6 ms·

While interesting, some aspects of the article are misleading or meant to incite. For example, the section talking about student aid mentions the current admini

by asnyder 17y ago

While interesting, some aspects of the article are misleading or meant to incite. For example, the section talking about student aid mentions the current administration's plan to increase student aid, but fails to mention the proposal of doing away with the bank subsidies completely and thus providing more aid instead of lining the pockets of bankers (http://www.whitehouse.gov/the_press_office/President-Obama-Meets-with-Family-Struggling-with-College-Costs/ http://www.whitehouse.gov/the_press_office/President-Obama-M...) contradicting the counter point to his argument.

davidw 17y ago
> meant to incite. Which is mostly what you'd expect from a site like mises.org or anything else that is highly political in nature.
kiba 17y ago
Won't this increase the demand for college education, thus allowing colleges to raise their price even higher?
- asnyder 17y ago
  I don't know. Perhaps. However, with the current economic conditions I would think that many that attend school under normal conditions might not be able to attend without aid. I'm sure we can look at the numbers and come up with a conclusion. Furthermore, there are many city and state institutions that have tuition caps. In this situation I would expect more students to result in better use of existing resources or the creation of more city and state institutions.
  - BearOfNH 17y ago
    I'm sure we can look at the numbers and come up with a conclusion. A long, long time ago I read an article comparing the increase in the cost of college education vs. the published inflation rate. They were roughly the same. Really. But this was a long, long time ago...Camelot. After student loans came into existence this rough equality disappeared and the cost of an education rose faster than inflation. Economically, that makes sense. Subsidize something (education) and you get more demand. With a somewhat inelastic supply of colleges, the price goes up. Of course correlation is not causation. Many other reasons can be cited as well. But once upon a time college, while still expensive, only kept pace with inflation.
- sgoraya 17y ago
  Certainly possible - This is why I have opened a college savings, 529 plan for my 4 week old son (you can never start saving too early).
  - ivankirigin 17y ago
    You can definitely start saving too early, in the sense that over a 16 year period you might be better off with a portfolio more aggressive than a savings account.
    - sgoraya 17y ago
      FYI: 529's can be structured as a portfolio/mutual fund and be as aggressive as you want it... https://personal.vanguard.com/us/funds/529portfolios https://personal.vanguard.com/us/funds/529portfolios
joe_the_user 17y ago
The subsidies to banks are incentives to loan. Fewer incentives seems likely to result in a fewer loans at higher prices. If the price of education was set entirely by the market, the price of education would be equal to the expected reward - which would imply student payments so high they leave a graduate making little over the minimum wage for their entire lifetime. Even more, the student is more likely to overestimate their expected reward from education (everyone thinks their above average) than the bank is likely to underestimate it so some students today can wind-up with truly absurd debt loads (think of the people who drop out of medical school with no degree but owing $150K). This situation provide such perverse incentives that it's in the interest of society to prevent it through lower-priced state education as well as private education subsidized by scholarships. During the 1950's, when America happen to be growing and productive, this was the paradigm. In the present era, the movement towards the marketization of education has only accelerated the country's decline. Why providing even more marketization now is "good thing" is beyond me. Education and basic health care should be provided free to each citizen (to extent, forced on each individual) because they are a good, benefit for society as a whole rather than being merely a good for each individual. You benefit when everyone is healthy and smart (unless you're a con-man looking to outsmart your fellow citizen). The willingness of this society to go in the opposite direction has been a powerful force moving downwards.

by asnyder 17y ago

davidw 17y ago

> meant to incite. Which is mostly what you'd expect from a site like mises.org or anything else that is highly political in nature.

kiba 17y ago

Won't this increase the demand for college education, thus allowing colleges to raise their price even higher?

asnyder 17y ago
I don't know. Perhaps. However, with the current economic conditions I would think that many that attend school under normal conditions might not be able to attend without aid. I'm sure we can look at the numbers and come up with a conclusion. Furthermore, there are many city and state institutions that have tuition caps. In this situation I would expect more students to result in better use of existing resources or the creation of more city and state institutions.
- BearOfNH 17y ago
  I'm sure we can look at the numbers and come up with a conclusion. A long, long time ago I read an article comparing the increase in the cost of college education vs. the published inflation rate. They were roughly the same. Really. But this was a long, long time ago...Camelot. After student loans came into existence this rough equality disappeared and the cost of an education rose faster than inflation. Economically, that makes sense. Subsidize something (education) and you get more demand. With a somewhat inelastic supply of colleges, the price goes up. Of course correlation is not causation. Many other reasons can be cited as well. But once upon a time college, while still expensive, only kept pace with inflation.
sgoraya 17y ago
Certainly possible - This is why I have opened a college savings, 529 plan for my 4 week old son (you can never start saving too early).
- ivankirigin 17y ago
  You can definitely start saving too early, in the sense that over a 16 year period you might be better off with a portfolio more aggressive than a savings account.
  - sgoraya 17y ago
    FYI: 529's can be structured as a portfolio/mutual fund and be as aggressive as you want it... https://personal.vanguard.com/us/funds/529portfolios https://personal.vanguard.com/us/funds/529portfolios

joe_the_user 17y ago

The subsidies to banks are incentives to loan. Fewer incentives seems likely to result in a fewer loans at higher prices. If the price of education was set entirely by the market, the price of education would be equal to the expected reward - which would imply student payments so high they leave a graduate making little over the minimum wage for their entire lifetime. Even more, the student is more likely to overestimate their expected reward from education (everyone thinks their above average) than the bank is likely to underestimate it so some students today can wind-up with truly absurd debt loads (think of the people who drop out of medical school with no degree but owing $150K). This situation provide such perverse incentives that it's in the interest of society to prevent it through lower-priced state education as well as private education subsidized by scholarships. During the 1950's, when America happen to be growing and productive, this was the paradigm. In the present era, the movement towards the marketization of education has only accelerated the country's decline. Why providing even more marketization now is "good thing" is beyond me. Education and basic health care should be provided free to each citizen (to extent, forced on each individual) because they are a good, benefit for society as a whole rather than being merely a good for each individual. You benefit when everyone is healthy and smart (unless you're a con-man looking to outsmart your fellow citizen). The willingness of this society to go in the opposite direction has been a powerful force moving downwards.