Drum Roll, Please. And the Top Ranked Virginia Colleges Are…

Oh, my, U.S. News & World-Report has just published its Best College rankings for 2018. Poring through college rankings is like slowing down on the  Interstate to check out a car wreck — you know you shouldn’t do it, and you know it’s a waste of time, but you do it anyway. So, for your viewing pleasure, here are the rankings for Virginia’s public universities:

Corrections: Mary Washington University should read “University of Mary Washington.” The tuition at Hollins University is $39,035.

What stands out to me is the marked contrast in tuition levels at public and private institutions. The sticker price for public institutions is significantly lower that for the privates. On average Virginia’s public universities charge $13,575 in tuition and fees. On average the privates charge $33,650. (These expenses do not include room, board, textbooks or other expenses.)

Of course, there is a world of difference between the list price and the “net” price after institutionally provided financial aid. Wealthy private schools with big endowments such as Washington & Lee University and the University of Richmond can afford to knock their prices way down for select groups of students, but others are hard pressed to compete.

If your kid wants to go to a southern regional university, where would you prefer to send him or her — to Mary Washington (ranked 19, tuition $11,630) or Mary Baldwin (ranked 31, tuition $34,140)?

I’ve spilled much digital ink on this blog worrying about the public institutions pricing themselves out of the market. I still think there is abundant reason for concern. But my analysis heretofore has not given sufficient weight to the extraordinarily high cost of the private colleges. As families become ever more desperate to hold down the cost of attendance, more will change their preferences from private to public, in effect creating a safety valve for the publics.

The Commonwealth provides a small subsidy for Virginia students attending private Virginia colleges, but not enough to noticeably close the gap. The private schools can pitch their small class sizes and close teacher-student relations all they want, but they are selling to a shrinking market. I wonder how many of them have a long-term future.

Update: If college administrators aren’t going into panic mode, they should be. Glassdoor, the job search blog, reports on 15 major companies – including Google, Apple, Starbucks, Costco, Whole Foods, Hilton and Publix — that are relaxing their college-degree requirement for many higher-paying jobs. When big employers stop using college diplomas as a credential, they start looking for specific competencies, not degrees. And that spells disaster for colleges selling credentials.

As I’ve been researching the family/corporate history of the A.T. Massey Coal Company in my paying gig, I’ve been struck by the number of business leaders who emerged in the first half of the 20th century with little higher education. The lack of a college degree did not stop them from becoming successful business leaders. They supplemented on-the-job learning with night school to acquire specific skills they needed.

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5 responses to “Drum Roll, Please. And the Top Ranked Virginia Colleges Are…

  1. Well… the public universities have been relentlessly hammered in this blog every which way from Sunday from their expense, being nests of “leftists”, how they deal with sexual behaviors, diversity/affirmative action, subsidies for under-prepared minorities, affirmative action, tax credits , bureaucracy, bad breath and smelly armpits …..


    so NOW…it turns out that they’re not so bad after all?

    Oh VEY! What will happen to all those enraged rabble rousers???


  2. Larry, the bad breath and smelly armpits are probably yours. . .

    73% of college students are in public institutions, and the majority of the $1.5T in debt has been run up by those students and default rates are trending toward 40% by 2023. The U.S. spends more on higher education as a percentage of GDP and yet is middle of the pack in producing college graduates.

    For some reason, you inveigh against the U.S. healthcare system and policy, which have the same characteristics as U.S. higher education in terms of cost and outcomes, but give higher ed a pass.


  3. Jim mentions that he is comparing sticker price in the article, and mentions that it can be much higher than net price after discounts and financial aid. I’d point out that the difference can be huge. It emerged after the issues at Sweet Briar College that average discount from list tuition was something like 68%. The average for first time students at private colleges is now up to 50%. If you applied that average tuition for Virginia private schools and compared it to Virginia public schools, the difference would then only be $3,250 per year. This is almost exactly the size of the Virginia Tuition Grant.


  4. Izzo –

    I always wonder at your cool understated analysis of numbers. You are sure eyed and deadly accurate without fail.

    Here, if we believe the New York times August 25, 2028 article that you have copied in above along with the April 4, 2018 “nacubo” report, we have a truly remarkable debacle unrolling before our gaze.

    Here we got the history of the Obama Administration manipulating the growing numbers of student loan defaults beginning in 2012 and then, at the start of 2015, finally going off the air altogether to hide a looming debacle that otherwise could not be hidden from public view.

    Meanwhile, as if working in tandem, Hilary and Bernie start chasing after kids votes by singing to then the benefits of free education, yet again another fraud, while their Democratic federal co-conspirator officials suggest and hint and wink at the benefits of repayment relief and forgiveness of debt laden students and graduates in a series of signals to the entire corrupt industry that only makes matters worse and worse.

    Meanwhile, at the very same time, the schools continue their relentless march, annually jacking up face rate tuition, while they chase the dwindling number of kids with ever larger discounts off the face rates and sweet talking ever more unqualified numbers of unprepared kids to saddle them up with ever larger and more toxic loans for a college education that they most likely will never receive, but will graduate anyway with just debt instead.

    Gentlemen, these are the blinking red lights of a looming market collapse the likes of which we have never seen, given its unique combination of adverse consequences that could follow in its wake.

    But, in my view, it has the basis toxic elements of the 1989/1990 imploding US real estate market bubble that ruined our economy back then. There you had big real estate leaders hiding their own borrowers defaults by lending those defaulting borrowers ever more money on faulty underwriting at face value of newly collected rents that had been discounted in ever larger amounts, finally as a much as forty percent in some cases, all front end loaded. But everyone was making so much false money and had so much at risk, nobody could stop jacking up the bogus system. So these discounts went on uncorrected for far too long, compounding exponentially the debacle that would ensure that everyone collectively – borrower and lending and all their facilitators alike – an entire industry, walked itself over a cliff, never to be seen again. It was the classic market collapse that reduces all its players, their structures and their Ponzi scheme games, to rubble.

    Still, this new one here has so many new wrinkles and facets, I not even sure Tom Wolfe of The Bonfire of the Vanities, A Man in Full, and I Am Charlotte Simmons, could have dreamed the disaster of greed and stupidity up.

    • Above I described the 1989/1990 real estate market bubble collapse and how it reminds me of the looming Student Loan Debt Crisis, and its possible ramifications.

      It is interesting to note that the 1989/1990 bubble real estate market collapse triggered government interventions what were intended to put the collapsed real estate market back together again. And to soften its blow, and enhance its recovery.

      In fact, these market interventions by the government did far more harm than good. In my view, these government interventions laid the groundwork of the 2008 depression triggered by the Fannie Mae low income mortgage loan crisis. This too have relevance to our current Student Loan Debt Crisis.

      Here is my earlier commentary on how that follow on debacle came about.

      “Fannie Mae had perfected the art of manipulating lawmakers, eviscerating its regulators, and enriching its executives. All in the name of expanding home ownership. …

      Fannie Mae led the way in relaxing loan underwriting standards, for example, a shift that was quickly followed by private lenders. [CEO James A.] Johnson’s company …”

      My slant on what happened was quite the reverse. That CEO’s Johnson and Raines inflicted poor underwriting and accounting standards on Fannie Mae at the behest of their political masters. And those political masters gave them the sword and shield they needed to deepen those bad habits until they ignited the match that blew up the US economy. The corruption took over 15 years to gestate then spread and ignite the debacle.

      The underlying problem began after the S&L collapse when Federal Regulators (FSLIC & RTC) forced the liquidation of S&L troubled assets. Here in 1990s Wall Street began to package multifamily housing projects, mixing prime and subprime into securities wrapped by Fannie Mae’s guarantee. Here the political pressure from Executive and Congress shoved a bad result into the marketplace, doing far more harm than good.

      One of the most pernicious results was the later political pressure exerted on Fannie to shift the same technique developed for troubled multifamily projects over into sub-prime loans in minority neighborhoods. This is what exploded the economy.

      I wrote about this several years ago around 2012 or 2013 on Bacon’s Rebellion. These comments still have relevance to what is happening today, in all sorts of public private partnerships:

      “As we grow far too accustomed to our own bad habits, we cannot see how over time those bad habits enlarge and twist themselves out of shape in ways that put us finally on a road to our own failure, producing catastrophic results.

      This lesson we never seem to learn. I suggest that now this public private financing of roads, tunnels, and bridges, and attendant private assumption of essential government functions may be growing out of control.

      And that, in so doing, these ever more complex public private transactions are twisting our state and local governance institutions and private enterprise structures out of shape, leading us into catastrophic events.

      This is happening right now in government financing of student loans, despite the very recent US financial collapse sparked by public private manipulation of the housing market. So we never seem to learn.

      See Playing with Other Peoples Money article on this website. Here’s a shortened and edited version on one long comment below that article.

      “Private enterprise is no more moral that government. Out of control experts can be found in abundance everywhere. They work for governments and private enterprise too. Indeed many private enterprise experts work for government for lots of money. And the successful ones learn how to work the system, how to win low bids and flip them into maximum profits. Unfortunately today’s financial realities can easily acerbate this all to common and current government, expert and private sector overreach.

      Take, for example, how non-govt investment rating agencies told non-govt Banks that sub-prime MBS were “prime” investment grade securities?” This rating agency debacle is example of experts run amok, driven largely by government mandates. Muni bonds being only one of endless examples.

      But where things most likely get bent out of shape is where politics enters the marketplace to achieve political results. In the case of sub-prime mortgages it was Fannie Mae following the dictates of its political masters.

      In short, a creature of the Federal government, Fannie Mae, was captured by Congressional politics. Congressional mandates shoved Fannie into the business of using its credit to guarantee sub-prime mortgages that were securitized then sold to the public until ever more and ever riskier loans polluted the nation’s pool of home mortgages and the scheme collapsed.

      This is a long story. But one could see the risk of these structures being guaranteed by Fannie long before the sub-prime debacle. Real estate is unique. It’s unlike other assets typically used for security. It’s very local and peculiar insofar as its quality as security of loans. So it’s properly the business of local lenders familiar with the unique nature of their local market. Hence the first multifamily Wall Street securities wrapped by a Fannie Mae Guarantee done in the early 1990′s which involved mixing “sub and prime mortgages” from across the nation raised red flags among those knowledgeable about real estate by reason of real experience. But the Wall Street folks, whose black box computer models and endlessly complex esoteric financial structures comprising multiple levels of risk (differently priced tranches cutting across thousands of loans) were untethered to the dynamics of the real estate securing them, could not see the risks.

      Nor would anyone see the risks – not the government regulators, the Congress, Fannie Mae, Wall Street, the rating agencies, lawyers and appraisers, bundlers and mortgage closers and brokers. Nobody would listen or act responsibly. Too much pride, too much political influence, to much political posturing and agenda, and to much money, was involved.

      And, of course, as always happens the crooks (smelling blood on the water) arrived for the killing. But this happened mostly later. Still, from the get go, people were making tons of money for getting these troubled assets off the books of troubled lenders as required by yet another government program of 1990′s regulations, so everyone forged ahead.

      Money corrupts. So experts began to run amok, fueled by the fact that the experts creating the problem earned huge fees doing it before they offloaded the “hidden risk” to the public. Fannie Mae provided the perfect cover, giving triple A credit to less than triple A product. Thus a federally created program that for decades had built a liquid highly efficient mortgage market for properly underwritten home loans that was rightfully the envy of the world, was hijacked.

      The problem was further turbo-charged by more politics and government intervention. The ruse behind this maneuver was as American as Apple pie. Every citizen gets to own a home of his or her own, irrespective of their ability to pay for it. (a simplified overstatement but not by much.)

      Of course, Wall Street and conduit bundlers of sub-prime loans (all private) were only to happy to jump in, make a bundle, then offload even more junk onto the public, leaving Fannie Mae holding the bag by reason of its federally mandated guarantee.

      It was a perfect deal by Federal government and Wall Street standards. The politicians got all the credit. Wall Street and conduits that packaged the mortgages got high risk free cash profits up front. The taxpayer got the shaft (gigantic losses) in the back. The sub-prime homeowner got his own bankruptcy by reason of his federal government feeding him and/or her financial crack cocaine, all for political advantage.

      One great tragedy was the near ruination of Fannie Mae, which up until the early 90s was a poster child of successful government at work. The benefits that Fannie brought to this nation are incalculable. One can say this institution, as much as or more than any other, brought the American Dream to the the American people. Every credit worthy family got a home of their own, one they could afford, from a starter home, right up the ladder. No other country enjoys the success that Fannie Mae created for us. But how easily even the greatest of Federal government programs can be twisted out of shape, and then used for purposes that poison the financial health of a nation, its individual families and citizens. And this poison goes right to the core of the American dreams, our homes.

      And, while private companies, more often than government, put the brake on experts taking undue advantage, and private companies typically cannot afford to go broke, those rules get blurred if private companies get tangled up with government regulations, mandates, and guarantees that twist these iron rules of private enterprise out of shape, and so thwart the rules of free enterprise functioning within a properly regulated marketplace.

      Here the problem started in the 1990’s after long success when Multi-family securitization by Fannie Mae began to include the bundling big commercial individual mortgage loans (each secured a rental housing project) with weak credit into packages of stronger loans, matching risks, to get the weaker loans off the books of troubled S&Ls as defined by federal law.

      So here a government bail out program began to twist the market. It was also a logical first step to later securitizition of INDIVIDUAL home loans by mixing sub prime individual loans in with prime loans, and selling them off together. The practice, fueled by politics, driven by political influence, and the politicians need to get himself reelected, quickly began to fed on itself, growing with each election, and ever higher profits for those who could offload the debt, under the cover of a federal guarantee.

      The gigantic failure that resulted shows how gov. intervention as a player in the marketplace, tilting free markets to government mandated results, so often results in unintended consequences, often catastrophic ones. ”

      — Bottom Line —

      The above example shows how a Government that inserts itself as a chronic, deep, and continuous player in free markets can easily blow up the market. Obviously, the fact pattern of roads, bridge, and tunnels differs quite a bit. But I suggest that when a society and/or its government encourages its private business sector to become a chronic, deep, and continuous player in the historic tasks of public governance, that society and government is also playing with fire. One that can easily flare out of control.”


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