Bloomberg, WSJ: Student Aid Increases Tuition 433
retroworks writes "Bloomberg News makes the case that when the federal government offers tuition assistance, students apply to more expensive colleges, giving the institutions an incentive to raise tuition and a disincentive to lower it. (The Wall Street Journal has a similar article, but it's paywalled.) This reminds me of the debate over President Reagan's cuts to the Pell Grant program in the 1980s. MIT's Campus Paper 'The Tech' quoted the MIT administration as saying it had 'no idea what really will occur' when Reagan's proposal to cut Pell came to Washington. So the question is, 25 years later, do we know now? Did cuts to federal tuition assistance hurt the education of the lower income students? Did increases to Pell grants create more opportunity? Or is federal money the milkshake, and students are just the straw?"
Re:What about state budget cuts? (Score:4, Interesting)
Re:well, duh (Score:5, Interesting)
If I am a school and I have learned that students can borrow $60,000 a year from the government, then I am sure as hell I will raise my prices to get htat "free money".
No, not at all. If you had a full campus while charging $5K/yr, you'll raise your tuition to $65K a year, because you'll collect the "free" $60K plus your campus full of students obviously can afford $5K/yr.
Not one extra person will attend (duh, the out of pocket cost remains $5K) and not one extra person will not attend (free money for all !!!)
Re:well, duh (Score:4, Interesting)
Re:well, duh (Score:4, Interesting)
Depends on the funding and legal model around universities.
In canada for example the government (provincial) sets tuition fees for a university to be able to accept public funds. You can charge more than that, and be accredited, but you won't get public money. The Richard Ivey School of Business at Western is an example of a programme that went that route (but only for 2/4 years of undergrad and grad school or something weird, they're somehow part of western sometimes and separate from it others, but whatever).
Now the problem is that costs to run universities are increasing. Most of them are full of old buildings, so when the cost to heat or cool things goes up, they're screwed. There's just general inflationary pressure, the fact that staff need to be paid more as time goes on. As it is the technical faculty are becoming separated from industry rates and it's a real problem. A starting faculty at 70k is what a comp sci grad can get straight out of a bachelors.
If costs go up, you need to get more money. In canada at publicly funded universities you typically pay 5-7k per year, and the government chips in another 13k or so (foreign students pay the full amount). If tuition fees go up, well then student loans need to increase to compensate. It's not like students can magically live on 6 or 700 dollars a year less this year than last.
Now rightly, universities are trying to get as much money as they can. They may not run a profit, but they can't run at a loss indefinitely.
So that's one scenario, where cost increases and government approved tuition hikes to meet cost increases drive increased student loans.
In a more european system, where tuition is even less if not zero then it's entirely the government negotiating with universities on the price per student. And then you don't really have effect 2, and least not on core educational things, you might see more expensive restaurants on campus though.
The US system is a bit messier. There are enough schools that set their own tuition rates that you could see a bit of both going on. Where loans are increased in part to keep pace with public price changes, and private schools are taking advantage of that increased capital. But then loans have to be made available for students going to the expensive US schools which means the public ones can demand more money. In canada and europe if you want to go to a school with 20k tuition that isn't med school, well that's your own damn problem. In the US if you want to even go to a school like UCLA you're looking at 12k and tuition rates seem to vary much more wildly even within a state than they do elsewhere.
Without loans a lot of people wouldn't be able to go to school, but somewhat sadly, we're at the point where we're significantly over training in some areas (english, fine arts, history, drama, psychology, etc.) and giving out loans for a lot of those grads is just going to saddle them with debt for decades.
Go to college. End up broke. (Score:4, Interesting)
College (tuition) is the next Housing Market Crash waiting to happen.
Re:well, duh (Score:5, Interesting)
Further, what major won't make you more productive? I studied philosophy, and now have a job as a web developer. Looking at people I've worked with, I see art history, psych, even sociology majors. A given major isn't bullshit (though some can be more than a bit funny sounding) - it comes down to how effective a given student is at taking advantage of what they chose to learn.
Re:well, duh (Score:2, Interesting)
You are not intended to live on minimum wage. Anybody who shows up on time and sober will be making above minimum in three months.
The Voice of Experience calls bullshit on that one. Some jobs don't offer more than minimum wage, period, regardless of how long a person works there or how well they do their job.
The problem isn't that minimum wage is too low - the problem is that there are too many jobs that should but don't pay more than the minimum wage, because they have no legal (or, apparently, moral) obligation to do so.
Also, not enough hours; sure, $7.25/hr is a (barely) livable wage @ 40 hours a week, but I doubt you know anyone who makes minimum wage and gets more than 20-25 hours a week.
Personally, I don't think people should voice an opinion on topics they have fuck-all experience with; unless they've lived on minimum wage, they're really just talking out of their asses.
Re:well, duh (Score:5, Interesting)
In hindsight, it wasn't really a head start.
Re:well, duh (Score:2, Interesting)
I never really understood why people who can barely afford their own expenses have kids.
Re:Demand, meet supply (Score:4, Interesting)
The other thing this whole thread seems to have ignored so far is that even as universities are raising tuition, they've also been cutting staff, eliminating tenure, dropping courses, increasing class sizes, and capping enrollment.
My friends who are currently doing undergrad degrees have seen core classes explode in size, just in the time they've been at their schools. Many of them have been forced to take five or six years to complete their degrees solely because their college only offers some of the classes they need to graduate every other semester, and they might be too impacted to get in.
So if student aid is what's causing tuition to go up so fast, what's causing all of this other stuff?
Re:well, duh (Score:5, Interesting)
I live in Huntsville, Alabama which is a smallish city (~180k pop) surrounded by a couple of semi-affluent suburbs. Surrounding the suburbs are a very poor rural area dotted with small towns. The area (as well as most of the state, and most of the region) has an extremely low cost of living. Minimum wage is at the Federal minimum of 7.25.
I have two brothers and a sister who all live here and make at or near minimum wage at various jobs. They have occasional raises that seem to add up to around $1.00 per hour each year or so.
Working full-time at minimum wage you end up with a take-home of less than $1000 per month. The cheapest 1bdrm apt you can really hope for is around $350/mo. (You can potentially save some money here by playing the roommate lottery.) Utilities will bottom out at around $50/mo on average if you are careful. The area is very spread out and not pedestrian friendly, and we have very poor public transportation here. Gas is around $3.10/gallon right now (it recently dropped from around $3.70 or so, where it had been holding for a couple of months) so depending on the commute you'll be spending somewhere in the ballpark of $100/mo or so on gas.
So, after gas and housing you're looking at $500 to live off of each month. This is just barely manageable from my experience. Frugality is a must in this situation, and medical bills are basically un-payable. Since most retail and other min-wage jobs are only part-time, lots of people end up working multiple jobs to make ends meet. Luckily this area was not hit as hard by the recent economic unpleasantness, so there are still lots of low-end jobs to go around. Anyone who has student loans, car payments, or any other significant bills is pretty much on rice-and-beans-with-the-lights-out at this income level.
Re:well, duh (Score:5, Interesting)
Loans are arms and the lenders are arms dealers. The people who graduated ahead of you bought the bullets and effectively shot you out of the economy. They effectively pit us against eachother when competing for any big ticket item: house, car, education, etc.
Just as in war, a combatant sometimes wins; but arms dealers always win.
Re:well, duh (Score:4, Interesting)
Oh yeah, and the damage you did to your brain and body are a model upon which to build a future for our children (and trust me, you did damage, you may not know it now, but when the osteoporosis troll come a knocking, please don't be surprised, he's been to the house of quite a few of my friends who did exactly what you did in the young adult years when good nutrition ensures a long healthy life.
Which isn't to say there aren't a bunch of lazy, sex crazed coed, studying classes that will make little or no contribution to their future and who's nutrition even with money sucks beyond reconciling. Its just a certainty that if you can't afford good healthy food, that sooner or later you'll pay with your health.
Personally I like the idea of a society that supports young people in choosing between college and useful, vital trades that society needs and upon which a young man or woman can build a healthy future. The education cost would be dramatically less, preserve vital skills in our society, and normalize the price of plumbers and electricians and car mechanics, oh my. That would leave the justifiable college bound a much larger pie in which to cut, and more resources to support them in becoming future engineers, scientists, teachers and scum sucking lawyers and corporate capitalists (the scum sucking is obligatory, but seem harder every day to separate from these last two groups.)
It really is a no-brainer, Fail to support the students of today and the future will suck even more than it does now. There are few better investments.