Student dept in the US of A

Being an Australian I thought our tertiary students had a huge problem with student debt until I read the attached article. One reason nations such as China are rocketing ahead is their approach to this problem. Of all the spending of taxation revenue surely subsidising education is one of the most logical and productive investments any government can make?
Or should we all, like Ayn Rand’s Howard Roarke, slave in a stone quarry to pay our way?
https://www.chicagotribune.com/nation-world/ct-pete-buttigieg-student-loan-debt-20190608-story.html

 

Education, at best, has public good traits. At worst, it is a merit good. Marketisation of education then becomes irrational.

The irony is that there isn't even a debate over subsidisation. The basis of marketisation, the human capital model, predicts that subsidisation is required. It finds that the wealthy will invest more, generating inequalities that threaten the maximization of education returns. At the very least, the empirical evidence says we need free education and generous means tested grants. That will enable equality of opportunity.

 

As a middle lass parent of a recent college grad. (3 years) I think it worked out pretty well. 5 yrs. Approx 60k loans, maybe another 40k spent.

Worth every penny, my kid makes more than i do.

Loans are already half gone.

The key? Dont spend 60k a year, spend 20ish including housing and food. Dont get a silly degree, if you want a silly degree get most of it at a community college. Dont take summers off.

People that borrow 160k for a 30k job are the real problem.

 

I’m unsure what exactly is meant by ‘marketisation’ in this context but it comes across as M BA talk. Speaking of which my view is allowing M BA’s to become the deans of universities was the silliest move tertiary education ever made.

 

You can simplify it down to allowing the price mechanism. That creates perverse incentives. Universities focus more on "cheap degrees" and students buy into rate of return analysis. That leads to the social value of education declining (e.g. Britain saw some science departments close down). It also eliminates widening participation effects. Rate of return is skewed in favour of 'social capital' criteria (i.e. A working class kid is less likely to get a graduate job than a middle class one with a Dad who knows people and can open a few doors)

 

The reason college costs so much here are twofold. One is subsidization. For every dollar increase government subsidizes tertiary education colleges increase tuition costs by 60 cents. Colleges compete to get students so use the money to build water features and safe spaces.

Purdue, run by Mitch Daniels, took a different approach by freezing tuition until 2021 and cutting costs. When he first proposed it, staff complained that it would affect their image. Mitch disagreed by saying us regular earthlings worry more about paying for it than how much they will have to pay.

 

My son graduated from a four year, private university with $25,000 of debt. And we only had about $5,000 saved before he started. He got scholarships and had a good part time job all four years. His double major (math & computer science) gives him a good salary. And his wife is a Physician's Assistant with about the same debt.

The system is fine, but we have many people who are just clueless and don't know how to manage their financial affairs.

 

Yes.

The government has flooded the market with loans. Since students have butt loads of cash, inflation happens because the schools can raise prices. And the schools spend the windfall on lavish facilities.

 

Price mechanisms don't work very well in education? Crikey, its like Sherlock himself is on-board!

 

US policy is controlled from start to finish by special interests.

It favors those special interests to have an ignorant and distracted electorate. It helps keep wages low.

 

Who are these special interests?

 

Education has long been seen as an investment in the future, which is why up until very recently, tuition for residents was usually free. I paid $50 a semester for as many classes as I wanted to take because I was a resident.

However, the problem of student debt is only a problem because of students taking out loans. Supply and demand means that making government approved student loans available meant that students would either take out student loans or head down to the factory after graduating high school and see about getting a job in the mill.

I see lots of problems with this, but the causes are pretty easy to understand. I had to get a loan to buy my house. It would be pretty stupid to wake up the next day and say that having to pay off that loan is a problem.

There are other problems, like how states have lots of incentive to not invest in futures, so universities have started accepting lots of foreign students who have to pay the full price of that education, rather than the universities having to place the children of American taxpayers. Every time you see some foreign student wandering around a campus with a backpack on, realize that they are taking the place of an American student whose parents paid taxes so that the university could be properly funded. The land the university sits on was probably given to the university by the state for the express purpose of educating American students - not a bunch of foreigners who are going to take all that book learnin' and head back to India or China after they graduate.

 

Very rarely will a foreign student take the place of an American student. The pools for applicants are segregated in almost all cases.



To the OP, the reasons for the high cost of college has already been stated. Govt intervention in the student loan industry has highly inflated costs by dumping trillions in cheap money into the system. I have no issue with govt backed loans, but they should be limited to degrees that are deemed to he useful or in need. Studying lesbian eskimo mating rituals should not qualify you for any govt subsidy.

 

Yeah my BS was in the 60's also now my masters will probably push that over 100.

But my cousin got his PhD and he paid it off in a year with the job he got.

To the OP however I believe there are exceptions to the conservative mantra and education should be one of them. It's an investment in our nation so it's something they should encourage and help make affordable in whatever form that takes.

Its out of control at the moment and we are doing the complete wrong approach.

 

They average between 10 and 20% of international students, so that's 10 to 20% of the spots taken by international students.

So let's say that the royal heel of Trump comes down hard on all universities that accept federal funding, and tells them that federal funding is only for schools that teach American students. that means 10 to 20 percent more spots will be available. Now if I understand my supply and demand correctly, the supply of university education remains the same but the demand goes down. This means that the price of a university education would go down.

There's a reason why universities are all talking about diversity these days. To them, diversity means foreign students who pay their full share, and the state gets to keep the money that would have otherwise gone to pay for a local's education.

 

That's not really true though. Using your 20% example, that 20% is set aside for international students and just isnt available to domestic students. Schools also make a lot of money with international students as they pay higher rates than American students do.

 

Yes, exactly! That 20% is set aside for international students, but if they were no longer issued visas so they could attend our universities, that would open up 20% more spots.

Yes, schools make a lot of money with international students. I already pointed this out. It comes down to whether universities want to increase their income by accepting foreign students, or watch it decrease (in which case they have to go hat in hand to the governor's mansion) by accepting U.S. nationals.

State universities were created to educate American residents of those states. Not for them to take 20% of the desks in each lecture hall and give them to foreigners so that the university can get even more money.

 

If that's the way you want to see it. None of us are in a position to confirm or deny the truth of it though.

That said, there's no lack of space in the thousands of colleges and universities scattered around the country. Theres no one that doesnt have access to the education, other than cost. And cost is driven mostly by easy money from the govt.

 

They didn't. The primary job of college presidents in this country is fund raising. Deans are generally department heads. and only the dean of the Business school is at all likely to have an MBA/ The dean of the English Department generally has a PhD in English and so on. It is not uncommon that the deans of the various 'school' in a major university know anything at al about management, though they might be quite good at low level politicking.
One should note that the next to the last syllable of the word politicking is 'tick' which could serve to explain why so many politicians seem to be blood suckers.

 

Agreed, My oldest was a similar story, A good not great student, Did computer Eng, first 2 years at a community college paid for with savings. Last two years at a public U- 90% paid by loans. Paid off both loans by staying home free for a year. By 26 he owned his own house. My youngest was blessed and got 4 years at an IVY at less than the cost of a state school.

Kids want to go to school and learn interesting subjects that teach them to be a good conversationalist and not acquire skills that employers want. Kids who are borderline college material go to private schools as the competition for the good public U system is too intense. They want to live in dorms and not commute. They take 5 years to get the 120-134 credits needed.

A lot of it is also on the parents and the high schools guidance depts. The guidance dept at our school tried to talk my oldest out of going to the cheap Community college. She said the schools "good" students should only go to 4 year schools. Come to find out schools rank themselves on what percentage go to 4 year schools. Parents want their johnny to go to 4 year schools as a status. My oldest got teased about going to a community college by his friends.

There are kids who are average students who go to 4 year schools, Kids that don't even make the honor roll in high school but think that 4 years of college is the answer.

 

That's for me to know, and for you to find out. If you dare.

 

My son did two years at a community college away from home. He was in the dorm freshman year and an apartment sophomore year. Graduated magna cum laude. He played football and loved it. Then he transferred to a private school for his junior and senior years.

Not only is it “ok” to go to a community college for two years, it’s almost insane not to go that route.

 

In Mass, community colleges don't have dorms, but there is one every 25 miles so there really is no a need for one.
They also have satellite schools that teach adults at night in most of the cities/Towns High Schools
that don't have a community college in that city.

What we don't have is post secondary community colleges to teach the trades. Some have CNC-CAM but not many machines. Most just have classroom work for license prep. Trades people I know just don't want to hire 18 YO out of voc high school, some are good, but still don't want to work hard- take time off etc.

That is what I should have done rather than get into engineering.

 

I thought there was a Cape Cod Technical Community College? I used to spend summers up there.

 

Just "book work" type not hands on. For example, If you want to be a plumber in Ma. You need 5100 field hours under a master and 520 class room hours with code. A few schools teach you the 520 hours of course work, but do't teach you the hands on pipefitting to get an apprentice agreement with a master.