5 ms·
huh? there’s plenty of colleges to choose from and yet costs go up every year. to me it seems like a distortion caused by a Federal Gov that guarantees payment
by xoxoy 6y ago
huh? there’s plenty of colleges to choose from and yet costs go up every year.
to me it seems like a distortion caused by a Federal Gov that guarantees payment to universities in the form of federally backed student loans.
- peacefulhat 6y agoSubsidized corn is not rapidly and consistently increasing in price.
- grandmczeb 6y agoI don’t necessarily buy the idea that student loans are driving price increases, but there’s a tangible difference between subsidizing producers versus consumers (corn subsidies are generally the former, student loans are the latter).
- xoxoy 6y agoeducation is not a commodity in the same sense as corn and it’s much more of an inelastic good than corn the difference between 50k in tuition and expenses and 55k will not change demand a meaningful amount, and universities exploit the fact that education is inelastic and the money is coming from a guaranteed source regardless of the student’s ability to pay upfront.
- dragonwriter 6y agoThe reason for the subsidies is to support farmers by offsetting what would otherwise be price decreases, so...
- donw 6y agoCorn is an example of subsidized supply. Government money increases the supply of corn, and drives the price down. Hence, corn, and products derived from it -- high-fructose corn syrup (HFCS), corn-fed beef, Nu Metal bands, etc -- are cheaper. College is an example of subsidized demand. Government money increases the number of prospective students, by lowering the financial barrier to attend university. The result being that the cost of a university education has risen, drastically, while the quality of that education has plummeted.
- foolinaround 6y agosupply/demand you are right, the demand is artificially propped up by the govt. as you stated. However, it is tied to the job market, which is more realistic, and we are starting to see the fallout where many of the colleges will be going out of business.
- jdkee 6y agoEducation is now a Veblen good.
- dredmorbius 6y agoI agree that it is presently such. I disagree that it's ever been otherwise.