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Student Loans Might Be Driving Up the Cost of College. So What Do We Do About It? (Might be??)
Slate ^ | 09/08/2015 | Jordan Weissmann

Posted on 09/09/2015 10:15:50 AM PDT by Responsibility2nd

In 1987, President Reagan's secretary of education, Bill Bennett, published a now classic New York Times op-ed titled “Our Greedy Colleges” in which he argued that the government's attempts to make higher education more accessible may have also accidentally made it more expensive. “If anything,” he wrote, “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.” Ever since then, academics have sparred over whether the so-called Bennett hypothesis is really true. Do colleges actually take advantage of all those federal grants and loans by hiking their prices? And if so, are some schools even more callous about it than others? 

Economists have delivered inconsistent answers to those questions over the years. (I reviewed the research back in 2012 while Vox's Libby Nelson published a great, updated rundown in August). But it’s always seemed possible that Bennett's idea contained at least a grain of truth.

Earlier this summer, a team from the Federal Reserve Bank of New York and Brigham Young University released the latest paper suggesting that, indeed, the man was right. Looking at both public and private nonprofit colleges during the mid-2000s, they found that schools raised tuition by 55 cents for each $1 increase in Pell grants their undergraduates received, and by 60 to 70 cents for each extra dollar of subsidized student loans. Some schools seemed more eager than others to raise their prices when the government made more aid available, the worst offenders being private colleges with high tuition and high admission rates—what you might call schools for unexceptional rich kids.

(Excerpt) Read more at slate.com ...


TOPICS: Business/Economy; Miscellaneous
KEYWORDS: education; studentloans
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To: Responsibility2nd

quote “people aren’t supposed to willingly pay more for an investment”

um.. they dont and aren’t, that’s exactly the issue, If THEY were paying this wouldn’t be an issue.

And student loans dont count as them paying. Kids have little to no ability to think far into the future and how the decisions they make today will impact them years from now.


21 posted on 09/09/2015 10:47:33 AM PDT by TexasFreeper2009 (You can't spell Hillary without using the letters L, I, A, & R)
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To: EQAndyBuzz

Yeah, I was being funny.


22 posted on 09/09/2015 10:47:49 AM PDT by SoothingDave
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To: TexasFreeper2009

I’ve got a great idea! How about we really educate our kids in K-12?


23 posted on 09/09/2015 10:48:05 AM PDT by JmyBryan
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To: George from New England

Here is an example I know of. Granted it is a massage school. Charge was 4,000 for tuition. Now that the school is certified and student loans of 6,000 are available the tuition is now 10,000. Really Not kidding.


24 posted on 09/09/2015 10:48:26 AM PDT by therut
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To: Pelham
Since the mid 1960s colleges have managed to create a situation where people need college paper to get considered for decent employment, even when that ‘education’ is irrelevant to the job.

Colleges didn't create this situation but they are definitely benefiting from the artificiality created by (you guessed it) the Supreme Court in the disastrous Griggs vs Duke Power case.

Before this stupid ruling companies could IQ test and aptitude test to see if applicants were qualified. The SCOTUS said that was discrimination so colleges stepped in to the gap.

Griggs v. Duke Power Co.

25 posted on 09/09/2015 10:51:51 AM PDT by central_va (I won't be reconstructed and I do not give a damn.)
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To: central_va

“Colleges didn’t create this situation but they are definitely benefiting from the artificiality created by (you guessed it) the Supreme Court in the disastrous Griggs vs Duke Power case.

“Before this stupid ruling companies could IQ test and aptitude test to see if applicants were qualified. The SCOTUS said that was discrimination so colleges stepped in to the gap.”

I was wondering if something like that had happened. I hadn’t heard of Griggs vs Duke Power.

Unsurprisingly it has its poisonous roots in the Civil Rights Act of 1965. The same Act that Hannity and Glenn Beck stupidly like to hail as a great achievement for America.


26 posted on 09/09/2015 10:59:32 AM PDT by Pelham (Barky Obama celebrating the death of America)
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To: Responsibility2nd

I see no end in sight.

I just found out a degree from University of Denver, private school, costs $248,000. From CU Boulder, public school, it is $200,000.

Wages are not keeping up with college costs.

I hate to sound like a liberal, smack if you think I am, but only the wealthy can afford college at those rates, so it will be the wealthy that make the money.

Until people figure out how to educate themselves and until business stop demanded college, this will not change.


27 posted on 09/09/2015 11:01:14 AM PDT by CodeToad (If it weren't for physics and law enforcement I'd be unstoppable!)
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To: CodeToad

I wrote that using English in my head. *sigh*


28 posted on 09/09/2015 11:02:49 AM PDT by CodeToad (If it weren't for physics and law enforcement I'd be unstoppable!)
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To: SoothingDave

The answer in the op-ed section of the Pittsburgh Post-Gazette on Sunday said the answer was more big bags of money that would just magically appear from Harrisburg.

Yeah, made my head explode.


29 posted on 09/09/2015 11:04:44 AM PDT by Buckeye McFrog
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To: Iron Munro

Bingo! As long as any entity knows the fed is funding it their cost to operate is going to continue to skyrocket. Healthcare being a prime example.


30 posted on 09/09/2015 11:08:28 AM PDT by sarge83
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To: Responsibility2nd

Make them dischargeable in bankruptcy.


31 posted on 09/09/2015 11:41:38 AM PDT by Axenolith (Government blows, and that which governs least, blows least...)
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To: Pelham

They need that paper now because of all the bitching and lawsuits over testing of potential job applicants, is far easier to just say “must have degree” and weed out most of the losers that way.


32 posted on 09/09/2015 11:46:23 AM PDT by Axenolith (Government blows, and that which governs least, blows least...)
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To: Responsibility2nd

People still don’t get it...student loans is a “front” for funneling more money into education. The kids aren’t paying them back, the government gives them amnesty from paying back the loan...it is a gov subsidy, nothing more.


33 posted on 09/09/2015 11:48:46 AM PDT by ThePatriotsFlag ( Anything FREELY-GIVEN by the government was TAKEN from someone else)
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To: Fido969

Conservatives—Religious People —we should start low income colleges-—two year or Four Year college. Hire experienced people at a low cost to teach— Not high priced Professors —No tenure—No Propagandists. Maybe people who have experienced life, lead troops in battle, writers, the better High School teachers, Elderly folks that can’t find jobs but would want to work PT. Keep costs low and stick to basics—solid education. Do it right. If you have a Drama Department present “HMS Pinafore” and “Tom Sawer” Not “Bath-house” or “Waiting for Gidot”. A chain of good—budget colleges might be the answer.


34 posted on 09/09/2015 11:56:38 AM PDT by Forward the Light Brigade (Into the Jaws of H*ll Onward! Ride to the sound of the guns!)
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To: Axenolith

only if it sticks the school with the bill. We don’t want a bunch of free loaders filing bankruptcy and sticking the government with the bill.


35 posted on 09/09/2015 12:01:20 PM PDT by between_the_lines_mn
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To: CodeToad
I just found out a degree from University of Denver, private school, costs $248,000. From CU Boulder, public school, it is $200,000.

In-state tuition at CU Boulder is much lower (though still a lot of money).

36 posted on 09/09/2015 12:24:02 PM PDT by wideminded
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To: PGR88
Prices will crash. Midding suppliers (i.e. colleges) will go out of business. The survivors will learn to refocus and become more economical. Staff will be laid off. indebted consumers will need to declare bankruptcy.

We're there already, or rapidly getting that way. Schools have been riding the gravy train too long and have gotten complacent. Between that, and generous internal financial aid packages (usually given to The Usual Suspects to promote "diversity"), is resulting in a perfect storm on college campuses.

As State funding dries up, we're already seeing problems with the 3rd tier schools - typically small private diploma mills, or the colleges that were far overstretched already. A fair handful have gone out of business, or are about to.

Second Tier schools - think "safety schools" - will see a winnowing out. Those who can adapt, either by going online, or distinguishing themselves in some manner by focusing on a specific discipline or two, or simply by offering less financial aid, will likely be OK. However, don't bet too hard on adaptation - many staff and faculty are of the mindset that "It's always been OK, and it will always continue to be OK". Bluntly, they've no concept of "Zero Dollars" ..... Money is just something finance complains about, occasionally. Places that continue cluelessly like this will hit the wall like a bug hitting a windshield.

First Tier Schools - think elite private colleges, or Big State U - have truly an unimaginable amount of fat to burn through before they get into trouble. There will be the usual protesting and caterwauling when the 3rd Assistant Dean of Campus Diversity gets cut along with her entire staff, but the cuts will be made. For the most part, these places will come out leaner and probably meaner - read, more liberal, as the most aggressive admins eat their own.

Just what I see happening. It will take a long, long time. Remember that colleges are on a four year cycle, and this downswing is just starting. It may be a decade before things hit bottom.

But a bottom will be found.

37 posted on 09/09/2015 12:41:14 PM PDT by wbill
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To: wideminded

Add in boarding, fees, books, labs, misc expenses.


38 posted on 09/09/2015 12:41:35 PM PDT by CodeToad (If it weren't for physics and law enforcement I'd be unstoppable!)
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To: Forward the Light Brigade
I think your idea of low-cost colleges is good.

But I'm not sure that you can staff them with high-school teachers. The whole idea of college is that the material is a lot tougher and the professors have to have a much higher level of expertise in the field they are teaching.

As for propagandists, this seems to be an issue only in subjects that you might not want to teach at a college that is helping people get jobs.

Ultimately you want a college that is really going to give you something for your money. Maybe people wouldn't want to pay to learn college subjects from people who are not familiar with the forefront of knowledge.

The bottom line is: What are colleges spending money on now that could be eliminated while still making possible a high standard of learning?

39 posted on 09/09/2015 1:33:22 PM PDT by wideminded
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To: CodeToad
Add in boarding, fees, books, labs, misc expenses.

Boarding, fees, and books were already added in to the figures for in-state college costs on the page I linked to.

According to those figures, a Colorado resident would be charged something closer to $120000 for 4 years at CU, even in engineering or business, vs. the $200000 that was mentioned earlier.

40 posted on 09/09/2015 1:43:25 PM PDT by wideminded
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