The Real Reason College Costs So Much

[Dave_Berry]

<p>“The expert on the economics of higher education explains how subsidies fuel rising prices and why there’s a ‘bubble’ in student loans and college enrollment.” …</p>

<p>[Allysia</a> Finley: The Real Reason College Costs So Much - WSJ.com](<a href=“http://online.wsj.com/article/SB10001424127887324619504579029282438522674.html?mod=WSJ_Opinion_LEADTop]Allysia”>http://online.wsj.com/article/SB10001424127887324619504579029282438522674.html?mod=WSJ_Opinion_LEADTop)</p>

[Vladenschlutte]

<p>

This growth in subsidies, Mr. Vedder argues, has fueled rising prices: “It gives every incentive and every opportunity for colleges to raise their fees.”

</p>

<p>The crux of it. Nothing new has been offered in this article than has been said by everybody for as long as I can remember. Hopefully one day I can use some basic logic and reasoning and have articles written about me in the Wall Street Journal.</p>

[4kidsdad]

<p>

@Mr. Vedder

One thing about the for-profits is that they are laser-like devoted to instruction.

Then why the University of Phoenix is facing possible probation? See [University</a> of Phoenix faces possible probation by accreditor | Inside Higher Ed](<a href=“http://www.insidehighered.com/news/2013/02/26/university-phoenix-faces-possible-probation-accreditor]University”>http://www.insidehighered.com/news/2013/02/26/university-phoenix-faces-possible-probation-accreditor) Also see <a href=“http://www.nytimes.com/2007/02/11/education/11phoenix.html?pagewanted=all&_r=0[/url]”>http://www.nytimes.com/2007/02/11/education/11phoenix.html?pagewanted=all&_r=0&lt;/a&gt;

the relentless pressure for higher profits, at a university that gets more federal student financial aid than any other, has eroded academic quality… The university says that its graduation rate, using the federal standard, is 16 percent, which is among the nation’s lowest, according to Department of Education data.

</p>

[DGDzDad]

<p>There was something about this on MSNBC last night. I think the statistic I heard was that something like 90% of the tuition payments received by some of these private for profit “universities” is federal student loan money and the graduation rates are in the toilet. It’s just a pyramid scheme. These places have student loan departments that are like sweat shops. I have a relative that works as a student loan processor for one of them. Your job depends on meeting your quota of processing x number of student loans per day.</p>

[Ivyt]

<p>^ “For Profit”</p>

<hr>

[Vladenschlutte]

<p>

^ “For Profit”

---

</p>

<p>Allegedly NYU is scarcely better. I remember seeing articles about them before.</p>

[DGDzDad]

<p>

^ “For Profit”

</p>

<p>Thanks. That’s what I meant.</p>

[ucbalumnus]

<p>

@Vladenschlutte

Allegedly NYU is scarcely better. I remember seeing articles about them before.

</p>

<p>NYU is so expensive that federal Pell grants and Direct/Stafford loans can only cover about a quarter of tuition, or about a sixth of total cost of attendance. Note that 47% of NYU students either did not apply for financial aid, or were not given any financial aid after applying for it.</p>

<p>NYU was the subject of articles about students graduating with six figure debt, mostly in private student loans.</p>

[soccerguy315]

<p>key here, buried in the article:</p>

<p>

Nor is the president addressing what Mr. Vedder believes is a fundamental problem: too many kids going to college. “Thirty-percent of the adult population has college degrees,” he notes. “The Department of Labor tells us that only 20% or so of jobs require college degrees. We have 115,520 janitors in the United States with bachelor’s degrees or more. Why are we encouraging more kids to go to college?”

</p>

[emeraldkity4]

<p>Perhaps because without college they have even less hope of earning a living wage eventually.
[STUDY:</a> Majority Of Jobs Added Since End Of Recession Pay Low Wages | ThinkProgress](<a href=“http://thinkprogress.org/economy/2012/08/31/782111/study-low-wage-jobs/]STUDY:”>http://thinkprogress.org/economy/2012/08/31/782111/study-low-wage-jobs/)</p>

[potatoskillet]

<p>It’s a bureaucrazy. Inflation happens with random incentives sometimes. Moreover, college will eventually be available to virtually everyone but ironically it is a Giffen good due to prestige. It’s like owning a fine diamond.</p>

[glido]

<p>It’s more like lending money to people to buy cheap jewelry and real diamond prices.</p>

[annasdad]

<p>Because misled and misinformed parents are willing to put their children into debt to get degrees from prestigious name schools - instead of using them to go to one of the many more affordable alternatives, where the evidence shows they can get just as good an education.</p>

[snapdragonfly]

<p>THIS. This is the best article to come out in public media on the topic, since, pretty much, ever. Nails it, and addresses crucial elements that almost every public discussion has frustratingly just SKIPPED.</p>

<p>[The</a> College-Loan Scandal: Matt Taibbi on the Ripping Off of Young America | Politics News | Rolling Stone](<a href=“http://www.rollingstone.com/politics/news/ripping-off-young-america-the-college-loan-scandal-20130815]The”>The College-Loan Scandal: Matt Taibbi on the Ripping Off of Young America – Rolling Stone)</p>

[Rexximus]

<p>Decent article from Rolling Stones, but a main assertion of the article- that student loans are somehow profitable and thus inherently unjust- is factually inaccurate. If the government had to use real GAAP accounting versus whatever voodoo they actually use, this would be an absolutely awful credit portfolio and would post consistent losses that would make even the worst CMO’s look alright.</p>

<p>The new loans are paying 3.7% and have a default rate in the double digits. Even with the extra protections for the creditors giving high recovery rates, there is no way any market capital would ever get into fixed rate assets at these rates. It defies common sense that these loans generate any net profit. Just like with mortgages, the rates and availability of credit is completely artificial.</p>

<p>The existence of the loans at all is a subsidy to people who want to go to college, they aren’t some sort of profit center.</p>

[Ivyt]

<p>

Because misled and misinformed parents are willing to put their children into debt to get degrees from prestigious name schools - instead of using them to go to one of the many more affordable alternatives, where the evidence shows they can get just as good an education.

I don’t know about that, there are only a small fraction of students actually going to prestigious schools and even fewer are taking out massive loans (not to mention most of them have graduate debt less than or equal to the national average)*. I’m not sure but I believe the majority of debt is coming from for profit schools?</p>

<p>*one exception is nyu</p>

[ucbalumnus]

<p>[Project</a> on Student Debt: State Summary](<a href=“http://projectonstudentdebt.org/state_by_state-sum2012.php?sort=map_state_data_2012.fa_loans_debt_avg_d]Project”>http://projectonstudentdebt.org/state_by_state-sum2012.php?sort=map_state_data_2012.fa_loans_debt_avg_d) describes state by state student loan debt levels.</p>

<p>No surprise that Pennsylvania is among the highest in student loan debt, given its poor need-based financial aid to in-state students at the state related universities.</p>

[compmom]

<p>Every time Obama says that “everyone has a right to a college education,” I cringe. I think everyone needs the right NOT to go to college.</p>

<p>I agree with the idea that the real problem is: too many people going to college, period.</p>

<p>Social and financial pressures are causing every student to feel that college is a necessity. College will always be the best option for some, but many of us or our kids can, in reality, do fine without it if the culture would just go back a few decades and recognize this.</p>

<p>I guess a mass boycott is unlikely, in the near future, but I wish more parents and students would just resist the pressure, and advocate for more support for other paths. That don’t involve loans.</p>

[beachlover15]

<p>^I think he means if someone WANTS to go to college, they should be ABLE to.</p>

[dietz199]

<p>Another thread discussed the report which stated only 26% of students were college ready based on ACT scores (and these were very low scores for anyone who is CC conditioned). A quick google shows that 66.5% of HS seniors go to college (this includes those going to community colleges). Simple math indicates that 40% of those going to college aren’t ready. </p>

<p>Even if we take these numbers with a huge grain of salt…it’s still a huge number of young people stampeding down a course destined to end in financial hardships.</p>

<p>IMO what we desperately need is a ‘trade’ track. That and a re-education of the collective mind so that it doesn’t automatically look at anyone who chooses the trade track as inferior, a failure, not living up to their potential…or worse yet…as a sign of societal failure.</p>