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Federal aid for students has increased 164% over the past decade, adjusted for inflation, according to the College Board. Yet three-quarters of Americans and even a majority of college presidents see college as unaffordable for most, and that sentiment has been steadily spreading, the Pew Research Center reports.
Two new studies offer clues on why. One measures the degree to which some colleges reduce their own aid in response to increased federal aid. The other suggests federal aid is helping to push college costs higher.
Recipients of federal Pell Grants have, by definition, limited means to pay for college, so they are likely to qualify for grants and price breaks given out by schools, too. But schools view a student’s sources of federal aid before deciding how much to give on their own, rather than the other way around. The result is a crowding out effect, where some schools give less as the government gives more.
Lesley Turner, a PhD candidate at Columbia University, looked at data on aid from 1996 to 2008 and calculated that, on average, schools increased Pell Grant recipients’ prices by $17 in response to every $100 of Pell Grant aid. More selective nonprofit schools’ response was largest and these schools raised prices by $66 for every $100 of Pell Grant aid. Source: (1) Smart Money
Government intervention increases tuition costs, not privatization
Over the last 20-30 years, with the decreases in government funding, educational – and medical – institutions have been forced to find ways to generate funding. Of course, this applies to mostly publicly funded institutions.
In the US we have more private colleges, however, tuition has not been declining at them either. The problem is, indeed, governments guaranteeing tuition and loans. This artificially creates demand that drives up cost of tuition. This is also happening in Canada to a certain extent.
As a result, entire departments are devoted to fund-raising: in the case of colleges and universities, advertising and overseas recruiting junkets to attract students, and teams of people trying to solicit donations from business and alumni. How much does it cost to develop the system and hire people to write letters of solicitation or telephone people asking them to leave the institution money when they die? In the case of hospitals, how much does it cost to run lotteries or establish the various foundations to raise money?
Like houses, cars, and retirement savings, education is one of the largest expenditures in a person’s life. If we looks at life’s chronology, we see that education (and maybe a car) comes at the beginning. If that debt is of sufficient size to cause the graduate to put off buying a home, or setting money aside, then the economy will enter an up-down cycle similar to what we’ve seen recently.
We have not seen any quantitative economic analysis on the subject, but, we would suspect that the housing bubble we’ve just witnessed, where the federal gov’t (US) had to buy Fanny May and Freddy Mack, and where over half of homes are now owned by banks, and where record mortgage defaults continue to pile up, and bankruptcies are everywhere, just maybe some of that had to do with student debt beings so exceedingly high south of the border.
Unfortunately, the easy availability of credit makes it easy to obtain funding but also easy for universities to jack up the tuition fees.
Whoever said it’s a”debt-fueled business” is exactly right. Once upon a time the average student went to college for a lower fee, and the people who wanted the broader education went to university, paying more but having qualifications that actually meant something.
These days, we pay more for tuition, they have converted many ‘colleges’ to ‘universities’ so there is no selectivity, everyone pays the high tuition and there is no more value or prestige to the degree since all types of technicians are now earning Bachelors and Master degrees to increase their professional profile and so the university can make money.
Even things like nursing, medical lab technician, dental hygiene that used to be good careers you could learn relatively inexpensively and enter the workforce sooner, have turned into 4 year university programs with tuition upwards of $5000 a year. This is not helpful to the economy or the demographics of this country, mark my words.
References:
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The Enemy Expatriation Act is a short amendment to USC 8 §1481, the law which spells out criteria for the revocation of US citizenship. Already listed are naturalization in or serving in the armed forces of another country, formally renouncing US citizenship, or being convicted of treason against the US. These are, arguably, perfectly understandable. But the EEA adds this new reason to revoke citizenship:
[E]ngaging in, or purposefully and materially supporting, hostilities against the United States.…For purposes of this section, the term ‘hostilities’ means any conflict subject to the laws of war.
One would think that would constitute treason, and thus such a section wouldn’t be necessary. But look at paragraph 7 of §1481, which describes treason:
(7) committing any act of treason against, or attempting by force to overthrow, or bearing arms against, the United States, violating or conspiring to violate any of the provisions of section 2383 of title 18, or willfully performing any act in violation of section 2385 of title 18, or violating section 2384 of title 18 by engaging in a conspiracy to overthrow, put down, or to destroy by force the Government of the United States, or to levy war against them, if and when he is convicted thereof by a court martial or by a court of competent jurisdiction. [Emphasis mine]
There’s your problem. Under the current law, one has to be convicted of treason in order to be stripped of citizenship. This new section, added by the EEA, requires no such thing.
Now, the premise of the bill on its own gives me pause: does giving five bucks to Wikileaks count as “materially supporting hostilities”, or is that not a “conflict subject to the laws of war” yet? That’s ambiguous, though; the complete lack of a due process requirement — in contrast to the already-existing section regarding treason — is something else entirely.
The possibility of having one’s citizenship revoked without a trial is bad enough, but in concert with the recently-passed 2012 National Defense Authorization Act, it’s terrifying. The latest NDAA, of course, requires anyone accused of “terrorism” to be indefinitely detained by the executive branch of the government.
In response to public outrage, an amendment was added which made US citizens exempt to this requirement (which doesn’t make them exempt to the possibility, but in practice, perhaps the law will be enforced in such a way). If, under the EEA, someone is stripped of their citizenship without a trial, then there is no longer any semantic ambiguity to keep them safe from the NDAA’s indefinite detention.