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TLDR: > Ultimately, college is expensive in the U.S. for the same reason MRIs are expensive: There is no central mechanism to control price increases. “Univers

TLDR: > Ultimately, college is expensive in the U.S. for the same reason MRIs are expensive: There is no central mechanism to control price increases. “Universities extract money from students because they can,” says Schleicher at the OECD. “It’s the inevitable outcome of an unregulated fee structure.” In places like the United Kingdom, the government limits how much universities can extract by capping tuition. The same is true when it comes to health care in most developed countries, where a centralized government authority contains the prices. Both true and not true. College is indeed expensive because of unregulated price increase, but it's that way because of, not in spite of, government intervention. Much like home prices. Federal student aid has ensured that the cost of education grows to meet the amount of loan money available. Similar to mortgage guarantees. Please note that I am not decrying student aid. I only went to university because of it. But you can draw a straight line to that and price hikes.

pwned1 8y ago
The same goes for medical care. The article tries to say that university and medical care are somehow competitive or part of a free market. There's no coincidence that both "industries" are the most heavily regulated and subsidized industries in the economy, and they're the most expensive. Consumers of both products are completely divorced from the costs. People just don't think 20-30 years ahead. Student loans will weigh you down for a large part of your adult life, but when you're 18 you have no concept of that. Same with health care. Many many people don't care if their eating and health habits are detrimental... the consequences are years off and, frankly, someone else will pay for them. So government steps in and breaks the market mechanisms. Student loans are non-dischargeable and subsidized to an unlimited amount. Your health habits cannot be taken into account with health insurance; government mandates the same coverage for everyone, whether or not you eat 10,000 calories of potato chips a day, or you run three miles a day. The entirely predictable result is that prices go up unsustainably.
- seibelj 8y ago
  I will link to this book over and over: "Overcharged" explains the American medical system and its problems in great detail. Cannot recommend it more. Price obfuscation, third-party payments, and government interference have warped the medical system in ways that will make you laugh (then cry). https://www.amazon.com/Overcharged-Americans-Much-Health-Care/dp/1944424768/ https://www.amazon.com/Overcharged-Americans-Much-Health-Car...
  - pwned1 8y ago
    Thank you, I'll check it out.
kenjackson 8y ago
The part I don't get in this equation is that why are state colleges struggling then to meet their budgets? If they were simply extracting maximum value, why are they struggling to cover costs?
mrep 8y ago
> Federal student aid has ensured that the cost of education grows to meet the amount of loan money available. Yes, tuition prices are somewhat limited by the amount of loan money available. However, please stop this nonsense that "the cost of education grows to meet the amount of loan money available". I went to a public state school and most people there went there to minimize their debt because they paid in state tuition which is much cheaper. Most of the out of state people went there because it was a good school and they got decent scholarships and thus didn't have to pay full price. The rest willingly chose the higher out of state fees but they could have gotten into an in state school or one that gave them a scholarship. Private schools are similar except they only give "discounts" (scholarships) to people who need it but anyone going there can choose a state school if they want. TLDR: In classic American economics, schools price discriminate and charge the highest prices they can based on how good they are, how good the student is, and the students willingness to pay.

pwned1 8y ago

The same goes for medical care. The article tries to say that university and medical care are somehow competitive or part of a free market. There's no coincidence that both "industries" are the most heavily regulated and subsidized industries in the economy, and they're the most expensive. Consumers of both products are completely divorced from the costs. People just don't think 20-30 years ahead. Student loans will weigh you down for a large part of your adult life, but when you're 18 you have no concept of that. Same with health care. Many many people don't care if their eating and health habits are detrimental... the consequences are years off and, frankly, someone else will pay for them. So government steps in and breaks the market mechanisms. Student loans are non-dischargeable and subsidized to an unlimited amount. Your health habits cannot be taken into account with health insurance; government mandates the same coverage for everyone, whether or not you eat 10,000 calories of potato chips a day, or you run three miles a day. The entirely predictable result is that prices go up unsustainably.

seibelj 8y ago
I will link to this book over and over: "Overcharged" explains the American medical system and its problems in great detail. Cannot recommend it more. Price obfuscation, third-party payments, and government interference have warped the medical system in ways that will make you laugh (then cry). https://www.amazon.com/Overcharged-Americans-Much-Health-Care/dp/1944424768/ https://www.amazon.com/Overcharged-Americans-Much-Health-Car...
- pwned1 8y ago
  Thank you, I'll check it out.

kenjackson 8y ago

The part I don't get in this equation is that why are state colleges struggling then to meet their budgets? If they were simply extracting maximum value, why are they struggling to cover costs?

mrep 8y ago

> Federal student aid has ensured that the cost of education grows to meet the amount of loan money available. Yes, tuition prices are somewhat limited by the amount of loan money available. However, please stop this nonsense that "the cost of education grows to meet the amount of loan money available". I went to a public state school and most people there went there to minimize their debt because they paid in state tuition which is much cheaper. Most of the out of state people went there because it was a good school and they got decent scholarships and thus didn't have to pay full price. The rest willingly chose the higher out of state fees but they could have gotten into an in state school or one that gave them a scholarship. Private schools are similar except they only give "discounts" (scholarships) to people who need it but anyone going there can choose a state school if they want. TLDR: In classic American economics, schools price discriminate and charge the highest prices they can based on how good they are, how good the student is, and the students willingness to pay.