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The College-Cost Calamity

economist.com

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Re: The College-Cost Calamity

#31

Post by redwood »

trop wrote: post #5

I have a hard time imaging a world is with a huge crash in education. Does this mean fewer colleges and more students going into trades? Radically lower tuition? Fewer tenured professors, and more adjuncts and visiting professors with three-year contracts? Speaking of the latter, there is the disruption of online course offerings. These are creeping in from the bottom, replacing introductory lectures, and working the…

It's very easy for me to imagine a massive societal shift from traditional ivory tower education toward self-learning and online education and a skills-focused employment race. Of course there will always be ivory towers that provide elites with a way of distinguishing themselves for a very small, reserved portion of the population. Harvard et al's degrees will always set you apart... but for the bulk of the middle class there will need to be something else.

The way everyone today feels they need a masters reminds me of the way everyone used to say you need a credit card to get a good credit score. It's called drinking the kool-aid.

Re: The College-Cost Calamity

#33

Post by netcan »

wisty wrote: post #27
taligent wrote: post #11

I would be curious to know the costs and implications for adopting an Australian solution. Here in Australia everyone can go to college and what happens is that the tax office keeps track of the money you owe and then as you start earning money they pay the loan back through a tax increase. You also get a discount if you have the loan back quicker. It's all seamless and you can also add books/computer to the loan as…

Because it's effectively a price control, and price controls are bad and communist and evil.

Sarcasm aside, yes.

The Aussie HECS system is more like the European style systems than american ones where universities compete in a semi-free market. Unis get paid a set amount per student. Student contributions are a fixed contribution to the total. Including the subsidized loans but not including founding & research grants to Universities, they account for about 25% of total costs, an incentive to take it seriously but not a pay-you-own-way system. Very far from a free market.

The interesting element of the Aussie system is that they have maintained competitiveness and a steep quality curve more similar to the American environment with the best Unis (eg ANU & Melbourne) ranked much high internationally than the those just a step down locally. Australia has more highly ranked Unis than most European countries with larger populations.

But.. Judging by inflation in international & (the less subsidized) "full fee place" tuition, fees are rising fast down under too.

Re: The College-Cost Calamity

#35

Post by jbarham »

ninguem2 wrote: post #32

Anybody knows a good way of short selling Universities?

You could try shorting APOL (owner of University of Phoenix), DV (DeVry) and similar stocks of private education companies, although a lot of them are already down substantially from ~2009 highs.

Student loan ABS are harder to short unless you're an institutional investor or hedge fund (in which case you wouldn't be asking ;), but if things get nasty again in the financial markets people tend to pile into treasuries and USD as relative safe havens.

Re: The College-Cost Calamity

#36

Post by arethuza »

tsotha wrote: post #28

What can't go on, won't. There's no reason a college needs to charge $40k to an undergraduate. What's changed in the US over the last few decades is the ratio of administrators to students. I don't remember the exact numbers, but it went from something like 1 in 9 to 1 in 3. Colleges will simply have to make due without the third assistant to the vice dean in charge of diversity and lower the tuition they charge to n…

"The kind of perfect price discrimination they practice would be flatly illegal in any other industry."

Sounds awfully like "value based pricing" - which is a pretty common strategy in enterprise software sales.

Re: The College-Cost Calamity

#37

Post by rblackwater »

stevencorona wrote: post #9

The craziest part, IMO, is that I had to make a decision whether or not to take on $175,000 in debt (I went to RIT, it costs $44,000 per year) when I was 18 years old and had never handled more than $300. Sure! Sign me up! I couldn't even imagine what that much money would look like, let alone feel like to pay back- at that time, it was as equally mysterious as $10,000 or $1,000,000. Luckily, I left after my 2nd year…

I think the craziest part is actually that declaring bankruptcy doesn't cancel student loan debt, so there's no failsafe if you don't get a decent job afterwards.

Re: The College-Cost Calamity

#38

Post by brazzy »

netcan wrote: post #33
wisty wrote: post #27

Earlier quoted context omitted.

Because it's effectively a price control, and price controls are bad and communist and evil.

Sarcasm aside, yes. The Aussie HECS system is more like the European style systems than american ones where universities compete in a semi-free market. Unis get paid a set amount per student. Student contributions are a fixed contribution to the total. Including the subsidized loans but not including founding & research grants to Universities, they account for about 25% of total costs, an incentive to take it serious…

It seems to me that the bizarre excesses of the "education bubble" are the direct result of a free market in education and prove that it's a bad idea.

Education is not something where there should ever be an attempt to capture the consumer surplus.

Re: The College-Cost Calamity

#39

Post by cafard »

Back when Mark Edmundson wrote a piece for the NY Times saying that one should attend college for the joy of it, not as a vocational school, I had a look at the University of Virginia tuition about the time he started teaching there, and at the minimum wage. At the end of the 1970s, a summer of minimum wage work would pretty much cover U.Va. tuition and fees, though not room and board. At the moment, the equivalent number of hours falls far short.

A sort of institutional will has taken over the universities, one that leads them to expand at all costs. The area occupied by George Washington University in Washington, DC, has considerably increased over the years, and they have campuses in Alexandria and along Foxhall Road. AU, Catholic, and Georgetown have all expanded--the last, which is hemmed in with expensive real estate, is looking to open a campus several miles away across town. And they all seem to have Schools of Professional Studies (or some such name) where one can earn a credential by the investment of a couple of years of evenings and money that one's employer might pay for.

Re: The College-Cost Calamity

#40

Post by 385668 »

rblackwater wrote: post #37
stevencorona wrote: post #9

The craziest part, IMO, is that I had to make a decision whether or not to take on $175,000 in debt (I went to RIT, it costs $44,000 per year) when I was 18 years old and had never handled more than $300. Sure! Sign me up! I couldn't even imagine what that much money would look like, let alone feel like to pay back- at that time, it was as equally mysterious as $10,000 or $1,000,000. Luckily, I left after my 2nd year…

I think the craziest part is actually that declaring bankruptcy doesn't cancel student loan debt, so there's no failsafe if you don't get a decent job afterwards.

And that the penalty for defaulting is even more money owed. Pay the loans, pay interest for most of your life on an education that frequently doesn't pay commensurately to a job in the field, assuming you can get one. Don't pay, eventually owe hundreds of thousands of dollars more than you did originally.
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