higher education in ALL colleges is priced in a similar way. They've all raised their prices in accordance with the amount of money the government is willing to guarantee kids will have access to.
The claim in the article is unfounded. Prices have increased due to states cutting way back on funding, because of easy of getting loans (just one prong of the problem), need to have a college degree just to get your foot in the door (demand), and mismanagement by school management to build facilities students can't afford.
The problem isn't just that the government is backing the loan program and forcing borrowers to pay. The government also allowed tuition rates to rise. Colleges and Universities increased the price of tuition because they were allowed to.
US colleges used to be affordable before the federal government started pouring money into them with guaranteed loans. It's not a free market, but one distorted by government intervention.
True, but it's also worth taking a systematic look. Universities can freely raise their prices because there's an infinite amount of government-guaranteed loans to fund them. Notice how universities are affordable in most countries without this system.
The government essentially distorted the market, with colleges reaping all the upside and virtually no downside. If the government wants accessible public education, the easier solution is to fund colleges directly instead of going through a middleman that'll skim a lot before delivering that service (the student loan ecosystem).
Cart before the horse! Any evidence of cause-and-effect here? Its also true that "government loan subsidies have increased to offset rising college prices".
The prices have spiked because loans are guaranteed by the government and unforgivable, which creates a situation where loans are given to more individuals, which leads to a greater demand for college, and a resulting price increase.
This is a problem caused by government, not a lack of funding.
The reason college costs have gone up is because the government decided to make it so anyone could get college loans and they couldn't discharge them through bankruptcy. Then the public education system told everyone that if you don't go to college you'll be a poor loser. So while you don't have to go to college in the strictest sense, you have the same effect. Everyone does because they are told they must. And the schools know they are guaranteed those sweet federal loans which have strings on the naïve 17 year olds but none on the colleges. Why not raise prices? Why not build unnecessary ego projects? The incentive is to lower standards, enroll as many students as possible and raise tuition. Even state universities do this.
The reason for this explosion in cost, is the Feds began fully subsidizing the cost of a college education. Colleges then had the green light to perpetually raise prices - even in the depths of the great recession - they knew Uncle Sam would cover the bill. Education costs have had no connection to reality because you could get a government backed loan for it. When you see an entire industry, with plenty of competition amongst schools, disconnecting from reality, you can almost always bet the government is involved in the cost inflation.
Colleges then took that massive influx of government sponsored cash and put it to work funding their bureaucracies, building an endless parade of buildings they didn't actually need, significantly boosting professor pay, and accumulating substantial endowments.
Meanwhile the actual education - their product - did not get more valuable. At a time of terrible economic performance, with 14% real unemployment, falling incomes, and lack of jobs post graduation, clearly the cost of an education should have fallen by quite a lot. It didn't because of a guaranteed loan back stop.
There is talk now that students should pay the same low interest rates on their debt that banks pay when they borrow money. If that is put into effect, all it will do is accelerate the debt accumulation. It'll enable students to borrow more, and colleges will accordingly charge more. This government fueled scheme can only end in tears (bailouts).
Interesting that you want blame everything except the actual major source of expanding costs at colleges: an explosion in the number of administrators and administrative departments. Rising tuition is being spent on bringing more and more aspects of students' lives under the control of college administrators. Scandalously, almost none of the new money has gone to hiring more professors. Something is rotten in the state of higher education and it's the bureaucrats running the colleges, set free from financial reality by heavily-subsidized student loans.
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