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The only problem with the article is overly emphasizing the "you are being scammed" angle. The article actually covers it from two angles, and the "net sticker

by Goladus 13y ago

The only problem with the article is overly emphasizing the "you are being scammed" angle. The article actually covers it from two angles, and the "net sticker price" is only the right metric for one of them (an individual student evaluating the ROI of their own personal education). Looking at the system as a whole, average net sticker price is the wrong metric. That's hiding real costs in the system. "Why is there $1 trillion of student debt?" "Why does education cost so much?" "How can we reduce the cost of education?" You can't answer any of those questions if you ignore subsidies. Many grants and all tax credits especially are funded by the government and contribute to demand inflation just like any other customer. Other grants and scholarships are funded by charities and 3rd parties. If you're looking at the system as a whole you can't rule out those sources of funding as not being part of the cost. Colleges still treat that as demand and set their prices accordingly

cinquemb 13y ago
Definitely something brewing… I posted these a while back on another thread, but these seem highly relevant to getting some insight to where the demand from state/federal government is going. The Atlantic did a piece on decrease in government funding trends back in january: http://www.theatlantic.com/business/archive/2013/01/the-38-states-that-have-slashed-higher-education-spending/267427/ http://www.theatlantic.com/business/archive/2013/01/the-38-s... And Think Progress shows some stats on another indicator of decrease in government funding trends (tuition hikes): http://thinkprogress.org/education/2013/03/19/1741231/states-higher-education-cuts/ http://thinkprogress.org/education/2013/03/19/1741231/states... The Kansas City Fed also did a report on a periphery indicator of decrease in government funding trends (student loan defaults) and more: http://www.kansascityfed.org/publicat/reswkpap/pdf/rwp%2012-05.pdf http://www.kansascityfed.org/publicat/reswkpap/pdf/rwp%2012-...
nostrademons 13y ago
The difference between sticker price and net tuition (I don't understand what you mean by "net sticker price", that seems to conflate both metrics) is usually the result of price discrimination by the colleges. They raise sticker price so they can charge wealthy applicants more, and then offer generous financial aid so they can charge poor applicants less. It is a subsidy, but it's a subsidy within the organization. Similarly, many of these financial aid grants at elite institutions are often funded through alumni donations and investment income off the endowment. This is also a voluntary transfer payment from rich to poor. If you want to measure the incoming tuition flows into college, the metric you probably want is net tuition + government funding. That excludes transfer payments within the organization from rich to poor and donations to non-profit scholarship corporations, but includes funding from tax revenues.
- Goladus 13y ago
  It is a subsidy, but it's a subsidy within the organization. The original version of my comment explained this but I removed it for brevity. But yes you are right. From what I understand the money flow, especially at elite institutions, can be very complex. Also "net sticker price" was the term used by the commenter I was responding to.

by Goladus 13y ago

cinquemb 13y ago

Definitely something brewing… I posted these a while back on another thread, but these seem highly relevant to getting some insight to where the demand from state/federal government is going. The Atlantic did a piece on decrease in government funding trends back in january: http://www.theatlantic.com/business/archive/2013/01/the-38-states-that-have-slashed-higher-education-spending/267427/ http://www.theatlantic.com/business/archive/2013/01/the-38-s... And Think Progress shows some stats on another indicator of decrease in government funding trends (tuition hikes): http://thinkprogress.org/education/2013/03/19/1741231/states-higher-education-cuts/ http://thinkprogress.org/education/2013/03/19/1741231/states... The Kansas City Fed also did a report on a periphery indicator of decrease in government funding trends (student loan defaults) and more: http://www.kansascityfed.org/publicat/reswkpap/pdf/rwp%2012-05.pdf http://www.kansascityfed.org/publicat/reswkpap/pdf/rwp%2012-...

nostrademons 13y ago

The difference between sticker price and net tuition (I don't understand what you mean by "net sticker price", that seems to conflate both metrics) is usually the result of price discrimination by the colleges. They raise sticker price so they can charge wealthy applicants more, and then offer generous financial aid so they can charge poor applicants less. It is a subsidy, but it's a subsidy within the organization. Similarly, many of these financial aid grants at elite institutions are often funded through alumni donations and investment income off the endowment. This is also a voluntary transfer payment from rich to poor. If you want to measure the incoming tuition flows into college, the metric you probably want is net tuition + government funding. That excludes transfer payments within the organization from rich to poor and donations to non-profit scholarship corporations, but includes funding from tax revenues.

Goladus 13y ago
It is a subsidy, but it's a subsidy within the organization. The original version of my comment explained this but I removed it for brevity. But yes you are right. From what I understand the money flow, especially at elite institutions, can be very complex. Also "net sticker price" was the term used by the commenter I was responding to.