"The solution is and always has been to cut the fluff from the academies. For context, go add up the salaries the 'student services' area of the expensive school of your choice.
Having worked for one such office for ~15 years, the most appalling part was that they are largely antagonistic toward the faculty and mission of the schools. The waste is dizzying."
As the article mentioned schools are no longer competing on price, but they are competing on features / services / amenities. It seems intuitive to cut those to reduce costs, but the market doesn’t want that even if people say that is what they want that is not how they vote with their dollar.
The biggest declines in enrollments are at community colleges and state schools. Also counter intuitively when a college lowers their listed tuition to offer more transparent pricing they almost see an enrollment decline.
The difference between 50k, 60k, 70k, 80k per year is almost irrelevant to the students if they are able to secure a gurnanteed government loan.
Some of this situation is bad advice up front. I know numerous people who were guided by guidance counselors, schools, and loan folks to think that taking a large student debt would be just fine. Only to later have issues with it.
Schools and loan folks have skin in the game so I can understand why they are pushing for more high priced loans.
Why aren't school guidance counselors and school programs better preparing people? We should be taking a hard look at that.
High schools in general do an extremely poor job at teaching financial literacy. The only education I had on the cost of debt and the time value of money were incidental story problems in math classes. The strangely named "home economics" classes were all about cooking and nutrition and sewing, not about buying vs. renting a house or buying a new vs. used car vs. leasing, or saving for retirement or emergencies.
It's no wonder many young people have no idea what a burden debt can be.
I went to college while taking debt, and a big reason for it was not even just "advice", it was almost coercion, adults in my life back then (in a way I was still a minor, being 17) just outright made it look like not going to college, or waiting for a year to get in a military college (that was free) was going to ruin my adult life and whatnot, and when I was adamant about going to military college, my parents told me they would just go and sign me up for a private college without my consent ,and all I could do was choose what college I wanted.
No, I didn't went to military college, sadly, and now that I am properly independent and could do that in theory, I am over the age limit.
I am now debt free, but paying debts took a huge chunk of my life and set me back a lot, I married way later than I planned, got back to my sport way later than planned too and so on. (it took me 16 years to be able to rejoin my old team! now I am horribly out of shape and struggling to get back in shape).
right, the causal chain is so apparent and obvious, it's hard to see why someone would provide puzzling alternatives such as "fluff". schools can't fluff up unless an unlimited money spigot appears out of the sky, as it did in the 90s. fluff is a result, a part of the end of the causal chain, not the beginning. tuition was certainly rising before that, because government assistance existed before that, but it was limited by political means until the spigot was thrown wide open in the 90s.
in any market, there are broadly only two competitive strategies, cost or differentiation, and cost no longer matters when money is "free".
College costs have increased due to decreased state funding and increased regulation (both legal and from accreditors), which requires more administrative staff. Ironically, decreased state funding leads to an increase of administrative staff too, as universities invest in grant offices, development offices, and outreach departments in an attempt to find more funds.
Correct me if I'm wrong, but I think this is at least partially wrong.
Are you only speaking of public universities? I worked at an expensive, private, liberal arts, non-profit college, where I witnessed revolting inefficiency. Do such schools receive _significant_ state funding? Any?
One example of the waste I witnessed: at the end of the financial year, the student services departments where I worked would blow whatever money remained in their budget on frivolous, needless things, because if they didn't spend it, it went back into the college's budget. This mostly changed after the 2008 financial crisis, (I think?) but that's how it was for a long, long time. All staff were complicit, and knew what they were doing. These departments were given executive privileges with very little oversight of expenditure or outcomes. The corruption was surreal.
Another dynamic that I never see mentioned: in a small college town, the hiring pool is challenging, and the college jobs are the high-status local jobs. I witnessed, on several occasions, needless positions being opened for people who were basically friends of staff, so they could have one of the "college jobs".
When I hear students discussing college debt, and I remember these and other examples, it makes me a bit sick.
The spending all the money you have so that you don't lose it is a problem actually created by anti-corruption bureaucracy, and is very common in government funded areas.
The problem is that in an effort to avoid being wasteful, the bureaucracy aggressively tracks money spent, and forces a return of unused funds. This in turn disincentivizes saving because there is literally no benefit to spending efficiently or saving money for rough times, because those short term savings are immediately vacuumed back up by the higher level bureacracy.
Blaming student services departments for overspending is missing the root of the problem. I've seen the exact same issues in STEM research institutions.
My apologies, and my mistake - I didn't mean to say that this only happens in Student Services!
I worked in a Student Services office for 15 years, but I suspect this happens all over the place.
I also suspect that much of this changed after the 2008 financial crisis, as universities suddenly had to match their programs with career outcomes. Then the worst thing happened: administrations expanded even more, while the essential liberal arts are being suffocated and squeezed out.
We lost the best part of the college concept, and kept all the worst parts.
Decreased (per capita, inflation-adjusted) state (and federal) funding for schools (mostly state) and student grants (state and federal) effects both public and private schools.
I work at a well known public uni. We can get state and federal funding for anything that aligns with democrat political talking points. We cannot get funding for basic tech and projects. We have a program where students design and build actual tech related directly to their degree and future employment, and we have to beg people to fund us. The school nor grants will find us in any way yet we are entirely bound to all the unis policies.
This often means we pull money out of our own pockets for super basic tooling and materials. Students simply cannot learn in such a restricted environment and often burn out because they have to spend days working around a problem that a $10 component is meant to solve. Those students are also required to work to even afford tuition. They have to take on a second external job to have any "extra" money to buy their own hardware with.
Yet the uni absolutely preaches equality and opportunity. Again, democrat talking points. They do nothing to actually make that happen.
We need to defund unis, and we should have done it 20 years ago. Across the board no more public funding, if it's worthwhile then private industry will fund it like they do for any other trade.
My experience in higher ed is exactly the opposite. Funding is quite easy to get for STEM research projects through grants and other research programs.
Projects that just "align with political talking points" tend to be much more challenging to fund because there's significantly less money available in those domains.
Economically, an educated populace produces positive externalities on society. As such it makes sense for the government to fund and subsidize it to some extent because it produces a good ROI for both the society and the individuals.
> Economically, an educated populace produces positive externalities on society. As such it makes sense for the government to fund and subsidize it to some extent because it produces a good ROI for both the society and the individuals.
Sure, but we tried that, and tuitions are sky high and everyone is in tons of debt, right? Cutting all public funding may be extreme, but something obviously needs to change.
Then your state may be doing something right, unfortunately here the students are not getting a quality education for the cost. We try but we can't pull $2000 out of our pocket every semester to have group projects or other students programs.
Fun fact with many of the external programs is you are actually paying them to do it. Though it's a "grant" the institution wants you to fundraise to pay them. Yeah, no.
Because of this most students never touch a project outside of classes.
So it seems that your complaint is that certain things are not funded enough at a university. Why is your conclusion then to defund universities entirely? It seems like a non sequitur.
Think of the whole picture. The why. If you hear how admins and the "inner circle" professors talk you start to pick up on how they run things.
It's a bandwagon culture that believes they have a responsibility to be activists and force that upon students. There is no fixing that by just replacing leadership. The whole boat must go.
Burning a system to the ground is almost always the best way to turn a bad system into a worse one. Just like the junior devs impulse to tear out the bad code some other guy wrote and replace it with the differently bad code that they wrote.
Refactor. Don't rebuild. The bigger the system, the more true that is.
Code is logical, people are not. Cultures can only be removed, you will never convince a 40 year old woman working in education their whole life that their entire philosophy is wrong. They will continue to push their beliefs under the table. That's the poison that is naturally bred in public institutions. It's all politically motivated.
Not that I vote for them but you can see how little of a dent Trump made because the institutions around them were actively undoing their work. Perhaps for good reason, however they were voted in by half the population. What we see for support in education is largely confirmation bias. If you put it to a public vote higher education would be defunded.
>Across the board no more public funding, if it's worthwhile then private industry will fund it like they do for any other trade.
If you think university is solely vocational training, then this makes sense. However, that leaves a lot, including fundamental research unfunded. Research seems to suggest that reductions in public funding is the single most important variable in increases in tuition. I'd be worried that your proposal either exacerbates the problem or creates a whole new set of problems.
Can't increase tuition if there's no public institutions. :).
You can't fix the ship. The political culture is far too ingrained. This makes perfect sense when you realize that public means government controlled and funded. Of course it's going to be largely politically motivated.
As an example there are now new required classes that preach about equality and white privilege with dubious accreditation. Not as a concept, but as a requirement of students. That's a real thing, I wish I were making it up.
Be a fly on the wall in your admins offices and you'll want to scorch earth that system too.
Honestly, how would you propose to generate the political will to just get rid of public institutions? This sounds more like a libertarian pipe dream than a pragmatic solution.
I work at a well known public uni. We can get state and federal funding for anything that aligns with democrat political talking points. We cannot get funding for basic tech and projects.
Uh huh. Totally believe you. Convenient of you to leave out the name of your school while trying to make a ideological point so that nobody can refute your claims.
Apparently your school's tech program must be quite bad, if it's alumni are unwilling to donate to fund student's basic tooling requirements. However, it means your school can't be located in the Pac12 or California.
Across the board no more public funding, if it's worthwhile then private industry will fund it like they do for any other trade.
If you think that publicly funded schools are bad, you should look into how much worse privately funded schools are. (Here's a tip: you won't just be paying for your own tooling. The school will charge you for it at a huge markup.)
Too bad, I don't want to be fired. The tech program is bad, it's bad because there is not funding and instructors are a revolving door due in part to that. We have private industry instructors hire on, look at the state of the institution, and run. The only things that can be even partially funded are classes and dedicated individual student projects. There is 0 budget outside of that.
Alumni don't make enough to be contributing any significant amount of money. Programmers outside of Cali bubble economy are not making that kind of bank.
I'm telling you the facts of what I've personally worked with and how students are being scammed by this system for political gain.
And I'm telling you that if your school was for-profit, it would be even worse.
For-profit schools are significantly worse than non-profit schools in every way. And it seems that your real beef is that the taxpayers have decided not to provide adequate funding to the school for basic supplies. You should take that up with your fellow taxpayers, not the school.
Public schools are for profit, that profit comes out of tax payers against their will. Just because they have a tax free status doesn't mean they're not lining their pockets with money. Given the massive artificial increases in costs - they are. I've seen it happen in realtime.
This doesn't even approach the problem that industry and academics are seperated worlds. Unis lie and tell you everything is "in demand" yet students graduate and no one will even look at them.
The most funding for effective programs comes from private industry. Companies will spend far more than state or federal on real programs as long as they're not attached to universities. That tells you something right off the bat. High schools get far more money than us.
Private industry should be the one footing the bill and are the most knowleable about what industry wants. We do not yet have a system of this so you don't have any examples to base your claim from. For this to happen we need to first remove all higher public education funding to force companies to build their own.
Before you make bogus claims about "general education" there is nothing learned about humanities or general knowledge at a uni that isn't better done with a YouTube video. The instructors don't know how to teach and can't engage students with effective knowledge.
>profit comes out of tax payers against their will.
And there we have it. The "taxation is theft" heuristic that snaps your perspective into focus.
>Private industry should be the one footing the bill and are the most knowleable about what industry wants.
Are there any instances where you think this breaks down? There are some industries that very likely would not exist without initial government support because the initial risk was too great or the payoff too vague. I'm not sure aerospace would exist, for example, without the public shouldering the bulk of the initial risk. (That shouldn't be conflated with the stance those industries can't mature to a point where privatization is better).
Taxation is theft. That's a fact. In some circumstances that's a necessary evil. However that does not make it always proper to do. You're looking for a way to strawman this instead of addressing the argument.
There is little done in modern academics that legitimately drives innovation. Only select institutions, with significant ties to private industry, generate papers and innovation. Largely these are still already done in R&D at a company somewhere.
Public funding for education that works is effectively subsidizing costs for private industry. Public funding that doesnt work is incompetence that benefits no one other then government employees, and that makes it equal to theft.
Therefore, we remove the subsidy, and students that are worth investing in will be paid for by the billions that companies have sitting around collecting dust.
Taxation without representation is theft. If you live in a modern western democratic society, that is not the case.
In my experience, in both academia and industry, industry often gets the better deal. They can effectively socialize the risks to the public sphere and then when there's a clear path to make profits, take the reins. I think that hybrid system tends to work the best to mitigate the evils of both sides.
A good example is SpaceX. There would be no SpaceX without NASA and most of the earliest flights were self-insured by the govt. Their SpaceAct agreement allows them to have access to all the support and expertise of NASA as long as they share their data. In exchange, the dinosaur of NASA has some new innovation led by the private sector. Once they proved themselves competent, their customer base expanded to private companies because the risk was now lower. I don't think any of that was likely to happen in a non-hybrid approach.
You seem to be ideologically opposed to the very idea of public schools, and yet apparently have no problem working for one for years even though there are for-profit private schools or programs that you could be working for.
Something doesn't add up. I'm going to assume you are trolling and leave this conversation now.
That philosophy right there is why nothing changes. I'm pointing out the problem square in the face and you choose to ignore it for a fantasy. Address the merits, don't strawman.
I can infact get a government paycheck and also criticize it, knowing where it comes from and how it's obtained. Infact that makes me one of the most knowledgeable people on it.
You can, but it does seem to point to some questionable ethics.
Either you are personally benefitting from an institution you are actively undermining or you are perpetuating an organization that you think deserves to go away. Neither of those actions are ethically admirable. (See: your post about how illogical humans are)
Now I'll grant that your personal ethics are distinct from the issue, but I'm sure you can see why that might raise some eyebrows.
Shit I’m fine with keeping stuff if majority of the student body wants to pay for it, but let me opt out. The education system and tangential friends have so far proven the hardest bureaucracy I’ve ever tried to find a way around.
I hate that now, when I’m more mature, more experienced, and know exactly what I want from it is the time it’s the most difficult for me to go back.
> Shit I’m fine with keeping stuff if majority of the student body wants to pay for it, but let me opt out.
For things like swimming pools and gyms, sure.
But some of the new services are things like 'mental health support' - it would be problematic if you'd opted out of mental health support to save $50/month, then you committed suicide.
Schools should have none of those. And I say this as someone who happily uses my institution's nice gym and happy that decent mental health support will be available to me should I desire it.
Schools try so very hard to be the entirety of their students' lives. They want students socialisation to be within their bounds, they want students to go to their hospital, exercise at their gym, be policed by their police force, work at their on-campus jobs, eat at their cafeteria, live in their dorms, cheer for their sports teams, and so on and so on. And society mostly caters to this desire, which the students and parents are also more-or-less on board with. But even as these integrations individually benefit the students, the net effect is to bubble students away from the rest of the world while also creating a bloated administrative entity that is both too powerful for its own good and completely unable to get things done.
>But some of the new services are things like 'mental health support' - it would be problematic if you'd opted out of mental health support to save $50/month, then you committed suicide.
This sort of desire to tell people what's good for them is why we can't have nice things. You think you're being reasonable here but there's another well-meaning moron insisting they're being reasonable by preventing students from opting out of the the $50 gym fee, and another well-meaning moron that thinks they're being reasonable by requiring the dining hall have X Y and Z, etc, etc, etc.
In reality what you people are doing is the institutional policy equivalent of littering. One or two people do it and it's fine, we can tolerate that. But everyone does it and the park turns into a dump and the college turns into a flaming pile of money that society cannot afford to keep feeding.
The least crappy outcome is achieved when none of you get your way.
What about things you already have...like say health insurance. I went back for an MBA ~2009 while working a full time job. I was forced to pay an extra ~$300 per term for health care even though I already had it through my work. No way to opt out. When my tuition was ~$2,500/term...another $300 doesn't seem like that much except I was paying out of pocket so every dollar counted.
I believe you are confusing the student health fee with health insurance plan and they aren't the same thing. Student health fee goes into paying for the on-campus student services like the athletic fee, computer fee, etc. I haven't been a student in years but I do remember walking into the clinic and getting seen by someone right away. The services under that fee are kind of unique to student lifestyle: birth control, STD tests, vaccines, common prescriptions, mental health. Which is slightly different from family healthcare which requires preauthorization on some health services.
BTW, you could get a lot of fees removed or reduced by dropping to part-time commuter student. But they probably got rid of that exclusion since a lot of colleges are chasing money.
This was a student health fee that also covered health insurance for students (dental too). It was a basic program through Aetna Student Health. Also included urgent and basic services on campus as well as mental health services.
I was also an online student that only attended on campus class for 1 weekend per semester. It made no sense to make everyone pay the fee that included significant amounts of benefits that weren't needed by online students (the online MBA program was structured toward those currently working). This was on top of the $41 fee that I paid for the "Rec Center"...which again would never be used by me since I was an online student.
Okay I think I understand better. When I was a student the student health fee you were told was not insurance and compulsory. You could get insurance through the school for $1200/semester. This was mainly international, grad students and their families.
Like many first in their family college students I soon discovered a lot of scholarships only covered tuition (and books) and I was left to make up the difference in housing, meals, and fees. I felt the fees were a sly way for the college to scam money out of students. I was required to pay an athletic fee but they weren't required to give me tickets to every football game.
For schools, MBA programs are such a money pump if they were entitled to charge more they would. A lot cases the employer pays for the MBA program and they don't have the wherewithal to scrutinize excess fees. So, you end up with online students paying student health, rec, bus, and athletic fees.
Yeah it was eye opening for me too since my first degree was in 2000-2004 there was not such a high student health fee because it covered very basic things and I was under my parents insurance. The fees made a lot more sense when I was on campus and able to use the resources better.
I think all online degrees are over the top also because many companies will pay for them. I'm doing a CS degree right now that is online and it's more expensive (per credit hour vs. on campus). Not sure what the on campus fees are, but it seems crazy that not requiring anything more than some server hosting space to charge ~$2,000 for a 4 credit class. Luckily my employer is picking up 90%+ of the tab (maxing out at $5,250/yr).
But why would they do that? They will taught these extravagant programs that few want/need/will take advantage of but they will bake into everyone's tuition.
I often think about the role of universities in the education process. It seems that universities are just profit maximizing entities. They don't care about student's education unless it impacts their reputation or ability to make more money. They give the bare minimum support to teachers to teach as well as bare minimum investment in processes like admissions. Seems like universities are doing exactly what you'd expect any company would do.
> It seems that universities are just profit maximizing entities.
Most universities are nonprofits; universities tend to be research maximizing entities, with teaching as a distant second function.
There are institutions with teaching- (as opposed to research-) centric models, but they tend to do at most undergraduate, vocation, and/or professional education, not academic graduate education, and (somewhat ironically, in context of the comment above) tend to be far more likely to be profit-centric businesses.
>universities tend to be research maximizing entities
This really hit home for me reading "Excellent Sheep" by William Deresiewicz. At one point, a professor won an award for excellence in teaching and I believe the dean took the professor aside to reassure them that the award wouldn't negatively impact their career. Apparently, the common wisdom was you could either prioritize research or teaching and that an award in the latter implied you may not be completely committed to the former.
Universities are centers of research so working towards funding and endowments makes sense. The students are there to learn and be a part of the existing culture. There are plenty of small and community colleges directed totally towards imparting academic knowledge however.
> What percentage of published research is done by a university versus a private entity?
What incentive is there for a private entity to openly publish valuable research in the first place? Except in certain unusual situations (monopoly justification a la Bell Labs, PR, patent applications), I would expect that private entity research results would be kept private by default so the business can maximally exploit it without assisting its competition.
I hear that in many fields, papers are mostly written by grad students / post-docs. Professor gets their name on for raising the funds and sometimes managing the project, but not a whole lot of actual writing from their hands - any truth to that?
This feels almost word for word true for any institution in the US today. It would be one thing if institutions mistakenly over-prioritized profits over their broader goals, but they don't even have meaningful missions beyond profit anymore.
in academia education is secondary to research... we make the mistake of thinking they it serves an education purpose, but in reality their focus is on research. this is what matters for their funding, their public name, etc etc
At research universities, sure that is a big part of it. The professors are paid largely from research grant awards that they bring in, and about half of that award is skimmed off the top by the university for "overhead."
There are many small colleges that are not research-focused. They teach. They make their money from tuition and gifts, and possibly other federal grants but not for research.
I have a degree in cultural anthropology and graduated in the mid-aughts. I remember several conversations about working at a university with my advisor. He basically told me not to, or do so very sparingly in order to have some income when you run into lean times with your research money.
Said he tries to keep people from getting pulled into the academia meat grinder. The politics, the intense competition for research grants, constantly fighting for tenure, the lack of support in their research - he didn't see it as a worthwhile pursuit compared to going after outside, private research money or working instead in the corporate world.
I could tell he was pretty jaded, but out of the five professors in the department, only one encouraged me to stay at the university and pursue a career in academia. Considering where academia has gone since then, I'm pretty happy I took their advice.
State funding per student has steadily declined since 1987. Tuition rates have risen in response. I don’t claim all of the tuition increases have come from the decline in funding but the decline in public funding contributes to the increase. Public colleges are more and more being run like businesses. According to this research, public funding for higher education has declined in response to increased welfare and Medicaid spending.
"State funding for higher education has declined by roughly a quarter, to $7,152 per student enrolled in a public two- or four-year school in 2015, down from $9,489 per student in 1987."
The article is not in disagreement with the thought that Free Federal Money displaces other sources.
Also, the article does not show why tuition has risen 1200% instead of 30%.
Tuition in the University of California system increased by an infinite percent from 1960 to 1980. It used to be tuition free. Had it remained tuition free it would have been cheaper and better overall for society.
I think many people are for tuition free for a certain amount of people based on merit. However it shouldn't be just a 5th-8th year of high school...like it seems to be becoming. When an admissions rate of a large public university can reach 95%+...we are no longer selecting the best students that will actually gain anything from going to college.
The UC schools have always tied enrollment to the top 9% of California High School seniors. As High School graduation rates increased, the UC system increased its enrollment (most recently by building a new campus).
Enrollment at UC wouldn't change if it were free -- it will always be ~9% of graduating seniors.
The 9% merit bar is increasingly being circumvented by students electing to take one or two semesters of community college and take advantage of the 30% transfer rate into the UC system enjoyed by full-time students of those schools.
I don't think there is anything wrong with that. If you can get good enough grades at JC to prove you should have been admitted in the first place, then good on you, eh?
Too many people are going to college but now that colleges are run like a business this isn’t going to change. With declining state support we need more clients and the tuition money they bring.
The linked article doesn't say it's constant dollars, that's probably a far bigger change than it looks like.
Also, note that the relationship is non-linear: Suppose it really is constant dollars and constant costs and it really costs $10k/quarter/student and look at the numbers: $511/quarter in 1987, $2,848 in 2015--a 30% drop in funding leads to a 557% increase in tuition.
I can't fully tell here how much of this is the non-linear relationship you identified vs BLS not compensating for all financial aid and other reductions to create an actual net student cost.
The highest paid educator at the private R1 research university I work for makes about $200k, the average director or higher level administrator makes about $350k, while the LOWEST paid athletic coach makes $500k.
I think the blog post might be onto something, but I agree that I don't think it's all of it. My friend and colleague were just talking recently about how something happened around the mid to late 1990s in the US with college, but it's really hard to put one's finger on one thing or even one set of things, or why they changed around the same time. It's like higher ed just started getting insane around then in several different ways, from cost, to funding, to administration, to culture, to everything. Some institutions managed to resist the insanity longer but it seems like it's spreading.
I agree that cuts to public universities are also a big part of it, but that doesn't explain similar trends with private institutions, unless you explain it in terms of "inflation afforded through competitors" that private institutions could accrue. That is, public university funding is cut -> tuition increases at public universities -> private universities can increase tuition by comparison. It seems this would then lead to comparative budget surpluses at private universities though?
There's also a lot of trends that seem to have happened around the same time too that don't have anything directly related to state funding. For example, federal grant funds started ballooning around that same time, and the feeding frenzy on indirect funds and pyramid scheme of grad student funding started coming into play.
I'd love to have a single coherent explanation for why all of this started accelerating together in the late 90s. So far I've just chalked it up to political-administrative culture in the US (healthcare started seeing similar problems around the same time), but I'm open to the idea there's some sort of unidentified sociopoliticoeconomic explanation. I don't think it's just the Omnibus Budget Reconciliation Act of 1993 though.
Could be the access to information that the internet brought on. People were able to see data and information much quicker. Perhaps this led to submitting information quicker and having less barriers between someone applying for a loan and getting the loan. This then led to money grabs by every institution and the risks were small since there was always federal backed money available.
Grow bigger, spend more, push the lie that everyone needs to go to college...admissions go up, quality goes down...but they get more money than ever.
Wait, the claim doesn't match the little data presented and the primary claim is not examined or supported.
1) The Omnibus bill passed in 1993, but from the graph tuition was already increasing at 200% greater than inflation, and appears to have started in the mid 1980's; and
2) Why would the fact that the loans are now from the government mean that universities no longer had to compete on costs? The bill ultimately goes to the student in either case.
>Why would the fact that the loans are now from the government mean that universities no longer had to compete on costs?
I think an economist would say that the loans increase the number of "customers" who could now afford to go to college. Accordingly, when the demand increases faster than the supply, an economist would say increases prices are the result. There's an old op-ed by former Education Secretary William Bennett that gave rise to the "Bennett Hypothesis", where he said,
"If anything, increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase … Federal student aid policies do not cause college price inflation, but there is little doubt that they help make it possible."
However, I've casually seen a bit of research that refutes this claim and instead states the primary driver of tuition increases is reduced public funding.
> Student loans are cheaper than cheap, they are government subsidized and not even close to their appropriate cost.
Interest rates on government-subsidized college loans aren't that cheap. Undergraduate loans are the cheapest. They were particularly cheap in the early 2010s and during the COVID pandemic. But over the past 20 years the rate has been ~4-5%, and generally greater than mortgage rates.[1][2][3] Subsidized graduate loans are in 6-7% territory (even 8+%), and always have been. Unsurprisingly, AFAIU the latter constitute a substantially disproportionate share of student debt--including, especially, debt that people are unable to climb out of due to compounding--relative to the number of students.
They're really cheap relative to what the market rate for that sort of loan would be in a free market. That the loans cannot be defaulted on is another form of subsidy.
From a macroeconomic theory perspective that is completely incorrect. There is zero empirical evidence for this. Interest rates have been zero in Japan for decades and the biggest effect they had was keep inflation near 0%.
Cheap capital lowers the prices of all non-monopoly goods. Monthly payments on your mortgage are lower which reduces the cost of housing, it becomes cheaper to produce food or anything that can be produced in arbitrary quantities. It is only the monopolies that go up in price because they offer rent seeking revenue which is a direct result of their monopoly nature and actually distorts the market. Higher stock prices mean it becomes advantageous to start your own company.
This is conflating prices consumers see with broader financial access to capital. We may trivially see that when consumers can access cheap capital too, prices for consumer goods rise (housing loans, auto loans, college loans, credit cards, BNPL).
>Monthly payments on your mortgage are lower which reduces the cost of housing
Just trying to understand your perspective, but this is based on an existing mortgage, correct? What does it do for the price of a new mortgage? I was under the impression that cheap capital tends to inflate home prices.
One theory is that competing priorities have shifted public funds towards entitlements, especially healthcare, and away from public university. Tuition is then raised to compensate for the budget reduction. It's interesting to hear some cite that healthcare costs are the only sector that is outpacing college costs, which would explain why budgets are shifted towards it. As with any complex system, I doubt we can point to a single, simple cause.
It doesn't make sense because competition is supposed to lower prices regardless of how the money was obtained. If competition is driving prices down then you would expect that people are falling for the veblen goods trap which has nothing to do with loans.
If the government gave out guaranteed subsidized car loans of $70k to anyone and everyone, do you think average car prices would go down?
The theory is that anytime you subsidize anything, you tend to increase consumption of it. Increased consumption tends to increase price. It's unclear to me that is always the case in practice, but that's my layman's understanding.
> Why would the fact that the loans are now from the government mean that universities no longer had to compete on costs? The bill ultimately goes to the student in either case.
Because 17 years old student taking out the loan is not financially experienced, so the issue of cost is often not properly considered.
The students were 17 before 1993, just like they are now.
Maybe what you're trying to say is that the private lenders vetted their loans better than the government does. And that might be true, but nothing in the article backs it up. In addition, note that even before the Omnibus bill, the government still insured the loans. So private lenders had basically no risk, and hence no incentive to deny a loan.
I did a semester overseas at a top tier public university in Australia. There were some very notable differences about what is included with university there. Your tuition basically covers the academics, but that is it. No free gym (but the gym was relatively cheap... I guess they provide it at cost or at least don't make much profit). No included meal plan (but again, subsidized). Far fewer student activities. And you know what? The education, which is far and away the most important thing, was just fine... If I were paying Australian tuition prices, the added cost of a gym membership seems like nothing by comparison.
There's a whole lot of bloat in our college experience. I personally loved all the stuff that was included with my tuition. But you know what I don't love? That college is our society's key to upward mobility, but instead it creates crushing debt for many, because it includes lots of unnecessary stuff.
There are several american stuff in what you say yes. Im French, raise my kids in China. For me college is not an experience, it's simply a place to learn a trade, it's serious, it's not supposed to have gym. The food can be basic. What matters are the teachers and I adored my French ones in a small city.
I wonder how much of that debt burden is due to the non-teaching part of college in the US: do students expect frats, dorms, gym, fancy cantine, exotic location, isolated modern campus ? Hell we barely had one 90s computer per student in some classes in France, and well it did the job just fine. It was in 2009.
In his recent book, Ron Lieber argues that the actual price paid hasn’t gone up nearly so much as the sticker price because of the increasing ubiquity of merit aid (which is terribly named). How does that factor in?
He also points out that people’s expectations about what colleges provide have gone up. People expect small class sizes, mental health services, etc. If you argue colleges are just capturing extra money and not doing anything useful with it, I want to know where you think it’s going and why you think that?
The solution here sounds awful. I really like the diversity of college experiences available and I’d hate to see that homogenized. Which is not to say it should be a “blank check”, but it’s already not that — the max is calculated based on need, and families have to make up the difference. Plus loans aren’t cheap. So there’s already incentive for students to choose cheaper schools even if they qualify for more aid.
Agreed. The closest thing this post has to data is the chart of increasing tuition, and despite the claims of 1993 being an inflection point, the graph doesn't actually demonstrate that.
If anything, there's a sudden increase in the rate of growth in the 2000s that would be interesting to understand, but since the article likely started with the conclusion and worked backwards, it's no surprise that's not explored.
> I want to know where you think it’s going and why you think that
My daughter had four simultaneous academic advisors (general, college, and two honors) during her undergrad, so I think it's going to pay too many administrators for duplicate services or services way beyond the mission of education. Why do I think this, because of this and other duplication\excesses we saw.
You can think anything you want. What can you prove? Because a single anecdote about a single institution in a single circumstance is hardly the basis for making systemic policy decisions.
i dunno why this got up-voted so highly. Nothing here.
>He also points out that people’s expectations about what colleges provide have gone up. People expect small class sizes, mental health services, etc. If you argue colleges are just capturing extra money and not doing anything useful with it, I want to know where you think it’s going and why you think that?
Exactly. Also ignoring the wage premium, which is wider than ever. Adjusted for inflation and student loan debt, grads are still earning more money than ever.
> I want to know where you think it’s going and why you think that
Guess: Do nothing administrators paid to be on vacation.
Why: Several years ago I called 4 of them to follow up on different job applications and did not once get a live human, only out of office messages. Over the course of about six weeks I called each every week and left each a single message. I never received a single call back or email. This was my almamater after moving back to the state following my graduate study.
Certainly, people bring up too many overpaid administrators a lot. It's a compelling story too because it's got a well-defined bad guy. I've not seen much depth to the analysis though. Another story might be that "administrator" is what some people call people whose jobs they don't know or don't associate with "running a college"? Elsewhere in this thread folks have pointed out that colleges _do_ a lot more things now, from mental health services to just being bigger (and so having more overhead and associated middle management). _More_ administrators isn't bad if they're doing useful things.
Michigan cut basically all remaining funding for higher education while I was in college. I saw double-digit percent increases every year. A few years ago I went back to look, assuming sky-high tuition rates, but they ended up only being a little bit higher than when I went.
So why did tuition get high? The state stopped subsidizing it directly.
Given that degree holders go on to make wages much higher than those without, is it really fair that those without subsidize the education expenses of people who will go on to out earn them? Especially given how vanishingly little of it goes to actual education and instead administration and sporting programs.
If degree holders go on to make wages much higher than those without and many taxes are progressive, a subsidy on degrees will be paid for substantially by those with degrees (who may have had their degrees subsidized), and degree subsidization may have positive ROI for the government in terms of future tax revenue from those who got degrees.
If you're worried about administrative and sporting expenses, you could choose to subsidize only instructional expenses; primarily being instructor salaries, classroom buildings and equipment.
Here's the problem. I have no formal education and I pay the same rate of tax as a degree holder. Even under this system, I am subsidizing someone who has had considerably more privilege than myself.
Is college solely the domain of the upper middle class? Additionally we subsidize people of all wealth classes for things which have a social good that most people don’t seem to have a problem with. For example subsidies for solar panels mostly go to the wealthy+upper middle class, but it still benefits everyone.
> Is college solely the domain of the upper middle class?
Pretty much. At least the sort of degrees that leave you 100k+ in debt with no way to repay it. Poor kids don't have the luxury of making mistakes like that.
> for example subsidies for solar panels mostly go to the wealthy+upper middle class, but it still benefits everyone.
Only if you ignore opportunity costs. Those same dollars could've resolved food insecurity for a family for a few years instead they are sitting on a rich guys roof so he can brag about it in a condescending manner at dinner parties.
> Pretty much. At least the sort of degrees that leave you 100k+ in debt with no way to repay it. Poor kids don't have the luxury of making mistakes like that.
How do you figure? Poor kids qualify for federally subsidized student loans.
I suspect the whole debate is a bit skewed because it tends to ignore admissions. You can't go to an expensive college if you can't get admitted to an expensive college. Your family background and wealth tends to be a big factor in whether kids can get admitted to college, for many reasons.
It seems to be assumed that poor kids are just more "prudent" and other kids are recklessly throwing money away. More likely is just that poor kids get admitted to more expensive schools at a lower rate. The whole point of student loans is that they're taken by people who can't afford to pay for college upfront.
If poor kids are passing up the opportunity to go to great schools for purely financial reasons, why would we even celebrate that, instead of mourning their lost opportunities? I suspect the reality, however, is that poor kids aren't getting well prepped for college admissions, for well-known social reasons. That's not fair either, but I think it's cynical to try to play poor people and middle class people against each other just because middle class kids understandably want upward mobility — which poor kids want too, but simply have less access to such opportunities.
It's always weird when people mention the average lifetime earnings of college graduates, because you have to ask yourself why the so-called "prudent" poor kids who don't go to college are passing that up. It just feels to me like people want to shut down all upward mobility, and punish the ambitious middle class kids for even trying. What's the alternative to taking on big student loan debt, besides "staying in your place" and letting rich kids who can pay for expensive things upfront have all the best opportunities?
The other thing is that ambitious middle class parents and teachers are pushing their kids to go to college, indeed the best college possible, even if the kids aren't really ready for it or know what they want to do with their life yet. Everyone is telling the kids they have to go to college, that they can't get a job without a degree, etc. The pressure on kids from adults is massive. It's practically propaganda or brainwashing. There's nothing these adults love more than to brag about their kids, who end up as pawns in the social one-upmanship game of the adults.
Why should we mourn the fact that poor people avoid a life of student debt slavery? These aren't private loans that can be discharged. They will stay with you for the rest of your life if you can't pay then.
Honestly, your post is one of the most vile and disgusting comments I have ever seen on HN. You think people can't have upward mobility unless they spend $100k per year on tuition? Even if we assume the loan can be discharged, it is incredibly elitist to assume that you need an elite education just to get anywhere in life. No, you don't need an educational institution, that is just a crutch. You need discipline, motivation, a work ethic which can't be bought with money. After that you just need any good college, because learning doesn't happen in a confined geographic location defined by a critical mass of elites, it happens in your head.
I don't know where these authoritarian people like you are coming from, telling others that they are worthless if they don't sign up for a life of financial suffering. It sounds to me like you want to be a gatekeeper for upward mobility while sneakily creating artificial guilt in the form of student debt that must be repaid because it is moral to pay debts, even if the conditions of those debts would be considered immoral by any sane person.
> Honestly, your post is one of the most vile and disgusting comments I have ever seen on HN.
> I don't know where these authoritarian people like you are coming from, telling others that they are worthless if they don't sign up for a life of financial suffering.
What I believe is basically the exact opposite of what you seem to think I believe. I was actually arguing in defense of immediate student loan debt forgiveness (evidenced by my other comments on this article such as https://news.ycombinator.com/item?id=31570258). By the way, I also support government-subsidized higher education for everyone, like we have for high school. Of course I don't want people in debt slavery! Seriously, your comment was unhinged. Maybe you need to take some time off the internet.
All of the ways I benefit, I pay for. From the educated doctor who treats my illness to the educated engineer who designed my car. I don't find that I benefit enough to want to pay twice.
Really the degree holders benefit from having me around. I've been a taxpayer since 13, worked full time since 15, consumed essentially only the government services that I was forced to at gunpoint and even then I left school before I was legally allowed to. Why don't you all chip in for my mortgage?
Classic "I got mine" libertarian thinking. You know the old saying, death and taxes. Your taxes are set, you're getting money back.
Things you don't pay for, just a small list:
1. better dating pool, for you and your kids (assuming you like brains)
- this is not to say each person went to college, but they are influenced by people around them who did.
2. Better job candidates
3. Less narrow minded people, but it sounds like that might be a negative.
Things you get without paying for it, or paying a small fraction
- clean environment
- Neighbors who can have an intellectual conversation
- food that won't make you sick
- Parks, roads, airports
- First responders
--- last comment alert ---
not wasting anymore time on this
It’s a societal good as a whole, so yes, societies should invest in them.
Example: not everyone becomes a doctor. But society needs doctors. Having affordable pre-med college programs benefits everyone, even though only doctors directly make income from the program.
I’d rather lower the barrier of entry than punish the doctors. If it was easier to become a medical professional, doctors wouldn’t need to be paid so highly. We’re actually seeing a trend now of more people going into PA school which could help.
"easier to become a medical professional" rather than only "easier to become a physician" is key.
There needs to be a lot more competition in healthcare service provision period. There are a lot of things that could be made over the counter (e.g., drug deregulation), and a lot of services that could be provided by other types of providers (e.g, pharmacists, other professions that don't even exist now).
Pay is not what is capping the number of doctors in this country. Only 41% of med school applicants are accepted. The bottleneck is the number of residencies. The government could fix this by increasing the stipend residencies receive, but I'm afraid they've been captured by the AMA.
Physicians aren't the ones having trouble paying off their degrees (certainly not in America, that healthcare spending goes somewhere). We may have a district lack of doctored art historians but I think we will survive. Alternatively they could pay their own way.
Hah, my daughter is a state college student. She needs one class to avoid taking an extra semester with housing costs and all that fun stuff. It's some sort of pre-requisite and her advisor messed up.
It's $600 to take it this summer. No financial aid since she's just taking on CC class.
Universities have a broader purpose than training people for the workplace. Ironically, increased costs is a large part of the reason why society's vision of universities has become so limited.
It's also worth noting that reducing subsidies to education led to much of the administrative expansion. Recruitment, development, alumni, grant, and IP offices were created or expanded tremendously in an attempt to find additional funding from sources like more students, donations, indirect costs, and royalties.
> Universities have a broader purpose than training people for the workplace. Ironically, increased costs is a large part of the reason why society's vision of universities has become so limited.
What is that? Instilling values some people think is important and not others?
The article contains a chart, ostensibly to support its claim, but I don't see how it supports the claim.
The chart shows that tuition inflation was already massively outpacing overall inflation in the '80s. The trend seems to accelerate a little bit in '93, but there's a much more pronounced acceleration in the early 2000's.
So whatever the underlying reason is for tuition growing much faster than inflation, that reason must have been present in the '80s already, and the greatest acceleration of that process happened about ten years after the event that the article claims is the cause of all of it.
I feel like this article doesn't support it's thesis at all. Why does the government lending directly result in less downward price pressure than guaranteeing loans? The only hypothesis I can imagine is that people anticipated something like student loan forgiveness, but that requires more evidence than what is given here (after all the government could in theory waive private loans and reimburse the lender).
A smaller fraction of government loans have very high interest rates for starters, so loans became cheaper money when they came directly from government rather than were insured by government.
I mean, yeah. But also, the expectations placed on colleges have grown exponentially. Retention staff, student life staff, counseling staff, new innovative (read: Expensive) programs, the 'experience'. These all cost money.
My experience of expectations of college in the 90's - can I drink? Do the faculty let me miss if I need to?
My experience of expectations of college now - is my child safe? Can s/he access appropriate supports to ensure his/her success? What can s/he do on campus that ensures his/her safety and security and is free? Who can s/he talk to 24 hours a day for any reason? What connections to industry do you have for him/her? Do you have co-curricular and curricular experiences ensuring that s/he learns about life skills that s/he doesn't have? Is there a gym? Are there activities available 24/7 based on his/her schedule? Is the technology in the classroom accessible for my student? Are the buildings new?
Edit: My source is my decades of working in higher education. Like it or not, the expectations placed on colleges/universities are much, much higher today. All of that costs money. Every single part of it.
Isn’t this in some ways just growing up and directly having experience with the intricacies of a big system?
All those new things sound like considerations that were there before, yes even in the vaunted 90s to me.
Maybe the average role of parent has changed - I sorta remember college being perceived culturally as roughly a time to go be an adult, make your own choices haven taken a rough idea of the path, and get out of your parents wing.
I can’t see many the students being so interested in the things you listed. But then again, I never got to go because of the cost, and I don’t see first hand what expectations students have on them - but even if they do do care deeply about these expensive systems, where does that failure fall? Certainly not on the students who must work in the system that is set up for them.
> Isn’t this in some ways just growing up and directly having experience with the intricacies of a big system?
From what I've read, I don't think so. The underlying considerations may not have changed. But societal awareness of various problems has increased, causing both parents and students to ask things like "how many mental health counselors do you have for your student body?" or "what's the waiting time for an appointment?" I think consumers have become a lot more educated, too.
That example sounds to me a lot like a university taking on things they shouldn’t need to do, but have to because there’s nothing else to take them on.
I wonder how many counselors they have and how short wait times for appointments are in European countries where higher education costs either nothing or a small amount compared to median incomes
> That example sounds to me a lot like a university taking on things they shouldn’t need to do, but have to because there’s nothing else to take them on.
"should" is pretty load-bearing there, but yeah, that could be. People know that mental health is a particular issue for college students[1]. In the absence of anything else providing these services, it's not surprising that informed consumers would look to colleges to do what they can, and competitive pressure would result in most colleges growing their offerings in this area.
> I wonder how many counselors they have and how short wait times for appointments are in European countries where higher education costs either nothing or a small amount compared to median incomes
It's a good question. In interpreting the answer, one would presumably want to know how the general level of access to mental health services compares between the United States and those countries.
When I send my own children to college, it will be exclusively through extension courses. No frills. A long time professor at Harvard did the same thing for his children and gave me this idea.
I feel strongly that these expectations could well lead to the undoing of Western Civilization.
"...is my child safe..." Perhaps the issue is that the people who go to college these days are still... children?
>"...is my child safe..." Perhaps the issue is that the people who go to college these days are still... children?
I have a half an hour soapbox rant about over-protective, bulldozer parenting and what I have seen it do to our kids if you have time.
I work in administration now for retention services, but I've done a little of everything over the years from maintenance and janitorial to executive leadership to professor.
My favorite story - I taught an educational law course; this was a 600 level graduate course for future principals and superintendents. It was a weekend course that met 4 weekends, for 8 hours both days each weekend. On the second weekend, one of the students came to class Sunday morning hammered. Not hung-over, I get that. But hammered drunk. Slurring, falling down drunk.
So, I sent this full-grown adult home and gave him a zero on what we were doing.
Monday morning, this man's mother called me to complain that I treated her son wrong. He was 15 years older than I was. He was a leader in his k-12 school. He was training to become a literal district superintendent. And his f**ing mom called me. Like, the 18 year olds I at least understand. The parents are used to stepping in at that point (even thought that's a whole other issue). But this man was a full-grown ass professional adult. And his elderly mom called to try to tell me I was wrong for sending him home when he came drunk to my class.
Good point but I wonder which way the causality runs? I could make the argument either way:
1) Parent expectations higher -> college becomes more expensive
2) People would love colleges to do everything but they'd always say "we're a nonprofit spending all our $ on teaching/research so can't" and parents accept that -> colleges can get much larger amounts of money -> colleges compete on these non-circular programs -> students/parents raise their expectations.
I'm sure both are true, but I think something had to change. I would have loved all those services in the 90s but it wasn't considered practical.
Quite true. Additionally, there are raised expectations around wanting a perfect experience. My college in the 90s was block wall room with bunk beds and communal bathroom on the floor. Today everyone wants a private bedroom, shared kitchen and hang out area in their quad. This costs money and space too. At the same time, we now refuse to give deserving teachers tenure and everything is adjunct and basically gig work. Universities are no longer interested in education. They only want to create the largest possible funnel for endowments in the future. We do need to adjust how student loans work. The government should only guarantee a much lower amount and the rest should be dischargeable. And I personally would like to see it tied to the average 5 year income of students of that school's graduate per degree. We need to stop letting people sign up for $100K degrees in marketing when the average graduate ends up as a barista.
> Retention staff, student life staff, counseling staff, new innovative (read: Expensive) programs, the 'experience'. These all cost money.
Looking at going back sometime within the next few years. I don’t need any of this shit. I want to learn, do research and make new connections, but I’ll certainly half to help fund it for it, at least for a couple years.
For example:
> Do you have co-curricular and curricular experiences ensuring that s/he learns about life skills that s/he doesn't have?
I’m a grown adult with experience working in many different types of environments, while school would be a new challenge, I’m confident in my ability to adapt to it without paying 1000s on end for courses designed for people who are barely 18.
> I don’t need any of this shit. I want to learn, do research and make new connections
You're running into the fact that universities aren't set up for adults, and what you're buying isn't really what they're selling. The activities that actually fund the learning is the undergrad college experience and grant money. If you want to join a PhD program and do research you'll find lots of resources, connections, and access to people in the field, and if you want to party, go to football games, and learn some stuff along the way there's plenty of resources for that too.
> If you want to join a PhD program and do research you'll find lots of resources, connections, and access to people in the field, and if you want to party, go to football games, and learn some stuff along the way there's plenty of resources for that too.
Yes, unfortunately before I even think much about that, I have to completely and undergrad degree.
A bit of a hot take but I definitely think Facebook/social media factors into this more than we realize. Colleges regularly have major artists perform “Spring Weekend” concerts and being top-tier headline comedians to perform. That costs a ton of money and it just wasn’t happening in the 90s. Or maybe it was? And no one else knew about it...
> Colleges regularly have major artists perform “Spring Weekend” concerts and being top-tier headline comedians to perform.
I actually got a notification last year an artist was playing in a city near me so I went and what I didn’t realize was that it was actually a university event that happened to also be open to the public.
It's kinda great though, we got John Mulaney and Chvrches -- loved them both. I mean the uni is like the second or third largest concert venue in the area so it's not like it's a huge departure.
> But also, the expectations placed on colleges have grown exponentially. Retention staff, student life staff, counseling staff, new innovative (read: Expensive) programs
Have they? Or are these just new things the college has come up with to sell?
I worked in a university system for a while, and my observation is that the expectations have absolutely grown. Yes, someone has to be the first to think of some new thing to sell, but once they do, all of their competitors have to do the same thing to keep up. So many of the questions from prospective students and their parents are of the form "do you have X" or "do you do Y," all being things that other schools they are considering have or do. It's very hard for an individual institution to buck this trend if they wish to stay competitive for students.
The academic industrial complex has since moved on to focusing on wealthy international students, a group that is even less cost sensitive than an American student with a blank check.
I really noticed this when reading the page for a grad school at a nearby university, maybe one of the students on any of the research teams in the department were American.
I think this is more likely caused by grad school being a poor investment for the average American but a great investment for a foreign student looking to get a job in America.
Charles J. Sykes has been writing about this for decades. I recommend his books "Profscam" and especially "Fail U" for more information on why college has become so costly for such little return
I think the cultural stance in the U.S. that to progress in life/elevate oneself/stigma against forgoing college is also a large part of it.
I personally think that one policy that could have an outsized effect in solving this problem is establishing a max percentage of income that student loan repayment can be required to be for a maximum number of years (I'm pulling these numbers out of nowhere but just as an example) like 7.5% of gross income for 20 years. If the student hasn't repayed by that time using that percentage of income, the college is on the hook. Alternatively, a combination of the college and the lender (potentially switching away from government lenders).
The problem I'm hoping to solve is the insane growth rates of tuition for a wide variety of degrees that do not justify their cost. Young kids being told that college is the required pathway into a good life often are not given the commensurate instruction that the college degree should be useful in terms of earning more/securing a job. An instruction of "study whatever you find interesting!" sounds good but is IMO very poor advice. It should be modified "Study things you find interesting but remember that college is to build and refine your skills for your career after"
If you let students default on debt - most of the problems get solved.
Creditors are going to make risk-free high-interest loans. As long as the loans are available - students will take them to get their underwater basket weaving degrees.
If students could default on debt - then there wouldn't be an endless supply of creditors willing to lend them money to get degrees they know won't pay enough money to pay them back.
This doesn't work though because even the attractive degrees can declare bankruptcy based on having greater liabilities than assets immediately after finishing their degree. Allowing students to default on student loan debt without requiring a minimum time period to do so basically means no one can safely provide loans for any degrees regardless of income potential.
Some people have far more than $100k in debt, so the tradeoff might be far more attractive.
If you're finishing undergrad at 22, your bankruptcy won't harm you for buying a house at 29-30 which is kind of when you want to buy a house anyways since saving up 25% takes a good amount of time. It seems like a very worthwhile trade to declare bankruptcy.
As for being allowed to declare, the time to do it is before you have a job. At this point you have debt higher than assets and no income so the case for bankruptcy is extremely clear.
> Some people have far more than $100k in debt, so the tradeoff might be far more attractive.
That would be the lender's problem for lending far more than anyone reasonably needs to be lent to obtain a degree. They'd have to price the loan accordingly.
> It seems like a very worthwhile trade to declare bankruptcy.
You don't get to just declare bankruptcy on a whim because the outcome is favorable to you.
> You don’t get to just declare bankruptcy on a whim because the outcome is favourable to you.
I’ve addressed this in the above by mentioning when you do it. You have assets < debt and no job therefore no income. No court is going to reject this bankruptcy because you are actually underwater and will in theory take infinite time to repay the amount you owe.
Yeah bankruptcy is a legal process. Judges and probably lawyers are involved. It's not "free" and (my supposition) if you have legitimate near-term future prospects for income the judge may not grant it and tell you to get a job and pay what you owe.
We already have what you describe, it's called Income Driven Repayment. Your monthly payment is set to a certain percentage of your income, and after 20-25 years, any remaining balance is forgiven. The only difference being that forgiveness is paid for by the government, not the school.
The program is frankly a mess, with a ton of byzantine rules around eligibility and how the monthly payment is calculated. I work for a company that deals with this and have partial ownership of the code that has to implement these rules, and it's frankly a nightmare.
Furthermore I have serious doubts about the value of the program. It's really only good as a stop-gap measure to avoid defaulting on your loans in the immediate future. Going for the 20-year forgiveness seems unwise to me, since you are experiencing negative amortization for that time and your loan balance will be increasing. So most of the amount forgiven will be accrued interest, which will then be taxed. In most situations it would probably be better to focus on increasing your income and just paying the loans off.
X% of income *above the poverty line*, no time limit, disappears upon death. Administered through the IRS, it's a line on your tax return and thus automatically adjusted for income.
(And I'd do the same thing with child support--x% up to $y.)
While you can technically discharge student loans through bankruptcy, the bar is much higher than traditional debts. I wonder what the consequences would be if that bar was lowered?
Might be an unpopular opinion... but this is exactly why we shouldn't do student loan debt forgiveness. The root core of the issue wouldn't at all be addressed and it would actually be a signal to universities and students alike, that Universities can charge more, and students can continue to take out larger loans because... they might be forgiven at some future point in time.
I reluctantly agree--unless the forgiveness is coupled with new laws and regulations that substantially reform the system (perhaps by eliminating the federally subsidized student loan system altogether, and restoring the more generous grant system of yore).
If we do nothing to change the system, what are new college applicants going to think? Either they'll have to pay back their loans and, compared to those who wend before, get totally screwed. Or borrow with the belief that the debt will eventually be forgiven. Neither are good.
And, FWIW, I have a boat load of student-loan debt that I would absolutely love to have forgiven. But it's a bad idea unless the White House and congress are able to address the root of the problem.
> If we do nothing to change the system, what are new college applicants going to think? Either they'll have to pay back their loans and, compared to those who wend before, get totally screwed.
EDIT: I misread your comment. Please disregard.
They got screwed when they took the loan out, not when they pay it back. The terms never changed, people just realize they made a bad decision. Sometimes people argue they cant actually consent to the loan in which case we should just cease the loans immediately.
Part of the puzzle is rebuking this sort of logic: "Education is important. Having a bachelors degree is practically required. Therefor a loan is worth it." Without any qualifiers. This suggests the degree job prospects and loan amount don't matter. They do. If education is expensive enough, it's just not worth it.
Student debt is mostly held by the richer half of the US population. Serious question: would it do more good if instead of giving money to people with student debt, you gave money to people without it?
The first test of a potential policy is whether it's better than doing exactly the opposite. If you can't even prove that, it's probably not a good policy.
Income is not wealth. Especially when you factor in student loan debt! You can make a higher income than another person but still be poorer than them because of debt.
Also, income can change a lot from year to year. My income certain has. If the economy goes to pot, suddenly a lot of people with higher income will become unemployed. And the years you spend in school are typically very low or no income, so you're not building any wealth during those years. And if you go to graduate school, it's even more years of low to no income.
A college graduate will earn $900,000 more than a non-college graduate over their lifetime.
> You can make a higher income than another person but still be poorer than them because of debt.
Maybe we should focus our money on making college costs more affordable rather than forgiving loans and signaling to universities and students that it's safe to take on more debt?
"Men with bachelor's degrees earn approximately $900,000 more in median lifetime earnings than high school graduates. Women with bachelor's degrees earn $630,000 more. Men with graduate degrees earn $1.5 million more in median lifetime earnings than high school graduates. Women with graduate degrees earn $1.1 million more."
Of course these are just averages. There's no guarantee that any given person will earn even a penny more. Not to mention that not everyone who goes to college even finishes their degree, but they accumulate the debt regardless.
> Maybe we should focus our money on making college costs more affordable rather than forgiving loans
Why not both?
The thing is, the people who make a lot of money after college are able to pay off their debt. The real problem is the people who get stuck with debt for decades, unable to pay it off. It's a lifetime burden. Senior citizens are a very fast growing group of student loan debtors.
I don't necessarily believe that you should forgive student loan debt the minute someone walks out of graduation. But what about decades later?
Anyway, it's important to remember that these lifetime earnings numbers don't include college costs. You have to subtract those. Unless your parents pay for your college, in which case you have no student loan debt.
A large percent of students never get a degree. Here’s the best statistics that I could find. It talks about 6 year graduation rates but I think a large percent of those who don’t graduate within 6 years never graduate.
Because forgiving loans is a moral hazard. It signals to new college students that they can take out more debt and it signals to universities that they can raise tuition.
Saddling people with a lifetime of student loan debt is a moral hazard that has already occurred. Moreover, college students are already taking out more debt, and universities are already raising tuition, despite the lack of forgiveness.
Would a one-time forgiveness cause an increase in college costs? I don't know, maybe? And if it did, by how much? I don't know, do you? Maybe the problem needs to get worse in order to put pressure on Congress to finally address it comprehensively. And if Congress still refuses to address the problem despite its getting worse, then you can no longer argue that we need to wait for a comprehensive solution, because that's not coming. Perhaps the occasional forgiveness event is the best and only thing we can do in the face of persistent gridlock. I hope not, but...
I'm not saying you hold this opinion, but policy-makers seem to have little issue with moral hazard when it comes to bailing out "too big to fail" corporations. I get the moral hazard argument, but if it's truly a first-principle it should probably be applied more consistently.
Yes I went to a cheap state school that I could afford. I'm from a modest background and it didn't occur to me I could borrow beyond my means and go to a nicer school.
I certainly don't feel student loan forgiveness is "fair" in that circumstance!
> Yes I went to a cheap state school that I could afford.
The state school prices have gone way up too. It's possible that the state school you could afford back then would no longer be affordable now.
(By the way, I had to go to a state school too instead of a nicer school that accepted me, because of money. And yet, I still accumulated student loan debt! Because college is pretty expensive no matter what.)
Nowadays 'affording' a 'cheap' state school is guessing if you can walk away with 20-50k of debt vs 50-150k. My younger brother had solid scholarships and still walked out with 25k. I graduated in 3 years and luckily my parents covered the last tuition check and I still had 15k.
At this point I've paid my debts and still welcome relief for students who didn't have the same opportunities as me.
There is no 'cheap' 4 year school anymore. Costs can be mitigated by going to a Community College for an associates/first 2 years then bridge that into a 4 year program but if you want to go for research, engineering, or many other more dedicated programs then being at the 4 year school all 4 years leads to many more connections and opportunities that some feel are worth the cost.
Borrowing beyond ones means isn't always fully understood by a group of 17-18 year olds, especially those who may be first generation college students or from school districts that have spent 2+ decades now losing resources for educating students on college options in order to focus on the kids failing out. For example, many college apps I completed in 2011 needed a letter of rec from my counselor who I had talked to once as a sophomore but spent most of his time working with students on the edge of failing or dropping out. It's archaic just like how the US college system operates as a capitalists dream and not a public service.
In terms of fair, well policy hasn't been fair in a long time either. The 2017 tax bill raised my taxes and pushed a trillion plus surplus back to the wealthy - a much worse outcome for all then cancelling student debt without a deeper plan. It may not seem "fair" to you but that doesn't make it bad policy.
Ignore fair - How does this debt forgiveness address any of the systemic issues you've pointed out?
Colleges will still be just as expensive. The next round of student signing up now still has all the same burdens and obligations, the same disadvantages understanding the borrowing they're doing.
Nothing is getting fixed. You're just handing a one-time stimulus to recent college grads. And don't take me wrong - I would also have preferred a stimulus for recent college grads instead of the insanity that was Trump's tax cuts for the wealthy. But that's like picking between two wormy apples.
I really don't want a payout for EITHER of those groups! - I want the systemic issues around pricing for education to be addressed.
So if "debt forgiveness" also includes plans for something like universal access to college, or a standardized loan process through the federal government, or (perhaps most useful of all) the simple ability to discharge education debt through bankruptcy.... then sign me up.
If it just means handing money to the children of already mostly well-off folks, as a one-time political courtship to win the next presidential election... Then count me out. I think it's a bad idea.
> Student debt is mostly held by the richer half of the US population
It's mostly held by the federal government.
It's mostly owed by the richer half, but that's misleading when it comes to impact.
Sure, households in the bottom half of the top quintile have twice the average student loan debt of those in the bottom quintile, they also have more than 10 times the income. The average student debt in the bottom quintile ($25,030) is about the upper income limit ($27Kish as of 2020) of the bottom quintile, while the average in the bottom half of the top quintile (80-89th percentile, $51,380) is a little.more than 1/3 the lower limit ($143K in 2020) of the top quintile. (And the upper half of the top income quintile actually has a lower average student debt that the bottom half, or the whole of the next highest income quintile, not just a lower average student debt to income ratio.)
The share of households with any student debt and the average household student debt-to-income ratio decreases consistently with household income.
> this is exactly why we shouldn't do student loan debt forgiveness. The root core of the issue wouldn't at all be addressed
This is a false dichotomy. The root core of the issue should be addressed. However, that would require an act of Congress, whereas federal student loan forgiveness can be accomplished immediately via executive action. This is why people are calling for it now, because it can be done right now. Also, the President promised to do so multiple times during his campaign.
> Universities can charge more, and students can continue to take out larger loans
Universities are already charging more, and students are continuing to take out larger loans despite the lack of forgiveness.
>"However, that would require an act of Congress, whereas federal student loan forgiveness can be accomplished immediately via executive action. This is why people are calling for it now, because it can be done right now. Also, the President promised to do so multiple times during his campaign."
I can't be the only one who feels like this is simply 'buying votes' in an attempt to try and salvage some seats for the upcoming midterms. And, of course the people with debt want the debt forgiven unilaterally and post-haste, so it makes sense they're clamoring for it. In a democracy, who turns down free money?
By that argument, everything is "buying votes". There are far more blatant examples of vote buying, like creating jobs in the production of weapon systems for the military, tax cuts for specific groups (mostly the rich, though that's more "buying campaign donations"), and plenty of other examples.
The fact of the matter is that these loans are unsustainable. They saddle people with life-long debt that they can never get rid of, dooming them to a life of poverty because of a choice they made when they were young, which everybody at the time told them was the right choice.
That particular debt forgiveness is simply the right thing to do. It will free a lot of people from poverty.
But clearly there are also measures necessary to prevent this from happening again, like a reasonable maximum to how much can be lend.
The examples you gave are not as direct. This is a direct stimulus that can easily be attributed from the government to an individual. In some cases, as you mentioned, there are political reasons that are also suspect and stupid in my opinion. However, this example is extremely simple and easily attributable as there isn’t some 3rd party hiring people or some number of dollars you get to keep in your bank account in the future.
I would prefer that the change be that loans can be discharged in bankruptcy instead of this one off forgiveness.
I think the other examples are far more blatant. Politicians fund the military by far more than the military needs, to the point that the military doesn't even know what to do with it, but there's always conditions that specific military or NASA projects take place in specific states or districts for specific politicians. The tax cuts for donations are even worse. And neither of those are solving a specific problem, which is definitely the case with the crippling student loans.
That said, I agree with you on bankruptcy being a better idea. From what I understand, these loans are harder if not impossible to get rid of through bankruptcy than other loans, despite being far more crippling.
In general, I'd like a rule that all interest-carrying loans must be able to be eliminated through bankruptcy. Only interest-free loans should be exempt. Also: a cap on student loans to discourage excessive tuition. Tuition is just insane (and where is that money going? I hear plenty of younger professors are struggling too).
Yeah, I think we agree. The military spending is absurd and also extremely wasteful. However, I don’t think it is “buying votes”. Its more akin to this terrible system where senators pork bills and make trades. Paying people (or forgiving a big debt) directly before an election is buying votes. The other examples you said are just political ineptitude, horse trading and a broken governmental system.
My first pass on fixing education is that we should remove the non-discharge of student loan debt. Gen-Z could boycott this system by declaring bankruptcy immediately after graduation which would have relatively minimal affects on their lives relative to the debt and schools would be forced to lower costs
I still have no idea how he actually managed to win the primary. None of the Democrats or Progressives I know in real life or online actually liked him. He was doing terribly and then all of the sudden he cinched the nomination in the span of two weeks. I sense there was a lot of back room power-broker deals going on and that was the real reason why so many of his competitors dropped out when they still had a good chance.
The Democratic party seems to be a lot more competent, and try a lot harder, when they are combating progressives, as opposed to when they are combating the other party.
Alot of marginalized people were terrified of another term for the last doofus. They didn't want to rock the boat with anyone who was not center of the road and well established.
I feel like that would have been better reflected in Joe Biden's poll numbers in the races before South Carolina. He ultimately won, yes, and I don't doubt that plenty of people voted strategically but it genuinely seems like a switch was flipped when that South Carolina representative endorsed Joe Biden - his results became dramatically better after that.
He won the nomination because people thought he could beat Trump. This turned out to be correct. Not many dems loved him (see poor rally attendance), but nobody really hated him either and so they went with the least-worst option (where the worst option is Trump winning again).
> I can't be the only one who feels like this is "buying votes".
Votes are already bought by wealthy campaign contributors.
Anyway, aren't politicians supposed to help the public financially? If a politician campaigns on tax cuts, tax credits, and tax incentives, isn't that also "buying votes"? Which politician is not buying votes with their stated economic policies?
I sense there is a difference between passing policy which broadly affects future actions (tax rates, credits, etc.) and making a campaign promise to directly pay (or in this case forgive) a lump sum of money to a certain contingent of the electorate.
The child tax credit would be an example of ‘buying votes’ too, right? What about promises to increase milk subsidies? Or promises to keep protecting the limber industry from competition from Canada? Aren’t all such things ‘buying votes’ as you put it?
I’m not an economist but I suspect that in a society with a strong welfare system, universal healthcare, and free higher education then wages wouldn’t have to be as high as they are in the U.S. for certain industries. I don’t claim that student debt forgiveness is the efficacious or even that it should be done. I do claim that it’s best to ‘buy’ votes by creating a society with strong social programs.
Yes, I do consider the child tax credit buying votes and I likewise consider farm subsidies vote buying as well. This situation, in particular, seems egregious because of the amount being proposed - $10,000 - and because the executive branch is planning to do it unilaterally. I would still disagree with the measure, but I wouldn't feel as strongly if this happened a result of a vote from Congress.
Politically speaking the best course of action for Biden is to say that the repayment pause will continue until Congress passes comprehensive legislation addressing higher education funding and reforms.
This would actually be better than $10K forgiveness, which is kind of a drop in the bucket for people who are really struggling with student loan debt, despite the previous commenter thinking the amount is "egregious".
It's debatable that the President has the authority to forgive federal loans. Forgiving a small amount of debt for a more wealthier group of people without fixing the root of the problem is just selfish and bad policy. It's no wonder why the proposal is very unpopular.
I'd like to see student loan debt forgiven along with implementing a plan to address the cause of this ballooning debt. Unfortunately, this is the United States, and federal legislation on just about anything is currently impossible if there is any opportunity at all to turn it into a divisive issue. Even if the democrats managed to build a majority that would allow them to pass whatever they wanted, tackling a problem like this in a forward-looking way seems beyond them.
That's why I'm suggesting that forgiveness of any existing debt should be linked to a big policy change.
For example, make student load debt dischargeable in bankruptcy like any other debt, and at the same time impose tuition caps at state universities to make them affordable again.
Every problem that gets solved is one less thing to campaign on. And since we don't hold our politicians accountable, they can just campaign on the same things over and over and never do anything about them.
Debt forgiveness is indeed an extreme, perverse incentive. Capping federal aid seems unthinkable. Asking something of all of those grads (service) on behalf of forgiving their debt also seems unthinkable. Forgiving college loans is a wealth transfer to the highest earning cohort... I'm not in favor of a debt jubilee.
> Might be an unpopular opinion... but this is exactly why we shouldn't do student loan debt forgiveness.
I mean, it should be an unpopular opinion that a claim that both misrepresents the basic processes and incentives involved and requires effect to precede cause by more than a decade is perceived as “exactly why we should“ do or not do anything, but unfortunately it's actually a very popular opinion in this case.
(To the extent there is a real argument—and this one is not it—for federal student lending being a cost driver for education, that would be a good reason why debt forgiveness, if done, should be accompanied by lending reform to correct the problem going forward; of course, even without it being a cost driver, any argument for debt forgiveness is itself an argument for lending reform preventing the problem addressed by forgiveness from recurring.)
And the government would then cap the amount that universities get per student, and it would allow poor people to go to college as well. Everyone winds up paying tuition via taxes over time.
If we were dealing with the victims of a school shooting, first we'd make sure none of them were going to bleed out. Then they'd be prioritized for dealing with their root cause injuries.
We can apply similar tactics to these school financial injuries. We don't need to choose one or the other.
And the core problem with people taking on debt to pay for college in the US is individual people having to pay for college, unlike many other countries. How much it costs is a secondary issue. If it can cost anything, market forces will boost the price until it passes a fairness threshold.
Providing emergency aid to shooting victims doesn't incentivize more school shooters. If anything, it's a disincentive because it counteracts their goal. By contrast, forgiving student loans incentivizes more people to take loans, which in turn allows colleges to raise tuition prices.
> If we were dealing with the victims of a school shooting, first we'd make sure none of them were going to bleed out.
Well... no. Obviously stopping the shooter is the top priority.
Beyond that, it depends on how many people are there to solve the problem and how many victims there are. Everything beyond whats required to stop the shooter would attend to the wounded.
If the price of something is increasing faster than inflation then I expect something in return for the extra money I am paying like a bigger house, faster computer, whatever.
I went to college in the 1990's. Are college students getting a better education or experience for all the extra money they are paying? I've seen my university's new classrooms, student center, library, dorms, etc. and they are way nicer than when I was there. I don't know if the huge upgrade in facilities is also happening at other schools.
The money is going into a bottomless pit of administrative and bureaucratic overhead. Universities are caught up in a zero-sum competition for the top students (and athletes). To attract these students they invest in massive infrastructure projects (new buildings and renovations), often with the support of earmarked donations from wealthy alumni. These new facilities must then be staffed with administrators and maintenance workers. Along with the new facilities come new departments and schools of X and Y which also need their own administration.
The short answer is: administrative bloat. That's where all the money is going. Universities employ far more non-teaching staff than ever before. A large bulk of this staff is essentially dedicated to marketing the university to prospective students, a zero-sum competition with other universities.
One of the big problems is that wealthy donors love to earmark their donations for big projects that carry their name. It's way less sexy to donate a bunch of no-strings-attached money that the school can use to pay salaries and keep tuition down. For donors who actually want to help future students, the usual route is named scholarships. But then, of course, scholarships also require admin staff to oversee them. And schools can have thousands of these scholarships.
> The money is going into a bottomless pit of administrative and bureaucratic overhead. Universities are caught up in a zero-sum competition for the top students (and athletes). To attract these students they invest in massive infrastructure projects (new buildings and renovations), often with the support of earmarked donations from wealthy alumni. These new facilities must then be staffed with administrators and maintenance workers. Along with the new facilities come new departments and schools of X and Y which also need their own administration.
> The short answer is: administrative bloat.
I don't get it -- you're saying it's "bloat" and bad that the competitive market for students is causing universities to invest in themselves?
You've actually convinced me that a large chunk of costs for nameless "administrators" might be going to useful purposes because investing in buildings and programs requires non-educational staff to keep things going.
It's a zero sum game. Bob the student can either attend Charles State or Derek University, not both. If Charles State spends a million dollars trying to attract Bob, Derek U spends a million and a half, and Bob decides to go to Derek U, Charles State has wasted a million dollars. Furthermore, the fancy new aquatics complex at Derek U may have been the deciding factor for Bob but it does nothing to make him better at electrical engineering, his chosen major.
The building itself may have been donated by some magnanimous billionaire, but the water to fill the pools and run the showers, the chlorine and other chemicals, the electricity to run the pumps and keep the lights on, the lifeguards, the cleaning crew, the maintenance crew, the swim team coaches, management, HR staff, and so on are all part of the school's operating costs. It is these costs that are paid for by tuition money.
> If Charles State spends a million dollars trying to attract Bob, Derek U spends a million and a half, and Bob decides to go to Derek U, Charles State has wasted a million dollars. Furthermore, the fancy new aquatics complex at Derek U may have been the deciding factor for Bob but it does nothing to make him better at electrical engineering, his chosen major.
Why do you think it's zero sum? Everything I've read suggests the total number of college students is increasing while school count isn't. Schools are increasing capacity, but not necessarily fast enough. Bob may not matriculate, but many others might because of the aquatic center.
I can't imagine schools are building an aquatic center for one individual who might not even matriculate. I can imagine schools building an aquatic center to increase the overall matriculation rate. If it works, and this example is representative, then what you're describing sounds like a competitive market causing all the producers to make investments to improve their product. (You could argue they shouldn't, that we'd rather they be affordable and not have aquatic centers, but that's a different debate.) If it doesn't work, then it sounds like it was just a bad decision, and possibly one with long-term costs for upkeep. But as far as I can tell, on average these things _are_ working, because colleges are only getting more selective.
You could argue they shouldn't, that we'd rather they be affordable and not have aquatic centers, but that's a different debate.
That is my argument. Society is a whole is spending more and more on education but not getting more education in the deal. We’re getting more aquatic complexes and climbing walls and sports stadiums. None of these things help society achieve higher levels of education. They merely allow one school to lure students away from another: zero sum.
> The short answer is: administrative bloat. That's where all the money is going. Universities employ far more non-teaching staff than ever before. A large bulk of this staff is essentially dedicated to marketing the university to prospective students, a zero-sum competition with other universities.
Do you have a citation for this claim? The Ed department publishes higher-ed expenditure data, and it doesn't show "far more" administrative expense on a real per-student basis compared to 10 or 20 years ago:
Is the admin always on vacation? I applied to my undergraduate almamater for several positions and wasn't hearing back. I would call every week for about 6 weeks and received out of office messages for each person that entire time. It really gave the impression that people are collecting state funded salaries while doing very very little.
The extra money is going into administration. That includes salaries for non-teacher administrators and the fancy new real estate. Meanwhile they also cleverly decided to hire more part time teachers and fewer full time teachers, so they don't have to offer as much in benefits.
Is there really “extra money”? The chart of tuition does not tell us much about the total cost of a year of education, it just tells us the list price. In the 1970’s, the tuition cost at a state public institution was less than 10% of the total cost. Today, in state students pay about 50% of the cost, out of state more than 100% of the cost. Total Higher education costs have risen faster than inflation (as have grades K-12), but mostly not because of student loans.
Let's be real here, our generation was sold a bill of goods. Do well in high school and you'll get into college, which is the only chance you have to succeed in the world. If we didn't do well, we were shamed, grounded, told we were failures and punished. Do good, get a degree and the world will be your oyster! There will be an ocean of jobs all of which will allow you to retire with a big fat nest egg! The problem here isn't the loans, its not the universities costing too much, its the big fat lie. Maybe Johnny can't be a doctor or lawyer but if he went to a trade school and learned a skill more mechanical in nature he might just be as well off. We eliminated all the trade schools though, why? Because the big lie that University and the Corporate ladder is the "One True Way." It was all horseshit though. High tuition isn't because of the "Omnibus Budget Reconciliation Act 1993". Sure maybe it is a contributing factor, one of many, but the true reason its cost so damn much is because most of the degrees of asinine bullshit that doesn't prepare anyone for the real world. We ended all the trade schools and stuffed everyone into the same cookie cutter mold and then get upset when no one hires all the ugly cookies that didn't graduate magna cum laude. But little Johnny got a degree, why is he still working at McDonald's. Maybe you shouldn't have told Johnny that his only worth while trajectory in life was to get a degree. Maybe when Johnny's grades were tough you should have introduced him to something like metalworking, or wood shop, or electrical work.
College is still the best investment you can make in yourself, even accounting for opportunity cost. Expected earnings increase by over a million for getting your degree. That's a large reason why people are willing to pay so much.
What you are excluding is the risk factors for if you fail to find entry into your specific profession, and the chances of finding a job in a given major. Saying college is the best investment is so generic a statement when degree selection and the barriers to entry into the job market are also variables to success. The question isn't if, as a generic or on the whole, college is the best investment you can make. It's more like, is the major I've chosen going to be profitable after I graduate? What is the degree to market conditions like? Will my job be robust enough to stand against automation? The way I see it the number of available degrees vs graduates entering into the market has a high enough risk that failure to enter the job market becomes enough of a risk as to not be rewarding. Your statement is what is wrong with the industry, because it doesn't preclude the other option, what if you fail? Even if you passed all your classes and graduated top of you class, what happens if you can't find a job? Your statement assumes everyone is a winner if they invest in college, but that is not the case.
>College is still the best investment you can make in yourself
No it's not. Not without qualifiers. What if it costs $5M/year and the median income for graduates is 40k upon graduation? Clearly not worth it. That would utterly ruin your finances for the rest of your life. So there is some point where it becomes worth it. The question is where, which is going to be a little different for everyone.
Is 240k for a liberal arts degree worth it to you? It's certainly not for me.
> What if it costs $5M/year and the median income for graduates is 40k upon graduation?
Then it wouldn't be the best investment you can make in yourself. For now it still is. Yes, paying 240k to make more than a million more inflation adjusted dollars over the course of your career is worth it. Now it's probably not a great idea considering you can graduate at a much lower cost, but on the margin, yea, that's a good investment.
This analysis seems flawed. Not only does it start outpacing inflation in 1980 as someone else noted, it fails to explain the tuition explosion that Canada has faced over a similar timespan.
It wouldn't surprise me if it was something more subtle, like globalisation and massive Chinese and Indian populations seeking tuition from abroad. On the other hand, that seems like a bad explanation since typically these students are gouged even worse than domestic students (at least they are in Canada).
This makes no sense at all. Under the Federal Family Education Loan program, the student borrowed from a bank, and the university was paid right away. The government paid the bank in case of default.
Under the William D Ford Federal Direct Loan program, the student borrows from the government. The university is paid right away.
So this post’s argument, which is that the Direct Loan program made universities get paid right away, makes no sense.
Yeah, it feels like the author forgot a paragraph then explaining why this switch caused the increase. It's not clear why having a private lender between the gov and schools would keep costs down if the gov is ultimately on the hook for the money either way.
What’s the difference in incentives colleges in lowering tuitions whether the government pays them directly or indirectly through the students?
They are getting paid either way. Unless there was a cap that was removed that I missed.
And the students are picking up the same loan amounts whether it was originally backed by the government, or originated from the government.
The chart in the figure also doesn’t line up with the claims, with college inflation deviating from before the law was passed, and then a further increase in growth starting over a decade after it passed.
Anecdotally, having been heavily involved in the student govt affairs of a major state university at the time a lot of these tuition increases happened, what we saw was:
1) A huge pullback in state govt tuition support.
2) Coinciding with a massive increase in spending on athletics and buildings
3) leading to my otherwise extremely price competitive state college becoming as expensive as the equivalent private college a few streets down the road.
4) Followed a few years later by an increase in tuition at the private college.
This was once again further entrenched after the 2007-2009 financial crisis.
Incentive structures are important, but not the entire story. The article makes no attempt to examine where tuition revenue is actually being spent. Without that piece, I don't find their argument particularly convincing.
The article asserts:
> Close to 70% of college students attend using federal student loans, so schools would have no choice but to adjust their tuitions to match [the maximum federal loan], or risk losing a large chunk of revenue.
But as the article points out, the vast majority of schools are non-profits. Unlike corporations, they should not be attempting to maximize revenue.
I could be wrong, but I do not think most college administrators are looking to extract as much money for their students as possible. They want to put their students on a path to success, which implies not leaving them with crippling levels of debt.
Unfortunately, colleges sometimes don't have a choice, because they have bills to pay and are not swimming in piles of cash. Which leaves my primary question—if tuition has risen so much, where is that money going?
I have not yet seen a really good examination of this question.
One place is that it is used to replace reductions in government support.
"the single most important factor associated with tuition increases was decreasing revenue from government appropriations, with state appropriations
making up the majority of such revenue.[1] (this is an old study, but I believe the pattern still exists, and is even more exacerbated)
Another seems to be that administrative costs are growing disproportionately at the same time that public money has been getting smaller. This seems to be aligned politically, so it may need to be taken with a grain of salt but I can give one anecdote.
When I went to college, I was sent to see the veterans representative. At that time it was just a single person who had those duties tasked on top of her "real" role. Now, it's common for colleges to have entire admin teams to recruit and help veteran students. On one hand, this can be great for the colleges and students; if managed well, those students bring in "free" government money. On the other, it's probably hard to calculate the true ROI of such a team; for example, it may be hard to know how many of those student-veterans would have attended regardless if there was a full team to support them or not. But all those admin teams, across all the different groups and bureaucracies add up.
1. Anyone can receive funds, regardless of cost/financial sense.
2. Anyone can receive funds, regardless of academic performance.
3. Burden on the state will be low.
There has to be a filter somewhere. Germany (and others) chose 1 & 3. It's cheap, but only available for good students (but tell me if I am wrong, I am not German).
For historical reasons, this is largely untenable in the USA: if they chose the same, it would be seen as enhancing privilege (both economic and ethnic) and a transfer from poor -> rich. Americans want to believe that education is a means to racial equality, a restoration of historical wrongs, and a land of opportunity.
America is forced to offer loans for all students at all institutions, even when they don't really believe it will be beneficial because of cultural ethos, and choose 1 & 2.
Fixing grade school education would go a long way to remedy this. Americans don't really believe in the fairness of their grade schools, and are unwilling to deny uni to students based on their grade school performance.
> For historical reasons, this is largely untenable in the USA: if they chose the same, it would be seen as enhancing privilege (both economic and ethnic) and a transfer from poor -> rich.
Devils advocate - how is the current situation any different? Education has skyrocketed in price which disproportionately disadvantages people with less.
I totally take your point and think you're right about picking 2 of the 3. It's just that the people who think that way aren't considering the larger picture (and probably never will).
> Up until 1993, the federal government merely guaranteed/backed student loans that private lenders gave. This meant that only in the case of someone defaulting on their loan would the government be on the hook, stepping in and paying the college what’s owed.
No, the college gets paid on day one by the lender, whether it's (1) a non-federal loan, (2) a federally-guaranteed loan, or (3) a direct federal loan. The only case where the college would be out money is if they were the lender, but loans from schools were not the norm in the guaranteed loan program, school-issued loans tended to be (an old still are found as) private non-federal loans that are most commonly offered by for-profit institutions.
The difference between (1) and (2) is that the feds pay the lender (not the school) in case of default, so lenders have no real risk and behave accordingly.
From the schools perspective, there is no incentive difference between #2 and #3.
This is only one piece of the puzzle. Another is the significant reduction in state funding to colleges.
In particular, funding cuts are somewhat cyclical, occuring during economic downturns. Higher Ed funding always looks like the low-hanging fruit to cut. Health and social services, corrections (prisons) and K-12 education are much more problematic from a political optics viewpoint. Higher Ed is, in some sense, still seen as "optional" in the sense that people can live without it and because colleges do have an alternative revenue stream.
I've seen colleges have funding for basic things like updating crumbling infrastructure pulled mid-summer when states finalize budgets and a 5-year infrastructure program from the state is cut off in year three. This makes it very difficult for budget planning, and it's not uncommon for schools to then have to put out a bond to finish funding things itself.
A third factor is a sort of toxic arms race between colleges to recruit new students. In the wake of revenue uncertainty colleges of course try to increase their their enrollment to boost revenue. It has turned into a negative sum game, a college builds shiny new dining or housing facilities to attract new students, and the school down the road loses enrollment & revenue as a result which means they need to spend money building such things just to not lose students. Meanwhile the old facilities were perfectly adequate though by no means luxurious. Students going through the recruitment meat grinder are then making choices based on whether or not the school has various food franchises on campus. Schools doesn't have a Starbucks or even a Dunkin Donuts? Can't go there!
I don't know the solution to that one. The first schools that did it gained a brief competitive advantage but now it's more of an equilibrium where all schools have to do it just to tread water.
Anyway, it's all much more complicated than simply changing the loan structure (which of course was a big part of things as well.)
I'm dubious honestly. For one, the separation of college costs from inflation started before 1993 and that's even called out in Bennet's op-ed from 1987. Secondly, the number of students enrolled has increased dramatically while the number of new colleges has not. Acceptance rates at elite schools have dropped precipitously in the face of increase demand. Same as skyrocketing housing costs, you can certainly see how certain policies have had an impact, but the overwhelming force is simple supply and demand. If we accredit 1000 more colleges next year, I guarantee that tuition will drop.
Seems more likely it's just an arbitrage. There was a big gap between the cost of an education and the return so the market naturally is driving the gap to zero from both sides.
Why are tuition fees and student loans necessary? Instead of the government backing up or paying up the student loans, can't it just pay the university directly and then the student would study for free? (after perhaps some common sense adjustments to prevent abuse). Like in, you know, Europe.
If most students end up being paid their loans by the government its the same, minus the bureaucracy and the optics (we are not socialists, we discourage socialist behavior).
You can apply this rationale to the army, police, fire brigades, hospitals, schools, street lighting, public roads, public transport etc. and you end up in a jungle, not a civilized society.
Why not penalise tertiary institutions by stating that if students don’t find employment using those credentials, within 2 yard, their alumni fund / endowment fund gets raided the cost the degree?
Western Europeans seem to have figured out how to get a good, affordable college education without this sort of thing. Some Europeans I talked to said the government even gives them a per diem for spending money or what have you while they go to college. They don't seem to have onerous debt.
Just like high medical costs, or school shootings (nineteen children were just killed by a gunman at a school in the US, for the Europeans unaware) and so forth, this seems to be a mostly US specific problem.
Private Universities are in totally different niches over here (at least in Germany); they either cater to the elites (and sell high-level networking) and can charge pretty much whatever, or serve as a plan B for those kids who can't make it in the public system but have parents willing to buy a degree (also expensive) or in very narrow niches (there are some catholic ones I think), those tend to be cheaper. Since the public system is very good, there's little incentive to go to a private University otherwise. I don't think any of them charge as much as a good US college would, by a fair margin. Might be different in other EU countries, but I don't think it's that different.
Edit: And I would be extremely surprised if cost per student was that much higher in the public system than what I know people in one of the "plan B" private universities got charged, economies of scale and all that.
few people want to go there because the bit of paper you get at the end is the value and those a worth less than the bits of paper you get from other universities.
I went to a community college for two years (it was free), and then transferred the University of Florida to finish my degree (a fine public R1 university by any standard), paying exactly $0 for my degree. I know people who followed that same path and went on to top tier law schools, medical schools, bulge bracket investment banking, etc.
Now I can look back and be grateful that I got a great education for free, but I was, and still am slightly embarrassed by saying I went to a community college.
I now live in NYC where I'm pretty sure people can do almost the same thing with the SUNY school system, and come out with an undergrad degree for like $30k (still a lot, but most folks I know paid $100k+ for undergrad degrees that are not substantially differentiated from the path I did).
I did exactly that with the SUNY system. I could have probably gone to some "prestigious" place if I applied myself more, but I hated extracurriculars and all the other tertiary nonsense the applications seemed to expect of me. It should be about your educational and relevant (e.g. self taught programming demonstrated with projects) achievement, nothing else, IMO.
SUNY system worked out for me and I'm not embarrassed of it. They almost screwed up my graduation with a one credit discrepency in the requirements with the transfer. You have to be careful and do their job for them checking up on that, I've learned.
I understand feeling embarrassed but I think sharing your experience with your peers and (perhaps more importantly) their kids could help reduce the stigma, even if just a little.
Plus, usually they don't offer anything more than an associate's degree. Can't remember the last time I saw anything less than "bachelor's degree or equivalent experience" on a job listing.
One strategy is to go to community college for your gen ed requirements, transfer those credits to a more prestigious university, then finish your degree there. The piece of paper will have the university's name on it, but you will have saved money in the process.
You have to do some due diligence to figure out what credits you can transfer. You don't want to waste your time and money on a class that doesn't count. But I know of some people who did this.
This is my current plan. Look to see if your state has any programs that guarantee entry. If I pick the right CC, I’m guaranteed admission (though not guaranteed any major) at the primary school I’m eyeing.
That some community colleges focused on being 'transfer schools' was old hat when I was in school 20 years ago; there were established curriculums designed to meet the general ed requirements of UC and CSU. Since then, many states have developed programs where you can get guaranteed transfer admission to their state schools for year three and four.
It's a better way to do it anyway. Lower level courses at big schools tend to be giant lectures, but many of those are going to be higher level courses at community college. Would you rather take Calculus in a giant lecture hall or a small class room? Same with Physics and Chemistry (although those at least have lab sections that are usually size limited)
If you go to a community college for two years (nominal) and transfer to get a bachelors degree in two more years (nominal), you end up with the same piece of paper as if you had done all four years at that same place. Your bank balance (and life experience) would likely be different however.
Of course if you get through only two years, you'll (optionally) have a piece of paper, which might be better than dropping out of a four year school two years in.
If you reason from the premise that it's only the diploma that matters, I'm not sure it makes sense to talk about "transitioning" college from one model to another in the first place. We can't just decide by administrative fiat to transfer a bit of prestige from Harvard to the local 2-year school, even if we all agree it'd be better that way.
No, but we can decide by administrative fiat that Harvard can’t charge more than the community college does, and must transition its business model to be similar to that of the community college.
I thought most people who get into Ivy’s end up paying surprisingly lower, even compared to a state school. The problem is you probably won’t ever get in.
It's not obvious to me that we can. Harvard Community College seems like it would just end up in the same place as Harvard Extension School currently is, where everyone understands that it's not "really" Harvard and if you want the associated prestige you need to go to the 4 year residential program with competitive admissions.
You could regulate the cost of the 4 year residential programme (and presumably you also include those at similar universities while you were at it). Whether that's a good idea or not is a matter of debate, but it's essentially how most European universities work.
A big part of the value is you can take core classes very inexpensively and then transfer to a more expensive same state university. Not an option for everyone, but it really saves a lot of $$ for those that can make it work. Most two year degrees that don’t focus on a trade of some sort are mostly of dubious value on their own, though.
I went to one for an associate's, followed by transferring my credits to a state university for two more years for a bachelor's. Got an internship out of it, found my first good programming job within half a year, worked up to six figures remote a few years later. Seems like you get what you put into it and "prestige" isn't necessary at all just to have a good career.
College today has way more responsibilities. It has to fix rape culture, dismantle patriarchy, fix diversity, organize protests... All that costs money. In 1990ties 20% of students got raped, nobody wants to go back to that dark times!
Life and parody is indistinguishable now. Like it's difficult for me to cone up with any ridiculous statement that I could publish, and someone online would not take it seriously
The 20% rape is a fiction. Patriarchy in university is a fiction based on the number of females graduating (even in science). Organizing protests is not a part university's mission.
Having worked for one such office for ~15 years, the most appalling part was that they are largely antagonistic toward the faculty and mission of the schools. The waste is dizzying."
I made the above comment on another thread with a similar topic: "Boston University Undergraduate Cost Reach $80K" https://news.ycombinator.com/item?id=31309700