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The US federal government should do the same thing to public universities (US definition) that they did to insurance companies via the ACA -- cap administrative
by ethbr0 3y ago
The US federal government should do the same thing to public universities (US definition) that they did to insurance companies via the ACA -- cap administrative overhead.
For every dollar in tuition, >Y% must be spent on qualifying direct educational expenses. E.g. teaching faculty salary, etc.
If a college fails to meet that threshold, and spends too much on non-qualifying costs, they are required to rebate the difference to students.
If a college refuses to do this, they're no longer eligible for federal educational money (Pell grants or loans, etc).
Then let colleges optimize themselves to get under the limit.
It caused a lot of scrambling and long-overdue efficiency improvements in another legacy, slow-to-change industry (health insurance).
- dublinben 3y agoThe colleges will just respond in the same way that the insurance companies did, by jacking up prices. Raising the amount they're charging for premiums / tuition allows them to still maintain or grow their total overhead amount, even at a lower rate.
- cyberlurker 3y agoOne would hope consumer choice would come into play and students would start shopping around for the best deal.
- EatingWithForks 3y agoThis didn't work in the same way it doesn't work with insurance: students are limited by more than just price alone. Location matters a lot (a student may be staying with their parents). And also if all univiersities raise their prices in this way, there's nothing the students can do.
- onlyrealcuzzo 3y agoDoubtful. The only reason the cost of college is high is because 18 year olds that know nothing about finance don't have to pay for it now because they can get loans. You take away the loans, and you take away the ability of the college to charge whatever it wants and kids keep paying.
- janalsncm 3y agoAre 18 year olds today significantly less smart than 18 year olds 50 years ago? No. So why is tuition so much more expensive? In 1970 tuition at University of California schools was about $1000, inflation adjusted. You could easily make that at a summer job. So what has changed? States have stopped funding for schools. A lot of tuition used to be covered by tax money, which spreads out the cost to everyone and over many years. Now, it is a very abrupt cost to a small group of people. The prior funding model also had the benefit of a progressive tax system. Wealthier people paid into it more than poor people. Now, students have to rely on unpredictable financial assistance like grants and scholarships, and take on predatory loans to cover the difference.
- onlyrealcuzzo 3y ago> So what has changed? States have stopped funding for schools. Yes - but more importantly, schools got more expensive, because people had more access to debt.
- underlipton 3y agoThat's not an issue particular to university funding, though. Access to - and use of - debt has gone up across the board, for any and all big-ticket items, both for private and public purchases. There's a problem far larger than expansion of credit access, and it has to do with attitudes at the uppermost reaches of the planning of our economy as to how to distribute wealth - not just by geography or interest, but even by temporally. Decisions made 40-50 years ago to put the cost burden on future generations are literally paying interest today.
- ethbr0 3y agoI'd question whether insurance companies jacking up prices for purposes of growing headcount was a major trend. In the ACA aftermath, I believe you saw more insurance companies exit markets because they couldn't be competitive and profitable on prices with standardized plans. Which is its own problem and led to a lot of limited-insurer markets, but a different one.
- Brusco_RF 3y agoI stopped reading after the first sentence. Our current health insurance laws should NOT be a model for anything, ever!