It's Government Meddling That Leads To Massive Student Debt
Blogger and law prof Glenn Harlan Reynolds writes in the WSJ:
The skyrocketing cost of a college education is a classic unintended consequence of government intervention. Colleges have responded to the availability of easy federal money by doing what subsidized industries generally do: Raising prices to capture the subsidy. Sold as a tool to help students cope with rising college costs, student loans have instead been a major contributor to the problem.In truth, America's student loan problem won't be solved by low interest rates--for many students, the debt would be crippling even if the interest rate were zero.
If we want to solve the very real problem of excessive student-loan debt, college costs need to be brought under control. A 2010 study by the Goldwater Institute identified "administrative bloat" as a leading reason for higher costs. The study found that many American universities now have more salaried administrators than teaching faculty.
Another way to approach costs is to remove the incentives for universities to accept government-subsidized student-loan money regardless of a student's prospects of graduation or gainful employment. Under the current setup, incentives run the other way: Schools get their money up front via student loans; if students are unable to pay the loans back, the burden falls on taxpayers (if the loan was "guaranteed" by the federal government), and the students themselves, while the schools get off scot-free.
A serious student-loan fix would change this incentive. First, federal aid could be capped, perhaps at a national average, or simply indexed to the consumer-price index, making it harder for schools to raise tuition willy-nilly. Second, schools that receive subsidized loan money could be left on the hook for a percentage of the loan balance if students default. I would favor allowing students who can't pay to discharge their loan balances in bankruptcy after a reasonable time--say, five to seven years, maybe even 10--with the institutions that got the money being liable to the guarantors (i.e., the taxpayers) for, say, 10% or 20% of the balance.
You can bet that under this kind of a rule, universities would be much more careful about encouraging students to take on significant debt unless they are fully committed first to graduating, and second to a realistic career path that would enable them to service that debt over time. At the very least, schools would be more likely to warn students of the risks.
I couldn't open the Excel document (don't have Excel) to compare University of Michigan tuition from when I graduated high school (1982) to now, but this lady, Marilisa Kinney Sachteleben, compared Muskegon Community College from about the same time to now. From 1982-84, when she went there, "Costs for tuition, books, gas and supplies was about $1400 to $1,600 per year."
About costs now:
MCC estimates that with books, tuition, transportation and fees a student who lives at home will pay $12,200 per year if they live in-county and $20,100 per semester for out-of-county students. Those were last year's estimates and do not reflect the significant gas price hike Michigan residents experienced.Gas prices went over $4 per gallon earlier this year and is still around $3.60 to $3.90 per gallon. It costs our sons around $10 to $12 per day in fuel costs alone to drive to school. There is no public transportation as we live out-of-county. Carpooling is difficult because student schedules vary so much. Higher fuel costs could raise college costs of out-of-county students to $25,000 per year. We would have to pay out-of-county rates for any community college because there is no college in our county.
$25K a year for community college? Even the "in-county" $12,200 a year is outrageous.
I think the test is, of you're dumb enough to pay that much for a community college... You failed.
Miguelitosd at June 28, 2013 12:00 AM
"federal aid could be capped"
Wrong! The feds shouldn't be in the loan business to begin with. First, it has driven the price-spike in college costs. Second, they use it as a lever to force colleges to do all sorts of idiotic things.
Federal aid should be eliminated entirely. Heck, the entire Dept. of Education should be eliminated.
When colleges see that no one can afford them, they will be forced to fire their overpaid administrators, eliminate useless XXX-studies courses, and get back to providing useful educations at reasonable prices.
a_random_guy at June 28, 2013 5:40 AM
You can probably open it with Open Office.
nonegiven at June 28, 2013 6:31 AM
As I recall, my first semester at Texas A&M, as an out-of-state student, I was charged 4x what the in-state rate was.
I paid $16/credit hour as a newbie grad student. And a year after I had declared domicile in Texas, I was considered in-state. And I acquired a job as a teaching assistant, so I got paid for the work, and I was pretty much self-sufficient - I could pay tuition, books and rent, and still have a few bucks left.
The tuition has gone up quite a bit more than the rate of inflation. That's partially because the readily available money, but also to keep control over enrollment. When I was there, they had to cap the fish class to 4,500. One of the largest student bodies in the USofA, about 50K students.
I R A Darth Aggie at June 28, 2013 6:49 AM
You could try LibreOffice for Mac. If you have some version of iWorks, the Numbers program should be able to open an excel file.
I R A Darth Aggie at June 28, 2013 6:51 AM
I agree. OpenOffice.org is free and fully compatible. I use it.
Easy to download from ninite.com and is fully vetted.
Trust at June 28, 2013 7:01 AM
tuition for law school has risen like crazy. UC tuition want from under $2,000/year in 1985 to over $49,500/year. No way to justify that increase (or pay it!)
quika at June 28, 2013 7:18 AM
Amy Alkon
http://www.advicegoddess.com/archives/2013/06/28/its_government.html#comment-3773850">comment from I R A Darth AggieYou could try LibreOffice for Mac. If you have some version of iWorks, the Numbers program should be able to open an excel file.
Thanks, I don't have iWorks, and I'm trying to get my book done before the deadline!
Amy Alkon at June 28, 2013 8:20 AM
Anytime the government is involved there is a distortion of that market and the subsequent abuse.
It also makes the selected item more expensive. The government came out with the Stafford loans in 1965. Once the banks knew they could get their money back and dump the long term collection on the fed, they said "Hell yes we'll give a mediocre to poor, 18 year old, student a loan, whether he needs it or not."
So now the colleges and universities have 150 students instead of 50 showing up with cash in hand trying to get a college degree. So the colleges are saying we can sell more product (degrees) if we expand the staff, and for the marginal students we can expand the possible degrees into the social crap.
Employers were also forced to stop a lot of pre-employment testing by the Title VII of the Civil Rights Act of 1964. So they started relying on the college diplomas instead.
So now we are here where colleges and universities can charge almost any amount they want and get it. The banks will loan that amount plus because they don't face a loss. The students aren't forced to think about there choices until too late.
And you and me are on the hook for paying it back by the fed taxing the shit out of us.
This is the same path for food stamps, Obamaphones, green energy and all the rest. The fed is a 4000 pound gorilla. And we all know where a 4000 pound gorilla sleeps.
Jim P. at June 29, 2013 6:46 AM
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