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Your argument lacks sense. Care to elaborate on how greater supply leads to higher prices?
by dereg 14y ago
Your argument lacks sense. Care to elaborate on how greater supply leads to higher prices?
- lftl 14y agoHe should have left out the for profit universities as part of the problem (they're a symptom not the cause). It's all about the free federal dollars. The parallels to the housing bust are pretty clear. Cheap and widely available mortgages led to exorbitant housing prices and an eventual bust. Cheap, widely available, and undischargable loans for education are leading to exorbitant education costs. It'll be interesting to see how this bubble ends.
- ericfrenkiel 14y agojust addressed that in another comment. another side effect is increased revenues to these institutions caused a rampant increase in spending across the board - personnel, buildings, facilities, departments, etc. - that are now no longer sustainable.
- ericfrenkiel 14y agoIt's not so much as greater supply as artificial price insensitivity as it relates to increased tuition rates. Because the federal government will continue to cover the loans, it creates incentives for institutions to collectively raise rates since they know students - i.e. their customers - are essentially price insensitive (borrowing future dollars to pay for an exorbitant education today).
- ctdonath 14y agoMaking it easy to pay with someone else's money (whether or not it must be paid back later) distorts pricing in any market. The problem will eventually correct itself, albeit with widespread economic pain.