They could just give money direct to universities - but then it's hard to ensure they're getting good value for money.
But by giving it to students to in turn give to universities they get better value for money.
One day someone has to pay for that - and the students paying it back via loan repayments isn't awfully different to citizens paying it back via taxes. But with the student route everyone is more invested in getting good value for money. And non-university users (who tend to be the poorest) don't end up paying. Win win.
We're at a point where going into college for non-STEM degree can (and likely will be) one of the biggest mistakes of your life.
Private high school costs have also gone up astronomically and there are no federal loans for them.
[0] https://educationdata.org/average-cost-of-private-school
It's pure ideology. They have the exact same answer every time regardless of circumstances, like some radical evangelical responding to every question with "god".
It's not economics, ration, reason or anything like that - it's pure orthodoxy and blind dogmatism. They're Hayekian tankies.
It would be rich if the data in the article in no way supported your rant.
Just like the evangelicals see God in every leaf and water drop, the neoclassicalists will read any evidence and always see the same conclusion.
The article doesn't blame government at all. It's way more nuanced but ideologues will only see what they want to see.
The data linked above suggests Catholic schools are the most affordable. Priors confirmed - theocracy is the only way forward.
Catholic schools are financially structured in rather unique ways. They're controlled by clerical orders which are technically financially independent from the Vatican, kind of like a franchise.
Together, the institutions under a specific clerical order operate collectively kind of like a cooperative so money flows around differently than most schools.
Weirdly, schools that used to be but no longer are religious seem to now be some of the most expensive. For instance, Tufts, USC and Yale.
The rise in tuition is because college has been increasingly seen as a personal, private transaction and not as a social good.
This reframing of the institution as a market based services purchase is the rationale for the policies that have caused all the other problems
Catholic schools might also be cheaper because these clerical orders are ostensibly tasked with social welfare so they are still partially operating under the old model before the Milton Friedman mind virus.
Monks around the world are telling themselves "THIS GUY GETS IT". The institution misses its alma mater :(
In 2003, the average private highschool tuition was $8,412 (Snyder, Dillow, & Hoffman, 2008), or $14,079 (in today's dollars).
Please correct me if I've made some mistake, but plugging those numbers in shows that the annualized real increase in price is 0.5% per year over 20 years.
(and don't confuse the issue with current debt relief bill. The current bill has not been in effect since 1983, it is trying to give relief for this situation, not causing it).
It is NOT free to the student who is definitely affected. They are in debt and now crippled. But the university got it's money.
If you want to blame the government. Why is it the governments fault that Universities are now behaving like scammers and charging more for less and leaving the 'customer' stuck.
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Lets say I go to a used car salesman, and they want to cheat me.
Lets say (before 1983) I would pay 2000$ for the car, but I'm scammed and out 2000$. I lost 2000$
Lets say figuratively now it is (2020), and I can't afford the car, so a rich uncle co-signs, and give me 30,000$.
I still get cheated, but now I'm out more money, AND now I'm in debt to my uncle (who lets say wants some 'payment' I feel uncomfortable performing).
The used car salesman is a cheat either way, for lesser money or more money, and either way they got my money.
And I'm in debt and blowing my uncle until it is paid off.
In the end, I (the student) am stuck. Is it my uncles fault? Is it the crooked salesman? Maybe my uncle didn't know the salesman was a cheat either (but like a bank, does want something in return)? Should I know the salesman was a cheat? Maybe I'm young and just starting out in life and not sure about the warning signs? Should we allow the young and in-experienced to be exploited?
Because the government is not doing its due diligence as a lender, because current voters and government employees have no problem soaking future taxpayers. And crippling uninformed 18 year olds’ futures.
That is called regulation, and once you start putting in regulations, then everyone starts screaming about big government and over-regulation. There is no winning, put in protections and you are some big government commie bastard, don't put in protections and you are heartless and ineffectual.
And, I dare say, banks even in other areas where they could lose money (2008 real-estate), are just as eager to reel people in and ignore bad loans.
The government offering loans in the first place is regulation, and choosing not to do underwriting is part of that regulation.
I.e. the government regulated that they would lend tens of thousands of dollars to any student, so student A can no longer bargain with the school for a lower price because student B, C, and D are lined up to pay whatever is asked.
https://www.google.com/search?q=what+percent+of+student+loan...
92% Federal student loans make up the vast majority of American education debt—about 92% of all outstanding student loans is federal debt. The federal student loan portfolio currently totals more than $1.6 trillion, owed by about 43 million borrowers.
I think it's then pretty fair game for a forum comment to then suggest there's a causal relationship between "an entity that can print the currency that denominates the debt is backing the debt" and "this drives the price of the thing up due to easier access to funding for it".
To prove that claim, you'd need to actually demonstrate some sort of causal relationship and have data to back it up
For example, you could make the argument that:
1. Demand is the primary cause of tuition increases
2. Government backed student loans are the primary cause for the increase in demand
I believe that 1 is almost certainly the main cause of tuition cost increases. What I haven't seen any evidence for is 2. If it's true, show me the evidence. I'm open to it.
From what this article states and the research I've done, the main driver of demand is not cheap government loans. It's the labor market. The best jobs in this country require a college degree. That is what is probably driving demand, the desire to earn a liveable wage. Not the fact that you can get a cheap loan.
Government (taxpayers) underwrite unlimited amounts to uninformed buyers paying informed sellers.
I am a seller (college boss), and I can boost my own income, and I know I have no competitive pressure to keep prices down, so why not increase the college budget and spending, hence justifying tuition increases.
1. A large increase in demand for College. I could imagine this may be, in part, due to more accessible student loans. But it appears that many factors have come into play, and the main one is the perception that you cannot get a liveable wage in this country without a college degree. 2. Less funding from state governments 3. Increased spending in administration and student services unrelated to education.
Here are the sources I've read through so far. https://www.bankrate.com/loans/student-loans/why-is-college-... https://manhattan.institute/article/a-new-approach-for-curbi...
In 1 you're talking about a self-reinforcing effect. "I have to put on makeup to look pretty because everyone puts on makeup to look pretty". When everyone believes it, it becomes true.
All your drivers cannot cause a price increase if an 18 to 25 year old cannot get unlimited funding from a lender to make a stupid decision.
You are boosting your income by exploiting students through usury.
Lets say there is no government, then where was the 'competitive' pressure? How does government loans take away competition? Did they close schools to eliminate the competition?
Common sense is the rallying cry of people who cannot backup their claim by other means.
The claim: > Main cause: Government-backed student loans.
I've read the article. It discusses student loans and how they've skyrocketed, but never makes the claim that their availability is the cause. Instead, it argues a change in America's "labor profile" is to blame for the rise in demand (which, in turn, leads to higher tuition):
> Rising enrollment is also associated with a changing US labor profile; for example, manufacturing jobs were eclipsed by “business and professional services” jobs as well as healthcare, education, and retail jobs.
Going further, the author suggests we need to forgive/cancel the student loans:
> These loans should be forgiven/cancelled
To me, this implies the author does not believe federal student loans are to blame.
While it is technically the student paying, in reality the money is going (indirectly) from the federal reserve to the universities.
Everyone loves free government money...
The fact the student may never pay off those loans (and hence the government foots the bill) is the cherry on top.