The New York Times yesterday examined the challenges middle- and upper-middle-class families now face as they try to pay for college with less home equity. Only home-owners, of course, can benefit from home-equity loans, so what makes this story sad is how even the ostensibly well-off are struggling to meet the demands of "the great risk shift" in American society. A number of families, for example, are dipping into their retirement savings to finance their children's education. This story focuses on how expensive private schools are and cites empirical research that the prestige of an undergraduate degree does not impact a student's future earnings. State universities look like bargains in this story, offering the same education for way less money. But we're increasingly privatizing the costs of "public" universities. State universities, receiving ever less state funding, are increasingly turning their students over to financial-services companies, who are, of course, happy to oblige.

As high-school seniors weigh their options, Higher Education Watch reports that, over the past decade, aggregate funding for public colleges and universities fell by 7.8%. Because some states increased funding, this number obscures the fact that a number of states have decreased theirs by as much as 25%. When tuition increases and aggressive alumni fund-raising proved inadequate, schools have turned to corporate sponsorship. Naming a stadium or a scholarship after a corporate donor seems appropriate. But school's are also making deals with credit-card companies and banks in exchange for a share of the profits that these companies earn from students. This trend, sadly, resembles what is happening in elementary- and high-schools as well: in Fast Food Nation, Eric Schlosser detailed how school administrators open their schools to fast food and soft-drink corporations in return for cash payments. From the administrator's point of view, such deals provide needed money that the public is refusing to give.

Two types of deals have become common. In one, banks assume the responsibility and cost of making student ID cards. The banks then make student ID cards double as ATM and debit cards, which then leaves a predictable number of students vulnerable to high overdraft fees on negligible withdrawals or purchases. In addition, colleges are giving credit card companies student data in exchange for a share of the profits from the cards. According to Higher Education Watch, "The companies then use the data--which can include permanent addresses, e-mail addresses, and local telephone numbers--to market credit cards directly to students. Some colleges go even further, providing these companies with face-to-face access to students--allowing salespeople, for example, to set up marketing tents in central campus hubs." Shonu Gandhi's last post described how many college students now use credit cards and carry a balance on them. It turns out that the colleges themselves are at least partially to blame. Nevertheless, colleges are put in an impossible situation--they need to keep their schools solvent and affordable, and the state is giving them ever less money. The real culprit, I think, are states residents who refuse to fund public education.