Subsidies increase tuition:
http://marginalrevolution.com/marginalrevolution/2015/12/sub...
The $10,000-a-year college education has arrived (1981)
101–110 of 149 posts
Re: The $10,000-a-year college education has arrived (1981)
#102Subsidies increase tuition: http://marginalrevolution.com/marginalrevolution/2015/12/sub...
that is not real truthful..
As subsidies increased the upswing in HS students attending college happen..
1970s 25% HS students went to college
2000s 85% HS students went to college
Its not the subsidies that increased its the shear numbers of students per college campus increased beyond what the US state budgets for college could weather..
The correct term would be that US Federal subsidies had a side effect of de-funding public colleges at the State levels.
Re: The $10,000-a-year college education has arrived (1981)
#103This article hints at schools inability to justify their ever increasing prices. Why is tuition continuing to rise so much faster than inflation? Is this simple supply and demand? Government backed loans create infinite supply to anyone who wants them? How can not for profit schools justify gauging their students?
I see it as the natural consequence of the shift in mindset as to the primary beneficiary of a college education that happened during the Reagan era. It may seem bizarre to us now but, prior to that, students having a college education was viewed as being beneficial to society first and to the student second. And the funding model where states paid for almost everything followed from that.
But once you make the mental leap from it being about a public good to it being about an individual good, the arbitrage starts, just as it does for any item where the cost is significantly below its value. Colleges would have faced a massive backlash if they'd tried to just adjust directly to the point of equilibrium, so they've been moving to that point over the past ~30 years.
Re: The $10,000-a-year college education has arrived (1981)
#104Earlier quoted context omitted.
That's a terrible argument that I've never heard an actual policy-maker or politician make. Besides, unsecured debts are all around us, credit cards being the most common.
I guess this is the lesson: pay for your college with credit cards and avoid student loans. One can be discharged with bankruptcy, the latter cannot.
That's only feasible if you have limits large enough to put the whole balance on.
Also, the interest will kill you unless you actually plan on declaring bankruptcy, in which case say goodbye to any chance of buying a house in the next seven years.
I would think that in your early twenties, defaulting on student debt and declaring bankruptcy would have roughly the same net impact on your life.
Re: The $10,000-a-year college education has arrived (1981)
#105LOL, didn't even realize this was a historical piece going in. I was about to be impressed if someone in the modern era created some means of achieving a college degree equivalent for the stated price tag. I was envisioning some sort of online thing, but too good to be true.
Re: The $10,000-a-year college education has arrived (1981)
#106This article hints at schools inability to justify their ever increasing prices. Why is tuition continuing to rise so much faster than inflation? Is this simple supply and demand? Government backed loans create infinite supply to anyone who wants them? How can not for profit schools justify gauging their students?
There's several overlapping causes. 1. Services in general don't benefit from productivity improvements like goods do. As productivity goes up, services tend to get more expensive in terms of physical goods. Education is a service (as is health care, which is also out-pacing inflation). 2. Saving is extraordinarily difficult on a national and generational scale. Outside of saving easy-to-extract natural resources (oi…
> Services in general don't benefit from productivity improvements like goods do
Very not true. Productivity for paralegals, accountants, and programmers has certainly risen over the decades. We could define education as "person at chalkboard talking about things to other persons sitting at desks", which probably doesn't scale well. There's no reason to think that, in abstract, distributing information won't scale well.
> Saving is extraordinarily difficult on a national and generational scale.
Exactly. Leaving money to the next generation without getting a huge tax hit is non-trivial. If I got cancer tomorrow, I'm not deciding between leaving my daughter a college fund or going through chemo to eke out five more years. I'm "not paying" for the healthcare, so I'll spend whatever I can on lasting a couple extra months. I certainly can't opt to forgo treatment to leave $250k to my grandkids.
Re: The $10,000-a-year college education has arrived (1981)
#107I play devil's advocate with a Cuban friend sometimes: an expensive education is better than a free one because it shows that our culture highly values knowledge, at least in terms of money. When education is free or cheap, it is devalued, at least in terms of money. It's a bit of a tongue-in-cheek argument but I think that it's good that people highly value education and it would be even better if the tuition increa…
Students in the UK pay £9k (~$13.5k) per year out of pocket for the 3 year university system. They were paying just £3K (~$4.5k) until 2012. University was free in the UK until 1998. Many universities in Germany still remain free. Is this because the British or German society values education less? No, it's because Europeans pay more taxes on average, and their governments use this to subsidize the sticker price of t…
And of course, free (meaning paid in taxes) in all of the Nordics.
At least for smaller countries this makes total sense, I think. There are enrolment limits, so the brightest get in regardless of their social status or wealth, ensuring that the country gets the educated workforce for its needs to stay competitive.
Re: The $10,000-a-year college education has arrived (1981)
#108Earlier quoted context omitted.
1. Infinite supply of loans. Dept of Ed isn't even allowed to deny a loan to a person. 2. Culture since the Clinton era of "everyone should go to college". Massive cultural stigma for those who don't. 3. Colleges continue to justify costs based on lifetime earnings delta of people with degrees. Sadly, this data is backwards-looking and not indicative of what today's students should expect. The most heinous thing thou…
The loans are the key to the whole mess. So long as the loan is guaranteed to all and non-dischargeable through bankruptcy, the cost will tend to rise to match the total expected lifetime earnings the education enables. In short the loan system is transferring the benefits of the education away from the students and allowing the institutions to take it for themselves instead.
"In short the loan system is transferring the benefits of the education away from the students and allowing the institutions to take it for themselves instead."
That is by far the most concise summary I've ever read of the nature of the problem.
Would you say that the same thing is true to a lesser extent in the housing market? It's not as bad, but there's a huge amount of loan subsidy there that's driving the price of housing crazy.
Re: The $10,000-a-year college education has arrived (1981)
#109Earlier quoted context omitted.
The loans are the key to the whole mess. So long as the loan is guaranteed to all and non-dischargeable through bankruptcy, the cost will tend to rise to match the total expected lifetime earnings the education enables. In short the loan system is transferring the benefits of the education away from the students and allowing the institutions to take it for themselves instead.
"In short the loan system is transferring the benefits of the education away from the students and allowing the institutions to take it for themselves instead." That is by far the most concise summary I've ever read of the nature of the problem. Would you say that the same thing is true to a lesser extent in the housing market? It's not as bad, but there's a huge amount of loan subsidy there that's driving the price…
It's a nice analogy, but at least in the housing market you're equally likely to be a winner (sell before crash) as a loser (buy before crash).
Re: The $10,000-a-year college education has arrived (1981)
#110Earlier quoted context omitted.
The main point I was making, is it's unreasonable to complain about high student debt when majority of it is living expenses. People often complain about the high cost of attending university, but don't differentiate between tuition fees and living expenses, often lumping them together to reach a seemingly egregious yearly tab. It's not so egregious when you examine where the money is going... You would have spent ne…
So you're saying people who go to college shouldn't expect to have time to study?
It's certainly possible to work while attending university. I did it...