Here’s a non-controversial statement for the weekend: The cost of college is out of control.
As truths go, this one’s fairly self-evident. Much has been said about the 300+ percent increase in the past 40 years, even adjusted for inflation. Things haven’t slowed down recently, with a 14 percent increase in tuition costs for private universities in the last five years, and a 27 percent hike for public schools, according to The College Board. And student debt now tops out at over $1 trillion across the country, which should also serve as a decent little point of evidence.
This isn’t just a cry of the plebian.
A recent survey from Morgan Stanley of the Boston area’s high net worth investors found that 86 percent say the rising costs of college are “unjustified.’’
What’s a high net worth investor? Basically, it’s the upper middle class and up. It describes anybody with $100,000 or more of investable assets, which represents about a fifth of US households, according to Morgan Stanley.
So, the upper middle class is aggravated about college costs too—which makes sense for a couple of reasons. First, you (usually) don’t become financially successful without having a decent sense for keeping your own expenses under control. So when the cost of something is as completely out of whack as college, you’d expect those who have reached the upper middle class to recognize such ugliness when they see it.
Second, as The Wall Street Journal explored a couple of years ago, because its members have enough money to not qualify for financial aid yet still feels the squeeze of ever-increasing tuition, the upper middle class takes on quite a bit of student debt. In other words, many of these high net investors are keenly and personally aware of how expensive an education is. According to Morgan Stanley, 65 percent of those surveyed said they would consider taking out student loans to pay for their children’s or grandchildren’s education.
The survey also includes a subset of the broader group, which goes beyond the upper middle class: Millionaires. A full 52 percent—that’s more than half!—of Boston millionaires said they, too, would consider taking out student loans to pay for their kids’ or their kids’ kids’ schooling.
It’s no surprise that fewer members of the rich would feel a need to take out debt than the mere well-off. (Here’s another fun fact: 97 percent of millionaires say they expect to meet their financial goals. You don’t say.) And it’s not like those who do take the debt on will have much trouble paying it back.
For millionaires, taking on student debt could signal something of a strategic or calculated move, Christine Armstrong, a Morgan Stanley Senior Vice President in Boston, told Boston.com. Again, you don’t get rich without a fairly strategic view of money.
For example, they could see low interest rates on student loans as an advantage to other debts they might take on, and opt to put their cash in other places than a low-interest college education. Or they might even see taking a loan out in their child’s name as a lesson in showing the child just how expensive college can be. (‘Here honey, your first debt!’)
But even in those instances, the rich are looking at college as a major expense.
“Even the wealthy don’t want to write a personal check for $50,000’’ for college, Armstrong said. Good to know they’re on board.