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This was the first comment on Cuban's blog. Can anyone comment on it? I listened to the NPR Podcast, it is specific to private colleges; I am not sure how publi

This was the first comment on Cuban's blog. Can anyone comment on it? I listened to the NPR Podcast, it is specific to private colleges; I am not sure how public colleges fit in. "The most recent Planet Money on NPR was about the cost of college. [1] They point out that the price that has been rising is the “sticker price.” However, the average price a student pays for college hasn’t risen (except to adjust for inflation) over the past 20 years or so. The schools are raising the sticker price as a marketing tool, so they can give big need and merit based scholarships to woo desirable students. The reason student loan debt has ballooned isn’t because students are paying more, it’s because more students are paying. Federally subsidized loans aren’t increasing the cost of education, they are serving their purpose to give more people the opportunity to go to college. I suppose your point that it is a ton of debt and we don’t have a job to give to each college grad is valid. But, I am not sure the classification of it as a bubble is valid because we aren’t really seeing a rise in the cost of education." [1] http://www.npr.org/blogs/money/2012/05/11/152511771/the-real-price-of-college http://www.npr.org/blogs/money/2012/05/11/152511771/the-real...

AngrySkillzz 14y ago
I believe that's true for many well-endowed and non-state institutions; the wealthy who can afford the full $45k tuition help to subsidize the poorer students who can't, and I don't see too much wrong with that. The problem is that that isn't the entire story. Yeah, federally subsidized loans mean more kids are attending school, but not everyone is eligible for subsidized loans. Many of my friends, and myself, were offered standard unsubsidized loans as generally middle-class students. So for your average middle-class student, going to a less-endowed private or out-of-state institution means either paying full price out of pocket or taking out unsubsidized loans. And as we know, unsubsidized loans are reaching absurd levels under unrealistic terms and they're giving us a generation saddled with debt that will be very difficult to pay off. More students are going to college, but I seriously doubt the price of education is rising. Spending time on any college campus will tell you that they are spending recklessly because of the education bubble, and I'm not talking high professor salaries (they deserve every penny). Administrators these days make frankly irresponsible amounts of money, schools purchase expensive and unnecessary equipment to have a selling point for certain departments, and construction/renovation is everywhere. The sticker price isn't rising because costs are rising, the sticker price is rising because demand is inelastic (due to promise of better jobs and easy financing) and colleges are finding reckless ways to spend the rest of the money. So the points are valid, but they don't speak to the entire situation. It sure smells like a bubble to me; student debt is ballooning because demand is inelastic and its easy to take out a loan, schools are spending the money irresponsibly, and I don't see any reasonable way that all of this debt is getting repaid in this economy, especially under the conditions the loans are given. I'd say there's likely to be an impending burst and credit crunch as my friends and I hit the workforce.
- learc83 14y ago
  >unnecessary equipment to have a selling point for certain departments, and construction/renovation is everywhere. Exactly. When I started college I remember how ridiculous it was that every damn monitor on campus was a flat panel (this was when flat panels where still a few hundred dollars more expensive than CRTs) Now that I'm going back to school I'm shocked by the amount of construction going on. They've doubled tuition since I was last there in 2007 and there using it on to buy a multi million dollar skyscraper and build pretty fountains.
AngrySkillzz 14y ago
And as far as in-state institutions go, the prices can generally be anywhere up to the $20k range. I'm sure a significant amount of the loans are being spent on in-state institutions and, because of budget cuts, they don't have as many need/merit-based scholarships to give. That's not doing us any favors either.
learc83 14y ago
>The reason student loan debt has ballooned isn’t because students are paying more. That's not true, I've seen numerous articles on the cost of public colleges increasing much faster than inflation. Anecdote: I dropped out of Georgia State in 2007, I'm going back now to finish my last few semesters of a math degree. The cost has more than doubled in the last 5 years.
- Retric 14y ago
  He just refuted that argument by denoting that 'price' as the sticker price. New Mexico for example gives all students attending a state school with a high school GPA over 2.5 a scholorship. The state could just directly give public schools the same money for in state students and avoid the 'scholorship' angle. But, this approach offers better publicity and if you have below a 2.5 GPA in a public high-school you might not be ready for collage.
  - cantankerous 14y ago
    Which argument are you talking about? If the cost doubled for him to pay out of pocket, it doubled for him. Talking about sticker price vs. adjusted metrics is really arguing semantics in this case if somebody is stuck paying what's charged up front.
    - Retric 14y ago
      http://en.wikipedia.org/wiki/Price_discrimination http://en.wikipedia.org/wiki/Price_discrimination If he can afford to pay twice as much and did so then the school was wise to raise it's sticker price. They can then take the 'surplus' that he paid and use it to reduce the price of a more desirable students who are less able to pay.
      - learc83 14y ago
        >reduce the price of a more desirable students who are less able to pay. A very small percentage of the total financial aid comes directly from the school, so this is not what is happening. The vast majority of financial aid is from the state and federal government which is not financed by tuition. They are using the extra money by and large to fund additional administration expenses, a new football team and other prestige projects in order to boost the perceived status of the school. >If he can afford to pay twice as much and did so then the school was wise to raise it's sticker price. I'm not saying that it raising tuition wasn't the rational choice for the school. However, it only works because federal loans allow them to do it. Almost no one can actually afford to pay the increased tuition out of pocket. The more money the government makes available for student loans the higher tuition will go.
jellicle 14y ago
The comment is incorrect. Student loan growth far outpaces the number of new students: http://www.theatlantic.com/business/archive/2011/08/chart-of-the-day-student-loans-have-grown-511-since-1999/243821/ http://www.theatlantic.com/business/archive/2011/08/chart-of...
- quandrum 14y ago
  Your link doesn't support your claim. Worse, your link doesn't even consider the idea. All it says: > Obviously the number of students didn't grow by 511%. Why is it obvious? Show my a source.
  - MaxGabriel 14y ago
    Good point. Here's the Census' 08 data: "In 2008, college enrollment was at an all-time high with 18.6 million students enrolled, up 22 percent from 15.3 million in 2000." http://www.census.gov/prod/2011pubs/p20-564.pdf http://www.census.gov/prod/2011pubs/p20-564.pdf

AngrySkillzz 14y ago

I believe that's true for many well-endowed and non-state institutions; the wealthy who can afford the full $45k tuition help to subsidize the poorer students who can't, and I don't see too much wrong with that. The problem is that that isn't the entire story. Yeah, federally subsidized loans mean more kids are attending school, but not everyone is eligible for subsidized loans. Many of my friends, and myself, were offered standard unsubsidized loans as generally middle-class students. So for your average middle-class student, going to a less-endowed private or out-of-state institution means either paying full price out of pocket or taking out unsubsidized loans. And as we know, unsubsidized loans are reaching absurd levels under unrealistic terms and they're giving us a generation saddled with debt that will be very difficult to pay off. More students are going to college, but I seriously doubt the price of education is rising. Spending time on any college campus will tell you that they are spending recklessly because of the education bubble, and I'm not talking high professor salaries (they deserve every penny). Administrators these days make frankly irresponsible amounts of money, schools purchase expensive and unnecessary equipment to have a selling point for certain departments, and construction/renovation is everywhere. The sticker price isn't rising because costs are rising, the sticker price is rising because demand is inelastic (due to promise of better jobs and easy financing) and colleges are finding reckless ways to spend the rest of the money. So the points are valid, but they don't speak to the entire situation. It sure smells like a bubble to me; student debt is ballooning because demand is inelastic and its easy to take out a loan, schools are spending the money irresponsibly, and I don't see any reasonable way that all of this debt is getting repaid in this economy, especially under the conditions the loans are given. I'd say there's likely to be an impending burst and credit crunch as my friends and I hit the workforce.

learc83 14y ago
>unnecessary equipment to have a selling point for certain departments, and construction/renovation is everywhere. Exactly. When I started college I remember how ridiculous it was that every damn monitor on campus was a flat panel (this was when flat panels where still a few hundred dollars more expensive than CRTs) Now that I'm going back to school I'm shocked by the amount of construction going on. They've doubled tuition since I was last there in 2007 and there using it on to buy a multi million dollar skyscraper and build pretty fountains.

AngrySkillzz 14y ago

And as far as in-state institutions go, the prices can generally be anywhere up to the $20k range. I'm sure a significant amount of the loans are being spent on in-state institutions and, because of budget cuts, they don't have as many need/merit-based scholarships to give. That's not doing us any favors either.

learc83 14y ago

>The reason student loan debt has ballooned isn’t because students are paying more. That's not true, I've seen numerous articles on the cost of public colleges increasing much faster than inflation. Anecdote: I dropped out of Georgia State in 2007, I'm going back now to finish my last few semesters of a math degree. The cost has more than doubled in the last 5 years.

Retric 14y ago
He just refuted that argument by denoting that 'price' as the sticker price. New Mexico for example gives all students attending a state school with a high school GPA over 2.5 a scholorship. The state could just directly give public schools the same money for in state students and avoid the 'scholorship' angle. But, this approach offers better publicity and if you have below a 2.5 GPA in a public high-school you might not be ready for collage.
- cantankerous 14y ago
  Which argument are you talking about? If the cost doubled for him to pay out of pocket, it doubled for him. Talking about sticker price vs. adjusted metrics is really arguing semantics in this case if somebody is stuck paying what's charged up front.
  - Retric 14y ago
    http://en.wikipedia.org/wiki/Price_discrimination http://en.wikipedia.org/wiki/Price_discrimination If he can afford to pay twice as much and did so then the school was wise to raise it's sticker price. They can then take the 'surplus' that he paid and use it to reduce the price of a more desirable students who are less able to pay.
    - learc83 14y ago
      >reduce the price of a more desirable students who are less able to pay. A very small percentage of the total financial aid comes directly from the school, so this is not what is happening. The vast majority of financial aid is from the state and federal government which is not financed by tuition. They are using the extra money by and large to fund additional administration expenses, a new football team and other prestige projects in order to boost the perceived status of the school. >If he can afford to pay twice as much and did so then the school was wise to raise it's sticker price. I'm not saying that it raising tuition wasn't the rational choice for the school. However, it only works because federal loans allow them to do it. Almost no one can actually afford to pay the increased tuition out of pocket. The more money the government makes available for student loans the higher tuition will go.

jellicle 14y ago

The comment is incorrect. Student loan growth far outpaces the number of new students: http://www.theatlantic.com/business/archive/2011/08/chart-of-the-day-student-loans-have-grown-511-since-1999/243821/ http://www.theatlantic.com/business/archive/2011/08/chart-of...

quandrum 14y ago
Your link doesn't support your claim. Worse, your link doesn't even consider the idea. All it says: > Obviously the number of students didn't grow by 511%. Why is it obvious? Show my a source.
- MaxGabriel 14y ago
  Good point. Here's the Census' 08 data: "In 2008, college enrollment was at an all-time high with 18.6 million students enrolled, up 22 percent from 15.3 million in 2000." http://www.census.gov/prod/2011pubs/p20-564.pdf http://www.census.gov/prod/2011pubs/p20-564.pdf