I'm very opinionated about colleges / tuition. Many people find value in it, or they justify it somehow like they couldn't get the education / experience some other, more affordable, way.
My thoughts on the solution is the same for housing increases. Get rid of the government loans. In this situation also make student loans able to discharge by bankruptcy, that way banks will think twice about it as well.
The easier it is to finance something the more people will likely buy it. Look at cars, houses, colleges, even the use of credit cards. Peope will be angry when the loans go away, because it has become a part of the American Dream along with owning a house. But this will cause a huge decrease in demand and hopefully lower the price. And maybe students will work a few years before attending college and know what they want to do in life (can't say I had much of a clue when I attended).
Another side of effect with less graduates is that maybe we can get rid of the college degree requirements (you know, the ones that require a BA in any field).
I'm going to make an argument I imagine many here will disagree with: perhaps the solution to the cost problem is to have publicly financed post-secondary education?
Imagine this: the US government tells colleges it will pay $N per semester on behalf of any student who meets certain qualifications to attend that college. Colleges would be free to refuse to accept this, but with the exception of the Harvard/Yale type schools, any college that did refuse the public tuition would cease to exist because nobody would go there. As long as we can come up with a value for $N that keeps colleges funded without making them rich, it would work. I would submit that the ideal value for $N is much lower than the current average tuition.
How do you pay for this? Take it all out of military spending. There would be plenty left over, I assure you.
> Another side of effect with less graduates is that maybe we can get rid of the college degree requirements
I would argue that there are definite benefits to a more educated population. Just because a certain group of people are going to end up with jobs in a field that don't really require post-secondary education doesn't mean that society as a whole isn't better off when those people are more educated.
I'm of the opinion that many of the problems the US faces right now are more or less the direct result of an uneducated body of voters.
Only if that $N cap must cover a minimum of near 100% of the salary could that even have an impact, IMO.
Without minimum coverage it's just a subsidy that will drive the cost of college up even more since every student would be able to afford a minimum of $N. It's virtually identical to the current loan landscape.
Example (broad strokes):
Student Grant / yr Minimum Coverage
$5,000 100%
$10,000 98%
...
$50,000 90%
Couple this with removing government backed student loans for undergraduate altogether and now you've got a reasonable out-of-pocket maximum spend per student per year. In this table it would be $5k for a $50k school - if the school wants any gov help they have to manage their own tuition costs.
Obviously this would be sort of a disaster at first and these numbers are probably silly, I have no clue what the process of coming up with these numbers and adjusting them (somewhat less than 1200% over 30 years) would even look like.
Sorry, I was unclear: the idea would be that a college that accepts the $N tuition would be prohibited from charging the students attending any additional tuition.
Note that this is how things work in many European countries (e.g. Sweden): universities cannot charge any tuition from students, but they get a certain amount of money per student from the government. This way the government can control the price exactly, so there are no risk of runaway tuition levels.
Yes, this happens, and it results in one of two (or both) logical reactions:
1) schools accepting any students and doing the filtering at the outflow instead, kicking out people that should not have passed the entry test after three years of studies.
2) schools lowering the bars and just pulling through them as many students as possible, because you need a lot of balls to do 1) and there are not that many balls in academic environment
The correction mechanism is twofold, and in-place throughout Europe: a) Universities must publish employment statistics with indicators for salaries at different horizons; b) Students have k years of extra runway to graduate or drop out. Dropouts cost school budget.
They correct both errors. One almost immediately, the other when/if the market recognizes low graduate quality.
> schools accepting any students and doing the filtering at the outflow instead
I'm not arguing that anybody be allowed to go to college on the public dime. There would need to be some sort of qualification involved. Otherwise we would see shoddy colleges pop up that admit everybody that applies.
What that qualification would be is another problem entirely of course...
> 2) schools lowering the bars and just pulling through them as many students as possible, because you need a lot of balls to do 1) and there are not that many balls in academic environment
In my opinion, this is already a significant problem in the US. Short of having standardized exams required to earn a degree (a bar exam for every discipline), it's not an easy problem to solve.
First off too many people who do not need a college education are pouring money into one. Second the United States, nor any country needs the numbers of college educated people they already have.
Come up with a standard program if you must. We have standards for public education so let us have them for a college education. It cannot be that hard to establish the minimum required for each degree and then determine the cost of that education. With a standard costs will come down.
Uneducated voters, it is not from a lack of college. Public schools are not there to create critical thinkers. They are told day in and day out how the government makes it all possible. Top it off with thousands of assistance programs and why would you expect people to better?
" it will pay $N per semester on behalf of any student who meets certain qualifications to attend that college"
Well right off the top how do you define "qualifications". I mean if your answer is (and this is a question not a statement) "meets certain testing standards" or "belongs to certain clubs and does certain activities" you will almost certainly disadvantage certain students that might get accepted because the total "package" of them (as a student and a person) balances out the student body.
Then what we will have is even more of a system that feeds students in that are trained in high school only one way - to test well. This of course has already been happening with test prep however my feeling is any "qualifications" will push us more in that direction.
> Well right off the top how do you define "qualifications"
Well, I don't really know. I agree with you that standardized testing is not a good way to do this.
Perhaps a system where anybody can attend but the public tuition stops being paid for them if their GPA falls below some threshold? But then you get the problem of shoddy colleges popping up that accept everybody and give everybody good grades. I think restricting the public tuition to non-profit schools would help solve that problem, in addition to strict caps on salaries of different classes of university employees. As long as people don't see running a shoddy university as a way to make money for themselves, they'll probably stay away from it.
This article makes the ridiculous error of totally ignoring the fact that trivial access to loans and overall exuberance around college creates NO downward pressure on prices. So long as people are willing to pay almost anything and have access to the money to do so, prices will continue to rise. In my opinion, the "spiral" is largely the fault of excess government subsidization and price insensitivity. College is sold as a magic ticket into the upper class, and most people simply will never question this assumption.
Ending the flood of government money will force people to actually question the value of education and, as many people are priced out of the market, will hopefully lead to a rise in more efficient means of education like apprenticeships and cc.
That said, the article MASSIVELY distorts the extent of the spiral because it focuses on sticker price and not on net price. Evidently, the author doesn't realize that sticker prices are so high because colleges price discriminate. Very few people pay anything close to the listed price for college. For public colleges, the average net price is one third of the list price. For privates, the percentage is higher, but that's just because wealthy people are overrepresented at private colleges. Even then, the average net price isn't even close to the list price.
For example, I attend an "elite" private school. Although the sticker price at most of these schools is between $60,000 and $70,000 a year, massive grants are given to students that mitigate most if not all of the cost. I come from a family with slightly above-average income (but still decidedly middle class) and get a $50,000 grant from my school. I have a friend who is also middle class who is being given a full ride.
So, although this article makes a few fair points, it ignores the root of the problem and fundamentally misinterprets the data.
Can't believe I forgot to mention this earlier: student tuition is pure gold for colleges, because the money is not earmarked like most donations, many government sources (e.g. overhead charged on research grants), etc.
thank you! Every serious economist that has ever discussed college tuition in the US acknowledges that the issue of guaranteed loans and the ability to declare bankruptcy is a major factor (whether or not they think the status quo is acceptable).
However, in this 3 page article it isn't even mentioned once. Instead, he jumps immediately into the trendy topic of inequality. He might as well have just tweeted #1% #wealthgap #taxtherich
Absolutely! Let's get rid of the loans (like the ones I had to take to finish school in the late 80s), and go back to modest grants (like the ones I received in the early 80s) to pay for school.
Having been in college in the mid 80s, I got to watch first hand the defunding of higher education by Reaganism. Granted, "prop 13" in California started defunding schools 2 years earlier. I wonder if all of the boomers and WWIIers realized what they were getting back in 1980.
Of course, it was only in the 90s that I (personally, at least) could look back on the 80s and realize what a disaster Reaganism was visiting upon the US.
* unions busted
* regressive income tax structure (i.e. - FICA/Medicaid rates greatly increased, counterbalancing "normal" income tax with high bottom end rate)
* increase in immigration
* increase in "free" trade
* defunding of education and other public infrastructure
None of these were good for rank and file workers. As a result, the choice in the 21st century is pretty much "college", or "prison", due to the ability to find a job at all, or likely not. So, yeah, colleges (the leadership parasites in charge) are grabbing all they can, because that is the culture now.
However, it is often a soft requirement. When comparing two resumes for an entry level position, the college graduate gets the benefit of the doubt. Four years as an assistant manager at Burger King, Subway, and a call center is seen as less valuable than a BA in lit.
Where I live (Alberta, Canada) a 4 year degree is a bare minimum requirement to teach, most have an education degree which, in many Universities, requires a BA before you can get into the education faculty...
Last I heard, in some cities you had to have a BA to be a barista.
Well, who wants to hit on a girl who didn't even make it through college? When that socially awkward 28-year-old "techie" comes in and pays $7 for 620 calories of milk, sugar and coffee so bitter that it would be undrinkable without all the added sugar, he's doing it because he wants to run "Day Game" on the barista. How can he do that if it's not a girl he could actually, at least in theory, marry, because she doesn't have a BA?
(No, these aren't my actual attitudes. I'm trolling. But most people who make important decisions in our economy think that way, although they won't those sentiments so openly. Sometimes you have to think like a horrible person in order to know how the horrible people think. )
By the way, of the economic elite that is running the U.S. into the ground-- the ones who control job definition, in VC, what kinds of companies can be formed-- most of them actually know that they're doing it. They don't see the long-term severity, but they know that they're making the world poorer and themselves no richer by shutting the labor market down. They want white maids. Downton Abbey is porn for them. But that's another discussion entirely.
My thoughts on the solution is the same for housing increases. Get rid of the government loans. In this situation also make student loans able to discharge by bankruptcy, that way banks will think twice about it as well.
The easier it is to finance something the more people will likely buy it. Look at cars, houses, colleges, even the use of credit cards. Peope will be angry when the loans go away, because it has become a part of the American Dream along with owning a house. But this will cause a huge decrease in demand and hopefully lower the price. And maybe students will work a few years before attending college and know what they want to do in life (can't say I had much of a clue when I attended).
Another side of effect with less graduates is that maybe we can get rid of the college degree requirements (you know, the ones that require a BA in any field).