6 ms·

Hammer meet nail. The same issue plagues the American higher education system, which is wildly overpriced.

secabeen 3y ago
I would be cautious with any argument about higher ed that focused on student pricing. Higher Ed is full of completely opaque pricing activity, where colleges publish a ridiculous nameplate price, then give enough grants and other financial aid that the average student pays less than $2,500 per year, plus room and board: > Since 2016-17, the average net tuition and fee price paid by first-time full-time in-state students enrolled at public four-year institutions has been declining after adjusting for inflation; it was an estimated $2,250 in 2022-23. https://research.collegeboard.org/media/pdf/trends-in-college-pricing-student-aid-2022.pdf https://research.collegeboard.org/media/pdf/trends-in-colleg... If you want to criticize colleges on their cost, the data to use is expenditure data, which is much cleaner.
- activescott 3y ago
  Are you arguing that the opaque pricing is effective?
  - screamingninja 3y ago
    I do not believe that the comment above is about the effectiveness, but merely stating facts here. University "sticker prices" are often inflated to maintain prestige and very often supplemented with grants and financial aid based on income. Opaque pricing is never a good thing, but there are two sides this story.
    - activescott 3y ago
      I think worth clarifying. The comment ends with > If you want to criticize colleges on their cost, the data to use is expenditure data, which is much cleaner. As if the opaque pricing of colleges isn't just as baffling as the healthcare system's resulting cost situation.
    - anonymouskimmer 3y ago
      > University "sticker prices" are often inflated to maintain prestige Another function they have is to exclude the poor and naive. Richer and more worldly students probably have higher completion rates. Median is more important than average. A 2 or 3 variable analysis would probably be even better. I'd like to see how costs actually distribute for all students.
- heliodor 3y ago
  Talking about "public" and "in-state" is not the point. College is mostly about the private institutions at a national level. That's where people would like to go.
  - screamingninja 3y ago
    > Talking about "public" and "in-state" is not the point. I think the point is about access to higher education. > College is mostly about the private institutions at a national level. That's where people would like to go. Where people would "like to go" is highly subjective, and the statistics would wildly disagree with your statement on where people actually go.
    - secabeen 3y ago
      > College is mostly about the private institutions at a national level. That's where people would like to go. Yeah, I think this is an uninformed take, and that many students never even consider a tier-1 private university. They attend their local university, or even a community college before transferring.
  - dgacmu 3y ago
    Yes, but it's not where most actually go. 75% of degrees are awarded by public colleges and universities.
    - heliodor 3y ago
      Maybe because most people can't afford the top private universities. But would have liked to go there.
      - maleldil 3y ago
        They'd like to go to top universities because they're the best. Being private is just one more filter that stops poor people from getting the education they deserve. Quality education can be public and free.
- robocat 3y ago
  The argument is that the same problems occur in education: take your education specific points & you can find the equivalent issues in healthcare (Healthcare is full of completely opaque pricing activity, ridiculous nameplate price, give enough grants and other financial aid). These are probably emergent effects of capitalism. I have a systematic fix, but I can find no margin to write it.
  - anonymouskimmer 3y ago
    > These are probably emergent effects of capitalism. Regulated, subsidized capitalism. If insurance was only for catastrophic losses, and all premiums (government, employee and employer paid) were instead paid into things like health savings accounts, network and oligopolistic effects would start to disappear. Maybe not disappear entirely, but instead of locking people into networks the effort would go into marketing their networks as 'the best'. You could also fiddle with pharmaceutical costs by allowing the patent monopolies to exist until a certain amount of revenue is collected from the patent, and then negate the patent. Instead of the current system with time-limited patents. This would massively disincentivize a lot of pharma-to-physician marketing (at least until the patent expires). Though there would still be some incentive to profit before the next drug comes out that makes yours irrelevant.
- fn-mote 3y ago
  Just in case other Americans are surprised and dubious about these figures: remember that the vast majority of students are not attending the flagship state institutions that you might be thinking of. Public four year institutions include places like Western Michigan University and Southern Utah University, far from expensive urban areas.
  - d_sem 3y ago
    According to the US Dept of Education a 4 year Bachelor degree at Western Michigan University will cost at least $110,001. Certainly this is too high.
  - godelski 3y ago
    Reports like those are not great for people trying to understand data and solve problems. They're for bureaucrats. They're always full of aggregation errors, which is also a common problem many people often get frustrated with from armchair experts. People __should__ be suspicious when reading that the average price paid for college is $2.5k but student debt is almost $2T and the average student debt is nearly $40k. The way the data is presented should cause people to be suspicious because the narrative doesn't make sense. The problem is with the narrative around these numbers, which is how people "lie with statistics" (because math isn't just numbers, data analysis is about stories). A good way to think about this, and why it should reason that this data at face value isn't useful, is with a rather extreme example. If you took the average income across the globe then you'd conclude that no one could afford college. But that'd be unreasonable because the distribution of incomes is not the same as the distribution of people going to college. Similarly, in these types of numbers there's a large difference in groups. In fact, contrary to popular belief, those straddled with the most debt are not liberal arts degrees for people with low job prospects but rather high level education of and high prospect jobs. Graduates take out more loans[0]. Medical students take out by far the most[1] -- side note: maybe we should discuss this given the doctor shortage -- followed by PhDs and then masters. Obviously these are in lower numbers though But there are a lot of variables at play here that affect things and it should be rather obvious that you can't treat all these things equally. There are also other issues where private colleges have higher debt burdens and there's also a lot of dubious institutions taking advantage of people (which do we want that happening for people who are specifically trying to become more productive members of society? The most vulnerable are also the "least productive" and even small changes can result in large outcomes). [0] https://www.brookings.edu/articles/who-owes-all-that-student-debt-and-whod-benefit-if-it-were-forgiven/ https://www.brookings.edu/articles/who-owes-all-that-student... [1] https://wordsrated.com/student-loan-debt-by-degree-statistics/ https://wordsrated.com/student-loan-debt-by-degree-statistic...
- godelski 3y ago
  Let's do what robocat said and find a comparison with health care and school systems. One big driver to health care costs is artificial price inflation through insurance negotiations. Where insurance brokers need to get a deal but hospitals can't give a better one, so they raise the price and give a bigger discount on that. You know, the same thing that happens on Prime day. Schools do this too, in many different forms. Let's look at graduate student pay, for instance. A lot of graduate students don't actually pay because they're doing a lot of work for the school and bringing in a lot of money. But if you go look at the pricing of credits you'll find that it is common for graduate credits to be more expensive than undergraduate. Is this because graduate students cost more? No, they definitely cost a lot less. So why is this number high? Because it is used to validate any pay from outside the university for those graduate workers, where the school takes a large chunk of that not just for admin fees, but to cover "the student's academic costs." This too is an artificial "book keeping" number and why we should not be counting this as income (yes, some states want to do that). It also creates for weird situations when a student needs to pay for credits themselves. Or how about business class on airplanes? Few people are paying that actual rate. Also, I think you cherry picked form your source. They also say: > Over the 30 years between 1992-93 and 2022-23, average published tuition and fees increased from $2,340 to $3,860 at public two-year, from $4,870 to $10,940 at public four-year, and from $21,860 to $39,400 at private nonprofit four-year institutions, after adjusting for inflation. I should also mention that the $2,500/yr claim you're making (drawing from their numbers, but your interpretation) is a clear example of an Aggregation Paradox (see Simpson's and Berkson's). If we took this number at face value the $1.63 trillion debt level wouldn't make sense. Room and board isn't that much, even if many colleges require Freshmen to stay in dorms and buy a meal plan. Given that number, clearly there's a large variance to those numbers. There's always an advantage to reporting the mean, and if we have the mean and average we know these are within one standard deviation of one another. It is interesting to see that college board is reporting averages but when they talk about incomes they are using medians (which are reported from the fed). Averages, alone, are often a terrible metric and you need significantly more information that that to make any reasonable conclusion from data. Relying on averages alone will make you come to poor conclusions. Reports like these are for bureaucrats, not people trying to understand or solve problems. https://research.collegeboard.org/media/pdf/trends-in-college-pricing-student-aid-2022.pdf https://research.collegeboard.org/media/pdf/trends-in-colleg...
amanaplanacanal 3y ago
I suspect the high cost of health care, education, and housing are all caused by the same thing: the enormous amount of third party money involved. People are willing to pay a lot more for a monthly payment over time than they are willing to pay in cash.
dclowd9901 3y ago
Higher Ed is being propped up by a second tier of consumer credit that basically lends extraordinary amounts of money for almost no interest, never allows defaulting and can be paid back over essentially your entire lifetime. Were it not for education lending, we would not see these prices.
- secabeen 3y ago
  I have not seen data that supports this claim. At the least, there is a strong correlation between cuts in state support for public higher ed, and increases in tuition. In the 60's many states paid 100% of the cost, and tuition was free. Room and Board in college towns is also high, as part of the overall housing affordability issues. If unlimited education lending were a factor, we would see these increases in expenditures, but we don't. Costs are higher, but tuition increases are driven by changes in the revenue mix. https://fivethirtyeight.com/features/fancy-dorms-arent-the-main-reason-tuition-is-skyrocketing/ https://fivethirtyeight.com/features/fancy-dorms-arent-the-m...
- anonymouskimmer 3y ago
  Yes, we would, we would just have fewer colleges. And some of the ones we do have might have contractual arrangements with corporations that funnel students into jobs at those corporations (possibly by contractually binding the students into a job at those corporations for a defined period of time). There are both pros and cons to that sort of apprenticeship arrangement. It would be bad, though, if the apprentice also had to monetarily pay part of the cost of attending college.
- FireBeyond 3y ago
  > for almost no interest Federal student loans start at 5.5 and go to over 8% interest.[1] Private student loans start at 5% and go to 17%.[2] I'm not sure where you get "almost no interest" from. [1] https://studentaid.gov/understand-aid/types/loans/interest-rates https://studentaid.gov/understand-aid/types/loans/interest-r... [2] https://www.nerdwallet.com/m/loans/student-loans/private-student-loans https://www.nerdwallet.com/m/loans/student-loans/private-stu...

I would be cautious with any argument about higher ed that focused on student pricing. Higher Ed is full of completely opaque pricing activity, where colleges publish a ridiculous nameplate price, then give enough grants and other financial aid that the average student pays less than $2,500 per year, plus room and board: > Since 2016-17, the average net tuition and fee price paid by first-time full-time in-state students enrolled at public four-year institutions has been declining after adjusting for inflation; it was an estimated $2,250 in 2022-23. https://research.collegeboard.org/media/pdf/trends-in-college-pricing-student-aid-2022.pdf https://research.collegeboard.org/media/pdf/trends-in-colleg... If you want to criticize colleges on their cost, the data to use is expenditure data, which is much cleaner.

activescott 3y ago
Are you arguing that the opaque pricing is effective?
- screamingninja 3y ago
  I do not believe that the comment above is about the effectiveness, but merely stating facts here. University "sticker prices" are often inflated to maintain prestige and very often supplemented with grants and financial aid based on income. Opaque pricing is never a good thing, but there are two sides this story.
  - activescott 3y ago
    I think worth clarifying. The comment ends with > If you want to criticize colleges on their cost, the data to use is expenditure data, which is much cleaner. As if the opaque pricing of colleges isn't just as baffling as the healthcare system's resulting cost situation.
  - anonymouskimmer 3y ago
    > University "sticker prices" are often inflated to maintain prestige Another function they have is to exclude the poor and naive. Richer and more worldly students probably have higher completion rates. Median is more important than average. A 2 or 3 variable analysis would probably be even better. I'd like to see how costs actually distribute for all students.
heliodor 3y ago
Talking about "public" and "in-state" is not the point. College is mostly about the private institutions at a national level. That's where people would like to go.
- screamingninja 3y ago
  > Talking about "public" and "in-state" is not the point. I think the point is about access to higher education. > College is mostly about the private institutions at a national level. That's where people would like to go. Where people would "like to go" is highly subjective, and the statistics would wildly disagree with your statement on where people actually go.
  - secabeen 3y ago
    > College is mostly about the private institutions at a national level. That's where people would like to go. Yeah, I think this is an uninformed take, and that many students never even consider a tier-1 private university. They attend their local university, or even a community college before transferring.
- dgacmu 3y ago
  Yes, but it's not where most actually go. 75% of degrees are awarded by public colleges and universities.
  - heliodor 3y ago
    Maybe because most people can't afford the top private universities. But would have liked to go there.
    - maleldil 3y ago
      They'd like to go to top universities because they're the best. Being private is just one more filter that stops poor people from getting the education they deserve. Quality education can be public and free.
robocat 3y ago
The argument is that the same problems occur in education: take your education specific points & you can find the equivalent issues in healthcare (Healthcare is full of completely opaque pricing activity, ridiculous nameplate price, give enough grants and other financial aid). These are probably emergent effects of capitalism. I have a systematic fix, but I can find no margin to write it.
- anonymouskimmer 3y ago
  > These are probably emergent effects of capitalism. Regulated, subsidized capitalism. If insurance was only for catastrophic losses, and all premiums (government, employee and employer paid) were instead paid into things like health savings accounts, network and oligopolistic effects would start to disappear. Maybe not disappear entirely, but instead of locking people into networks the effort would go into marketing their networks as 'the best'. You could also fiddle with pharmaceutical costs by allowing the patent monopolies to exist until a certain amount of revenue is collected from the patent, and then negate the patent. Instead of the current system with time-limited patents. This would massively disincentivize a lot of pharma-to-physician marketing (at least until the patent expires). Though there would still be some incentive to profit before the next drug comes out that makes yours irrelevant.
fn-mote 3y ago
Just in case other Americans are surprised and dubious about these figures: remember that the vast majority of students are not attending the flagship state institutions that you might be thinking of. Public four year institutions include places like Western Michigan University and Southern Utah University, far from expensive urban areas.
- d_sem 3y ago
  According to the US Dept of Education a 4 year Bachelor degree at Western Michigan University will cost at least $110,001. Certainly this is too high.
- godelski 3y ago
  Reports like those are not great for people trying to understand data and solve problems. They're for bureaucrats. They're always full of aggregation errors, which is also a common problem many people often get frustrated with from armchair experts. People __should__ be suspicious when reading that the average price paid for college is $2.5k but student debt is almost $2T and the average student debt is nearly $40k. The way the data is presented should cause people to be suspicious because the narrative doesn't make sense. The problem is with the narrative around these numbers, which is how people "lie with statistics" (because math isn't just numbers, data analysis is about stories). A good way to think about this, and why it should reason that this data at face value isn't useful, is with a rather extreme example. If you took the average income across the globe then you'd conclude that no one could afford college. But that'd be unreasonable because the distribution of incomes is not the same as the distribution of people going to college. Similarly, in these types of numbers there's a large difference in groups. In fact, contrary to popular belief, those straddled with the most debt are not liberal arts degrees for people with low job prospects but rather high level education of and high prospect jobs. Graduates take out more loans[0]. Medical students take out by far the most[1] -- side note: maybe we should discuss this given the doctor shortage -- followed by PhDs and then masters. Obviously these are in lower numbers though But there are a lot of variables at play here that affect things and it should be rather obvious that you can't treat all these things equally. There are also other issues where private colleges have higher debt burdens and there's also a lot of dubious institutions taking advantage of people (which do we want that happening for people who are specifically trying to become more productive members of society? The most vulnerable are also the "least productive" and even small changes can result in large outcomes). [0] https://www.brookings.edu/articles/who-owes-all-that-student-debt-and-whod-benefit-if-it-were-forgiven/ https://www.brookings.edu/articles/who-owes-all-that-student... [1] https://wordsrated.com/student-loan-debt-by-degree-statistics/ https://wordsrated.com/student-loan-debt-by-degree-statistic...
godelski 3y ago
Let's do what robocat said and find a comparison with health care and school systems. One big driver to health care costs is artificial price inflation through insurance negotiations. Where insurance brokers need to get a deal but hospitals can't give a better one, so they raise the price and give a bigger discount on that. You know, the same thing that happens on Prime day. Schools do this too, in many different forms. Let's look at graduate student pay, for instance. A lot of graduate students don't actually pay because they're doing a lot of work for the school and bringing in a lot of money. But if you go look at the pricing of credits you'll find that it is common for graduate credits to be more expensive than undergraduate. Is this because graduate students cost more? No, they definitely cost a lot less. So why is this number high? Because it is used to validate any pay from outside the university for those graduate workers, where the school takes a large chunk of that not just for admin fees, but to cover "the student's academic costs." This too is an artificial "book keeping" number and why we should not be counting this as income (yes, some states want to do that). It also creates for weird situations when a student needs to pay for credits themselves. Or how about business class on airplanes? Few people are paying that actual rate. Also, I think you cherry picked form your source. They also say: > Over the 30 years between 1992-93 and 2022-23, average published tuition and fees increased from $2,340 to $3,860 at public two-year, from $4,870 to $10,940 at public four-year, and from $21,860 to $39,400 at private nonprofit four-year institutions, after adjusting for inflation. I should also mention that the $2,500/yr claim you're making (drawing from their numbers, but your interpretation) is a clear example of an Aggregation Paradox (see Simpson's and Berkson's). If we took this number at face value the $1.63 trillion debt level wouldn't make sense. Room and board isn't that much, even if many colleges require Freshmen to stay in dorms and buy a meal plan. Given that number, clearly there's a large variance to those numbers. There's always an advantage to reporting the mean, and if we have the mean and average we know these are within one standard deviation of one another. It is interesting to see that college board is reporting averages but when they talk about incomes they are using medians (which are reported from the fed). Averages, alone, are often a terrible metric and you need significantly more information that that to make any reasonable conclusion from data. Relying on averages alone will make you come to poor conclusions. Reports like these are for bureaucrats, not people trying to understand or solve problems. https://research.collegeboard.org/media/pdf/trends-in-college-pricing-student-aid-2022.pdf https://research.collegeboard.org/media/pdf/trends-in-colleg...

amanaplanacanal 3y ago

I suspect the high cost of health care, education, and housing are all caused by the same thing: the enormous amount of third party money involved. People are willing to pay a lot more for a monthly payment over time than they are willing to pay in cash.

dclowd9901 3y ago

Higher Ed is being propped up by a second tier of consumer credit that basically lends extraordinary amounts of money for almost no interest, never allows defaulting and can be paid back over essentially your entire lifetime. Were it not for education lending, we would not see these prices.

secabeen 3y ago
I have not seen data that supports this claim. At the least, there is a strong correlation between cuts in state support for public higher ed, and increases in tuition. In the 60's many states paid 100% of the cost, and tuition was free. Room and Board in college towns is also high, as part of the overall housing affordability issues. If unlimited education lending were a factor, we would see these increases in expenditures, but we don't. Costs are higher, but tuition increases are driven by changes in the revenue mix. https://fivethirtyeight.com/features/fancy-dorms-arent-the-main-reason-tuition-is-skyrocketing/ https://fivethirtyeight.com/features/fancy-dorms-arent-the-m...
anonymouskimmer 3y ago
Yes, we would, we would just have fewer colleges. And some of the ones we do have might have contractual arrangements with corporations that funnel students into jobs at those corporations (possibly by contractually binding the students into a job at those corporations for a defined period of time). There are both pros and cons to that sort of apprenticeship arrangement. It would be bad, though, if the apprentice also had to monetarily pay part of the cost of attending college.
FireBeyond 3y ago
> for almost no interest Federal student loans start at 5.5 and go to over 8% interest.[1] Private student loans start at 5% and go to 17%.[2] I'm not sure where you get "almost no interest" from. [1] https://studentaid.gov/understand-aid/types/loans/interest-rates https://studentaid.gov/understand-aid/types/loans/interest-r... [2] https://www.nerdwallet.com/m/loans/student-loans/private-student-loans https://www.nerdwallet.com/m/loans/student-loans/private-stu...