7 ms·
Federal student loans broke the market. People became price-inelastic.
by philip1209 3y ago
Federal student loans broke the market. People became price-inelastic.
- silverquiet 3y agoWhat is your price elasticity for your childrens' future?
- brk 3y agoYour comment highlights what I personally think is some of the reason for the extreme tuition increases: too many people believe that college is the singular best path for their children's future.
- ceejayoz 3y agoIncluding, unfortunately, the vast majority of employers and human resources people those children will encounter when attempting to get a job.
- silverquiet 3y agoI don't have kids, but I believe it. I have several close family members whose biggest regret is that they didn't go to college.
- BobaFloutist 3y agoIt (still), mathematically is. The return on the investment of a college degree is absolutely worth it. What's becoming much less clearly worth it is the value add of going to an elite school over a state school.
- tekla 3y agoCollege was/is/remains one of the biggest factors in determining incoming levels and general success in life.
- cj 3y ago> What is your price elasticity for your childrens' future? This is a silly question. Silly answer: I would want my kid to be able to retire happily. If college debt prevents that, let's ditch it.
- 999900000999 3y agoI can think of a much better use of 400k. I went to community college and a cheap state school and I make good money. Colleges don't refund you if you can't finish or get a decent job afterwards. The system as is doesn't make alot of sense. Just running though Harvard's cost calculator, if you have a family income of 300k you're out 86,666$. Drop that down to 175k and it's only 26k. Given how bad the tax rates are at that level you might as well have one parent play golf all day. 300k is a very reasonable amount for two typical people. After income taxes takes 100k off top( assume a high tax state like Hawaii), you're talking about spending more than 1/3rd of your take home on one child's education.
- silverquiet 3y ago> 300k is a very reasonable amount for two typical people. It's literally four times the median household income of the US. (And even after inflation, bananas still don't cost anywhere near $10 two decades on after that joke was made). This sort of statement is a bit out of touch if you ask me. Here's where I'm certainly willing to accept that I'm a bit out of touch - I don't have children. So my question is, how much would you be willing to pay if you thought something would give them a significantly better future?
- 999900000999 3y agoHow will anyone have an extra 86k on a 300k a year salary ? The numbers just don't make sense. I don't have kids so I'll probably cross that bridge if I get to it, but there's a limit. You can have a great future with community college + state school.
- silverquiet 3y agoIf I math this out right $300K - $100K taxes (your estimate) - $86K tuition = $114K which is still a lot higher than the median household income (which I'm pretty sure is still pre-tax). That said, I think you are onto something - these schools are for the elite; not the merely well-to-do or below. I also went to state school, so I'm not really dissing the thing, though people here would probably laugh at me if I said how much money I make, so maybe your mileage may vary on that one. But my perception (which could certainly be mistaken) is that the elite degrees actually have a huge premium, which is why there is so much competition for them.
- giantg2 3y ago"People became price-inelastic." Isn't it the opposite? The tutution became increasingly inelastic. Consumers would technically be more elastic given the higher credit available.
- t_mann 3y agohttps://en.wikipedia.org/wiki/Price_elasticity_of_demand https://en.wikipedia.org/wiki/Price_elasticity_of_demand
- giantg2 3y ago"A good's price elasticity of demand" Yeah, so the tuition is more inelastic, not the people.
- t_mann 3y agotechnically, it's demand that is meant here by what's elastic (or not). there's also a price elasticity of supply (eg, if tuition goes too low, some colleges will close). the way the GP used the term was understandable to me, and how I'm used to seeing it used. it's basically shorthand for 'people's [demand for college degrees] became price-inelastic'. if you want to use it differently in your communication, it's up to you. just remember that people might understand something other than what you meant.
- skhunted 3y agoLast year about 7.5 million people attended public 4 year institutions and about the same number attended public two year institutions. Around 5 million attended private institutions. Over the last 25 years there has a been a steady decline in the public funding of public higher education on a per student basis. Higher education is a large market and there are many, many forces at play. Blaming a single item is too simplistic an analysis. https://nces.ed.gov/programs/digest/d13/tables/dt13_303.70.asp https://nces.ed.gov/programs/digest/d13/tables/dt13_303.70.a...
- pc86 3y agoThe number of students is irrelevant. The government will secure your student loans and the only way you can get rid of them is to die. When a school can basically decide how much money they want, wave a magic wand and the money arrives in their bank account, it's going to skyrocket exactly like it has.
- skhunted 3y agoThe number of students at public institutions vs. private institutions does matter. You do not know much about how higher education works. Public institutions generally can't just raise tuition as they see fit. They usually need the approval of state governments. Tuition has gone up at public institutions as state funding has gone down.
- jdeal 3y agoFederal loan limits for the first year of undergrad are $5,500 for dependents and $9,500 for independents, so they can’t be blamed for a single year costing $100K.
- empath-nirvana 3y agoPrivate loans aren't dischargeable in bankruptcy.
- acchow 3y agoStudent loans became non-dischargeable. That broke the market.
- mxschumacher 3y agoexactly, make them dischargable and observe gigantic changes. Incentives, incentives, incentives
- bdjsiqoocwk 3y agoWanna share why having loans make people price-ineslastic? Mortgages are a thing and people aren't indifferent to house prices.
- gnicholas 3y agoMortgages don't qualify for income-based repayment schemes or forgiveness for govt/nonprofit employees.
- quickthrowman 3y agoMortgages must be paid on time or your lender will foreclose on your home and liquidate it to pay off your debt. That is impossible to do with an education. Add in loan forgiveness and income based repayment from the sibling comment, and the fact that a mortgage is securitized by collateral and it’s almost like a student loan and a mortgage have nothing in common aside from being loans.
- empath-nirvana 3y agoThis problem would be solved immediately by making student loans dischargeable in bankruptcy. The easy money would evaporate and a lot of colleges would have to figure out how to make money on lower tuitions.
- mattm 3y agoYes with loans that cannot be written off in bankruptcy, the lenders don't need to do due diligence and are incentivized to loan out as much money as possible. More money causes tuition to go up.