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Rising fees, not low minimum wages, are hitting college students

On Wednesday, MPR News carried an item asking “Why can’t kids today just work their way through college the way earlier generations did?” It went on

Let’s take the example of a working-class student at a four-year public university who’s getting no help from Mom and Dad. In 1981-’82, the average full cost to attend was $2,870. That’s for tuition, fees and room and board.

The maximum Pell Grant award back then for free tuition help from the government was $1,800. That leaves our hypothetical student on the hook for just about $1,000. Add in a little pocket money, too — say $35 a week. That makes an extra $1,820 for the year on top of the $1,000 tuition shortfall.

Now, $3.35 an hour was the minimum wage back then. So, making $2,870 meant working 842 hours. That’s 16 hours a week year-round — a decent part-time job. It’s also about nine hours a day for three straight months — a full-time, seven-day-a-week summer job. Or, more likely, a combination of both. In short: not impossible. Far from it.

For today’s public university student, though, the numbers have all changed in the wrong direction.

For the school year that just ended, the total of tuition, fees and room and board for in-state students at four-year public universities was $20,090. The maximum Pell Grant didn’t keep pace with that: It was $5,815. That left our hypothetical student on the hook for $14,275.

A student would now have to work 37 hours a week, every week of the year, at the federal minimum wage of $7.25 an hour, to get by. Research shows that when college students work more than 20 hours a week their studies suffer. If they’re working full time, many will take longer to finish and end up paying even more.

To cover today’s costs with a low-skilled summer job? Over 90 days, a student would need to work 21.9 hours a day.

That all sounds pretty bad. So what is the problem here?

The minimum wage isn’t the problem

It isn’t that the minimum wage is too low. In Minnesota, the minimum wage has risen from $3.35 in 1981 to $9.50 today for large employers. That is a nominal increase of 184%. And, over the same time, inflation has been 169%. So, in real (inflation adjusted) terms, the minimum wage has increased by 5%.

The fees are too damn high

Now look at tuition fees and other costs. The nominal increase there – from $2,870 in 1981 to $20,090 today – is a cool 600%. In real (inflation adjusted) terms, the cost of studying has increased by 160%.

So the problem here is not a falling or stagnant minimum wage, but skyrocketing university fees. Why fees have risen so much is a subject for another day. The trend shows little sign of slowing.

A former governor of our state once told a room full of college students, “If you’re smart enough to go to college, you’re smart enough to figure out how to pay for it.” There’s a good moral there about personal responsibility. Economically speaking, those who reap the benefits of something like education should pay the costs of getting it.

But it is hard not to feel some sympathy for today’s college students. However smart you might be, if the prices keep on rising it becomes harder and harder to pay them. However, it is clear that the answer to MPR News’ question lies with fees, not the minimum wage.

John Phelan is an economist at the Center of the American Experiment.

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