on financial aid this year as it did in 2009, due in part to a 2008 decision to defray tuition costs for families making up to $200,000. A family making $130,000 would pay $25,900 while wealthier families pay nearly $57,000 a year. 

Few schools have done more than Princeton to discount prices for middle-class students. In 2001, it boosted scholarships and removed parents’ home equity from the financial-aid equation. 

Fewer than a quarter of Princeton students graduate with debt, according to U.S. News & World Report, the lowest number in the country. That compares with 40 percent at Cal State East Bay, 45 percent at San Jose State and 41 percent at UC Berkeley, says the Oakland-based Project on Student Debt. 

“When you look at the state schools, they most likely do not have the private resources that we do,” said Robin Moscato, Princeton’s financial-aid director. Its $17.1billion endowment far outweighs UC Berkeley’s $3.1 billion. 

UC and Cal State campuses still compare favorably with less-selective private schools, where endowments are smaller and relatively meager aid usually is targeted for low-income students. 

At Saint Mary’s in Moraga, for example, a family making $130,000 will pay about $36,000 for a freshman year. 

Shocking turnaround 

At UC, for the first time ever, students are paying more for their education than California is, a shocking turnaround for the state that essentially invented the modern public university. 

Now students like Amir Salehzadeh, who applied to transfer from Las Positas in Livermore to one of several UC campuses, are struggling to make it work. 


For some, private colleges are more of a bargain

$19,500



Full price
 $32,634

UC Berkeley


For California’s middle class,
 tuition costs at the state’s once inexpensive public universities have soared past those at some of the country’s top private colleges. Here is a comparison of some universities’ approximate costs, after financial aid, of tuition, on-campus room and board, books and other expenses for a freshman whose parents’ gross income is $1-30,000. The estimates are from each school’s online price calculator.

Stanford


$25,900


Full price


$56,750


Harvard


$17,000


Full price


$56,750


WHAT A DEAL


Private colleges


Princeton


$19,830


Full price


$55,880


Cal State East Bay


$23,691


Full price
 $23,691

NO LONGER A BARGAIN


Public colleges


San Jose State


$23,557


Full price
 $23,557

DAVE JOHNSON/BAY AREA NEWS GROUP








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