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What's Really 'Immoral' About Student Loans

72 points by lordgeek 13y ago

joshuaellinger 13y ago
Good grief, I always forget how misleading the WSJ is. "Gov'ment causes those poor helpless colleges to overcharge." Bullshit. The growth in the cost of college is tied to big fat administrator salaries. It is control fraud pure and simple. To paraphrase, the best way to rob a college is to run one.
- anonymoushn 13y ago
  So you're saying if we didn't have government guarantees on student loans or any other form of government subsidy, banks would just give 20somethings who want art degrees $200,000 completely unsecured?
  - xyzzy123 13y ago
    > banks would just give 20somethings who want art degrees $200,000 completely unsecured? Of course they wouldn't. That's the idea though. Back-pressure. The idea is that it would then become unrealistic for institutions to try and charge 200k for an arts degree which no one can afford, even with loans. This should lead to lower tuition. Bear in mind that that what any institution wants to charge is the absolute maximum the student can borrow, plus any government subsidies or fees they can extract.
    - roguecoder 13y ago
      The demand for college education is still elastic. College loans merely allow colleges to extract values greater than the student's ability to pay.
      - dnautics 13y ago
        and since college loans aren't dischargeable, you get to keep the student in hock for the rest of their life!
- adamjernst 13y ago
  That's precisely what he argued though: "A 2010 study by the Goldwater Institute identified "administrative bloat" as a leading reason for higher costs. The study found that many American universities now have more salaried administrators than teaching faculty." What's more he doesn't propose eliminating federal aid or loan guarantees, he advocates letting you discharge student loan debt in bankruptcy and putting colleges on the hook for some percentage of that default. Sounds like a great idea to me. Schools that equip their students for well-paying jobs have nothing to fear, but diploma mills out for easy loan money will suffer.
- pdog 13y ago
  Colleges responded to the availability of easy federal money by raising prices to capture the subsidy (ie. big fat administrator salaries).
  - throwaway420 13y ago
    This is the only answer in this thread that is accurate. Despite its best efforts, economic law is the only one that the government can't find a way to violate.
- jlarocco 13y ago
  You're not really refuting the article's point, and you're not making a very good argument that school administrators are committing control fraud. Where is the evidence for control fraud? The article makes a good point, IMO. Schools can pay "big fat administrator salaries" because students have practically unlimited access to money via student loans. Give everybody a 10% raise, and tell students to take out 10% more loans. If the student can't pay the loans then it's not the school's problem, but maybe it should be.
  - joshuaellinger 13y ago
    What do you think control fraud is? It is not just giving your deans a big loan to buy a house and the forgiving it. It includes paying yourself excessively. If someone is stealing from you, the answer is not to make them share the risk.
- acheron 13y ago
  I like how you agree with the premise of the article while simultaneously calling it "bullshit". Big Brother is proud of your doublethink.
MartinCron 13y ago
You should only be able to use the "principal" pun once per article.
dajohnson89 13y ago
It is criminal that serious student-loan reform isn't on the table. As a recent graduate making monthly payments towards a 5-figure principal, I say fuck capping the interest rates. Please cap tuition and fees. Don't give me that BS about how universities need the money. During undergrad, I squatted in a 600 sq. ft. apartment shared with 3 other people. I seriously doubt my health is unaffected by the mold, mildew, vermin, etc. I had to live with every day. Across the street was the president's mansion(!). He had a team of gardeners, fountains, a gilded mailbox, and some pretty nice carS in the driveway. His army of administrators never worked a minute after 5:00, as evidenced by the steady stream of Bimmers, Benzes, and Lexuses that poured out of the administrative building's parking lot every day at 5:01 pm. Oh BTW, their building was the only one on campus with glass doors, bronze handles, oak furniture, marble floors, etc. Trim the fat, and make the university answer to a more sane market force.
- vizeroth 13y ago
  Clearly, this is going to vary from one University to the next, but top-level administrator salaries have gone through the roof in almost every industry, including education, while most staff (and faculty, in the case of education) salaries have remained flat or even dropped. The primary factor driving tuition rates up is reduced funding from State governments for State Universities and Colleges. Private Universities, of course, keep increasing their tuition rates to keep them at the same level relative to the State schools. Even the state schools (at least those trying to do something besides cut the quality of education and pass the costs on to the students) are getting a significant amount of their budget through private fund-raising. Of course, when it comes to private funds, it's easy to get someone to pay for a building or renovations if you're willing to put their name on it. You may even get some scholarships for students, some equipment, extra funds for high-profile faculty (or high-profile administrators, in some cases), and many people are willing to donate their time to speak to students as guest lecturers. Good luck getting someone to pay for faculty & staff wages and benefits, though.
- coryrc 13y ago
  "Market forces" are you making a decision to go to that school and not one of the thousands of others that offer reasonable tuition. None of that describes the school I went to.
kyllo 13y ago
Colleges have responded to the availability of easy federal money by doing what subsidized industries generally do: Raising prices to capture the subsidy. Exactly. This is an American problem though, the Europeans figured out many years ago that making tuition free for the students is a win-win for society. Everyone wants to go to college, so just make everyone pay for it, progressively, over time.
- billsix 13y ago
  I was under the assumption that college is free for students in many European countries, assuming the student passed certain tests. If those tests aren't passed, no college. Is that not correct?
  - wavefunction 13y ago
    Are you implying that not everyone sufficiently motivated cannot pass the necessary tests? A question for a question ;)
  - Ihmahr 13y ago
    That is correct. For example, if you want to study engineering you have to have certain math skills. Otherwise university won't let you in, no matter how much you pay. Oh, free college no. But tuition is something like $700 annual in germany/france. There is no housing or anything.
    - dnautics 13y ago
      this is all and good for something like engineering where it is possible and maybe desirable to set some reasonable, objective standards. What about something like political sciences? Almost all of the upper-level public servants in a country like France come from the same school (ecole sciences-po)... Doesn't this become dangerous? Who gets to be the gatekeeper?
      - mordae 13y ago
        Well the entrance tests for Faculty of Philosophy that my close friend attended have been in the form of interview and they mostly asked about what authors did you read, what were they trying to say and such. It's actually not that complicated for people invested in some area (of science, politics, culture) to spot good candidates when you give them a chance. Sadly, the quality of education in Czech Republic have degraded significantly in capitalism. We have gotten rid of Marxism-Leninism but have also let significantly more people in and set the incentives to produce a lot of graduates with much less knowledge, with rest of the bulk being thrown out after 2 years so that the university gets maximum state support. We are probably going to end up with student loans and lower government participation, which will ruin our education system completely.
ebiester 13y ago
So.. We make it so that only people likely to pay the loan back get student loans. Then, we watch as the actuaries figure out that students frompoor families are the ones who disproportionately pay their loans (since they don't have the same familial support during and after college.) So, poor students are disproportionately denied loans, and we continue to see generational wealth inequality expand. There are no great solutions, and there are tradeoffs everywhere. However, leaving it to the market seems immoral too.
- dnautics 13y ago
  why is 'leaving it to the market' immoral? If you think the poor should be granted preferential financial treatment, then you should reach into your own pocket and help pay for them. Or help scholarship funds raise money. Or at least pressure your alma mater to set aside some funds for the economically underprivileged. If you don't do any of the above, then you don't really believe in it, do you? It's also kind of insulting for you to assume 'the poor are the ones who won't be able to pay back'. In my experience (and it's possible that I had a unique college experience) it was the students who came from tougher backgrounds that buckled down, didn't get stupid degrees, or even if they did, managed to pull decent, well-paying jobs out of college, because they used their education, and it was the upper class students that were loafers or chose their degrees in a silly fashion, so in a way, the good education of the less privileged was subsidized by the poor choices of the rich.
  - dnautics 13y ago
    should clarify, my 'unique college experience' was that I went to a fairly expensive private research university in the US; I strongly suspect that the waste of time in college cuts across socioeconomic lines at many big box state schools.
- Jach 13y ago
  > ... generational wealth inequality expand. People automatically assume economic inequality is bad, though here's an argument for its merits: http://www.paulgraham.com/inequality.html http://www.paulgraham.com/inequality.html I'm more concerned about the wealth floor in a society going down, which is at odds with the general trend over the past centuries of it going up, even if not at the same rate as the wealth ceiling.
hkmurakami 13y ago
>A 2010 study by the Goldwater Institute identified "administrative bloat" as a leading reason for higher costs. The study found that many American universities now have more salaried administrators than teaching faculty. It's not just the number of administrators but also the pay. They tend to make many times that of actual professors. And there's no question which camp brings more value to students.
pnathan 13y ago
College is an interesting situation. It might be argued that collectively we all have an interest in seeing a more educated society, regardless of the earning power. It might also be argued that collectively we need to focus more on not "going to college" but instead focusing on things like "learning a sustainable trade". And, for an individual looking to maximize earnings & employment, a bachelor's in STEM/business is still a really good buy, supposing you didn't go to $$$ SLAC/Ivy League. Whereas subjects that are less fiscally shiny lead their students into a dark hole of debt. One solution is to simply collectivize the cost: everyone gets free college. That's really expensive and without good cost controls, well, is susceptible to being taken advantage of. Another solution is to go at colleges with the dieting plan. That's the current one. IMHO, that's exactly the wrong way to go about it. Another solution is to aggressively force state schools to cut overhead; i.e. cut the administrator staff. Well, asking people to fire themselves is sort of utopian, doncha think? :) --- I don't really buy any of the solutions that I currently know about in the US. My thought is that there are far too many colleges in the US. Too many states trying to stretch too few dollars over too many campuses. I instead think that federal funding should go to a select few - perhaps three or four - in the US. These colleges would be fully free and fully funded by the feds. Professors would be encouraged to congregate there and focus on having huge departments where all sorts of research could go on. The overhead per college is so high; it's considerably more scalable to focus on having a few large campuses than the small ones everywhere. Each campus requires a mini admin to be set up. Worse, the larger a department is, the more interesting collisions can happen: small departments work against this by not having that interesting person to run into(they are in the other state). Anyway, that's my undercooked idea to help college education. Education in the US is, I think, a wreck, and it has a variety of causes. Among them, the historic anti-intellectualism of Americans, the loss of historic mission, the rank foolishness of levelling egalitarians, the shrinking dollars for defense research, etc. More causes could be added.
- purplelobster 13y ago
  About collectivizing costs, you speak as if it has never been tried and you discount the idea based on your own assumptions that it would be too expensive? As someone who has gone to university both at a free*(you actually get money to study) (~top) Scandinavian university as well as a (~top 10) US university, there is not much difference in the actual education from what I could tell. Where there's a real big difference though is research. US universities consistently outspends and outproduces European universities by a large factor. My theory is that the undergrads are paying for the professor's research and grad students, but I'm not sure. The money has to come from somewhere. Either way, neither I nor my parents would ever have been able afford US tuition + living costs. I took a loan for all the living costs that were not covered by subsidies, a loan with an interest of about 1.9%, so I can't even complain about that. My point is that in the US, I would probably not have been able to afford a decent college, and I think that's a broken system. Research and fancy campus gyms should not be funded by stepping on poor undergrads. By the way, it also seems that student loans for US students mainly consists of tuition payments. There is rarely any mention of livings costs which I find curious. Do people just take it for granted that the parents will pay that part? Myself, after 5 years, I was roughly $50,000 in debt, all of it living expenses (note, that's only $10,000 a year in a country with high cost of living). My family didn't (and didn't have to) pay anything to put me through college. From what I can tell, this is the norm here, students take loans for their living expenses and parents are not expected to support them.
charlieflowers 13y ago
I have wondered for a long time now where all the college tuition money goes. Consider that: (1) the cost of tuition has grown FAR faster than inflation, and is now sky high, (2) A huge percentage of students need and get student loans, (3) student loans are one of the few types of liabilities that bankruptcy can't wipe out. So "everyone" (speaking loosely) goes to college, and "everyone" gets a loan. The college gets its money up front, and bears no risk of having that money taken away. This represents a huge flow of money into universities. Where does it go from there? How does college tuition revenue yearly compare to Apple's revenue from iphones yearly? In the case of Apple, I can see where the money goes ... Apple employs a huge number of people working on expensive ongoing operations. What are colleges doing with all this money? Surely all of it is not being soaked up by overpaid administrators?? A money stream that large ought to have a big, obvious wake behind it, but I don't know where that money goes. Can anyone enlighten me?
- rdouble 13y ago
  The increases in spending are indeed soaked up by overpaid administrators and their teams, known as "institutional support." For state schools, budget information is public and you can see for yourself how the university spends its money. This opinion piece regarding the University of Minnesota distills some of that information: http://www.startribune.com/opinion/42550752.html http://www.startribune.com/opinion/42550752.html But in one category, expenditures have nearly doubled over the last five years. That category is "institutional support," which consists essentially of central administration. The 2008-09 budget plan increases expenditures for institutional support by more than $143 million, or 80 percent, over the figure for 2004-05. The spending increase in this category alone covers the amount by which the governor proposes to reduce the state’s annual appropriation to the university. What has the university bought with all this additional money spent on "institutional support"? Among other things, a growing array of vice presidents and associate vice presidents. The university now employs 12 VPs, several of whose positions have been created during the last five years. Every occupant of such a position earns a six-figure salary, starting at around $250,000 per year. Multiply by twelve, add a number of associate VPs, then staff support, plus assorted expenses for everything from office supplies to travel — and the institution spends millions more each year on central administration This same pattern can be seen at almost any state university in the United States.
eightyone 13y ago
For an opposite view point, see the Salon article Tuition is too damn high. It argues for the vast majority of people tuition has increased because government has drastically cut funds to public education. Not because of Pell Grants or "easy money". The author has some interesting data, as well. Here's a glimpse: "The first step in grappling with the rise in the cost of higher education requires understanding where students go to school. There are three main categories — public schools (which include both four-year public universities and two-year community colleges), private nonprofits (the Ivys, most liberal arts colleges, etc.), and the for-profits (Kaplan, University of Phoenix, Corinthian Colleges, aka “career schools”). Here’s the key statistic: Fully 70 percent of the 19 million undergraduates and 3 million graduate students enrolled in post-secondary education in 2010 attended schools considered to be in the public sector — by which it is meant that some portion of their funding comes directly from government." "The problem: The word “public” doesn’t mean as much as it used to. Direct state support for public colleges has cratered over the past 10 years, and really fell off the cliff after the financial crisis. Yes, tuitions have risen, but not by as much as state and local appropriations for higher education have fallen. Just between 2008 and 2009, for example, average tuition revenue at public research institutions increased by $369 per student, but the loss in state and local appropriations per student was $751. Similarly, at public community colleges, tuition revenue rose by $113 per student, while appropriations fell by $488. Since the recession of 2001, tuition hikes, as exorbitant as they have been, still haven’t kept pace with the fall in government support." http://www.salon.com/2012/05/11/tuition_is_too_damn_high/ http://www.salon.com/2012/05/11/tuition_is_too_damn_high/
- zanny 13y ago
  The article you link touches on it, but before you even consider where students go to school you must ask why they do. And that is a very vacuous answer most of the time. I got my CS degree only because my peers said it would be significantly easier to be consistently employed with a BS even when it cost me 20k to get. In reality, young adults don't go to college to learn. They did that for ~15 years (even worse, they did for 15 years by compulsion without much say in the matter) and the vast majority want to do something else. Most of them are there for credentials, not knowledge, and that is the problem. The most important problem here is the necessity to disconnect education from schooling. The intent of the latter is to cause the former, but the former is not dependent on being confined to the latter. You can apprentice, you can self-teach, you can dive in as a high risk newbie in an industry. None of those involve going to prohibitively expensive summer camps turned annual to get lectured at. The Internet enables a lot here - where previously it was very hard to find like minded individuals interested in participatory group learning about a subject, now it is stupidly easy, a search away. Learning resources are also rampant online in what used to be confined to a tome from the local library or a prohibitively expensive book purchase. So the third viewpoint is that the problem has nothing to do with how the government behaves here because it is symptomatic of a baby-boomer irrational quest to get pieces of paper saying "bachelors" on it for everyone currently under the age of 30. The solution is to get a significant chunk of the people currently attending college and accruing these insane debts into more productive and better directed paths to careers in the things that interest them without the cultural baggage touting a phd in some field writing on a chalkboard as the golden goose of learning. The real, true, bottom of the barrel reason I think this entire debacle even exists or came about in the first place, and I think it is at the root of most societal shifts for 30 years, is that the ultra-concentration of capital and wealth into so few people has dramatically slowed down the productivity engine of the first world. There is little motivation when you already pull the strings of international business to invest in risky youth labor, and when you control a huge chunk of the economy your lack of risk taking on new talent means huge droves of the population are never given a chance to succeed. It is safer and (here is the key) more profitable to play games with rigged fiat money and banks or stocks of fortune 500ers than to actually create goods and services by growing productivity and creating value.
dale31 13y ago
Why not just cap the annual payout of federal loans to a reasonable level? This would surely put downward pressure on tuition.
javert 13y ago
Any form of government subsidized education is immoral. The universe doesn't owe you an education, which, like all values, is inherently expensive, and must be produced. Neither does society; and neither do I. This may seem cruel, but it's actually kind. Were it not for government control of education, education would have already undergone the same kind of massive transition that has happened to every free-market industry: much better, much cheaper, much more widely available. If you want to see what happens to an economic sector as the government becomes more invasive, look at the finance sector, which is the most controlled sector in the US, or look at the "federal telecom bureaus" (AT&T, Time Warner and Verizon).
- chrisrhoden 13y ago
  I really, really wish all objectivists had been born (actually) underprivileged.
  - maxharris 13y ago
    It is better to take cognizance of how things really are rather than how you really, really wish them to be. Where you start in life doesn't matter, but how big a jump you make in improving your lot does, and that's something that's entirely up to you. Please lay off the Rawlsian stuff - it doesn't square with the things I've observed in my own life. Nor does it square with the experiences of many of my friends that started life out poor, and chose to make something of themselves. At this point, some might say, "you didn't earn your brain/parent's money/etc." I say that's nonsense, because the entire idea of "earn" arises in order to distinguish real people who choose to act toward a goal from those that choose not to. To do that, we have to look at adults - lots of them, ranging from bums to billionaires, across time and professions, on and on. Then at young adults, then at small children (to fully see the contrast with adults). Choice is the crucial thing here: nobody could arrive at the idea of "earning" or "deserts" or "justice" by studying newborns or fetuses. Relying on "earn" (which depends on the idea of choice and free will, as I've indicated above) in a statement intended to undermine the idea of choice and free will is bogus. EDIT: I am making some serious points here. Disagree all you want in comments, but downvoting me reflexively does not refute my argument.
dnautics 13y ago
I'm surprised the absolute nondischargeability of student loans is not brought up in the article. This is, ultimately immoral, because that is exactly (fractional, voluntary, nonchattel) slavery. The US, to Obama and congress's credit (those who know me know I'm not a huge fan) engaged in some credit reform in the wake of the 2008-2009 economic crisis. Credit cards firms were required to allow their customers to restructure their loans and became obligated to outline the loan payments afterward, and rotating credit became dischargeable in bankruptcy proceedings. One wonders why college credit hasn't undergone such reforms. Does academia have that powerful of a lobby?
joshuaellinger 13y ago
I just realized my earlier comment on the WSJ being misleading did not really clear. He has the facts right but, to get published in the WSJ, he can't point at the real issue. It is same problems we have the with banks. These institutions have tons of hidden subsidies. They always will. Subsidized industries behave differently from non-subsidized ones in general but the WSJ approved solution is to pretend that it is possible to remove the subsidy. For public goods (utilities, parts of finance, education), you have to have government intervention and deal with the side-effects. That means regulation and rules about what you do with the money. I don't think the author would disagree when I say that the administrator are stealing from the taxpayers. But what is 'bullshit' is saying that we just have to accept it. When people are stealing from you, you deal with it head on. If they were employees, you would fire them. I don't have a great answer for colleges but you need to at least let the administrators know that they are acting immorally. It is not the loan process that is immoral -- it is the people who are running the colleges.

72 points by lordgeek 13y ago

Good grief, I always forget how misleading the WSJ is. "Gov'ment causes those poor helpless colleges to overcharge." Bullshit. The growth in the cost of college is tied to big fat administrator salaries. It is control fraud pure and simple. To paraphrase, the best way to rob a college is to run one.

anonymoushn 13y ago
So you're saying if we didn't have government guarantees on student loans or any other form of government subsidy, banks would just give 20somethings who want art degrees $200,000 completely unsecured?
- xyzzy123 13y ago
  > banks would just give 20somethings who want art degrees $200,000 completely unsecured? Of course they wouldn't. That's the idea though. Back-pressure. The idea is that it would then become unrealistic for institutions to try and charge 200k for an arts degree which no one can afford, even with loans. This should lead to lower tuition. Bear in mind that that what any institution wants to charge is the absolute maximum the student can borrow, plus any government subsidies or fees they can extract.
  - roguecoder 13y ago
    The demand for college education is still elastic. College loans merely allow colleges to extract values greater than the student's ability to pay.
    - dnautics 13y ago
      and since college loans aren't dischargeable, you get to keep the student in hock for the rest of their life!
adamjernst 13y ago
That's precisely what he argued though: "A 2010 study by the Goldwater Institute identified "administrative bloat" as a leading reason for higher costs. The study found that many American universities now have more salaried administrators than teaching faculty." What's more he doesn't propose eliminating federal aid or loan guarantees, he advocates letting you discharge student loan debt in bankruptcy and putting colleges on the hook for some percentage of that default. Sounds like a great idea to me. Schools that equip their students for well-paying jobs have nothing to fear, but diploma mills out for easy loan money will suffer.
pdog 13y ago
Colleges responded to the availability of easy federal money by raising prices to capture the subsidy (ie. big fat administrator salaries).
- throwaway420 13y ago
  This is the only answer in this thread that is accurate. Despite its best efforts, economic law is the only one that the government can't find a way to violate.
jlarocco 13y ago
You're not really refuting the article's point, and you're not making a very good argument that school administrators are committing control fraud. Where is the evidence for control fraud? The article makes a good point, IMO. Schools can pay "big fat administrator salaries" because students have practically unlimited access to money via student loans. Give everybody a 10% raise, and tell students to take out 10% more loans. If the student can't pay the loans then it's not the school's problem, but maybe it should be.
- joshuaellinger 13y ago
  What do you think control fraud is? It is not just giving your deans a big loan to buy a house and the forgiving it. It includes paying yourself excessively. If someone is stealing from you, the answer is not to make them share the risk.
acheron 13y ago
I like how you agree with the premise of the article while simultaneously calling it "bullshit". Big Brother is proud of your doublethink.

MartinCron 13y ago

You should only be able to use the "principal" pun once per article.

dajohnson89 13y ago

It is criminal that serious student-loan reform isn't on the table. As a recent graduate making monthly payments towards a 5-figure principal, I say fuck capping the interest rates. Please cap tuition and fees. Don't give me that BS about how universities need the money. During undergrad, I squatted in a 600 sq. ft. apartment shared with 3 other people. I seriously doubt my health is unaffected by the mold, mildew, vermin, etc. I had to live with every day. Across the street was the president's mansion(!). He had a team of gardeners, fountains, a gilded mailbox, and some pretty nice carS in the driveway. His army of administrators never worked a minute after 5:00, as evidenced by the steady stream of Bimmers, Benzes, and Lexuses that poured out of the administrative building's parking lot every day at 5:01 pm. Oh BTW, their building was the only one on campus with glass doors, bronze handles, oak furniture, marble floors, etc. Trim the fat, and make the university answer to a more sane market force.

vizeroth 13y ago
Clearly, this is going to vary from one University to the next, but top-level administrator salaries have gone through the roof in almost every industry, including education, while most staff (and faculty, in the case of education) salaries have remained flat or even dropped. The primary factor driving tuition rates up is reduced funding from State governments for State Universities and Colleges. Private Universities, of course, keep increasing their tuition rates to keep them at the same level relative to the State schools. Even the state schools (at least those trying to do something besides cut the quality of education and pass the costs on to the students) are getting a significant amount of their budget through private fund-raising. Of course, when it comes to private funds, it's easy to get someone to pay for a building or renovations if you're willing to put their name on it. You may even get some scholarships for students, some equipment, extra funds for high-profile faculty (or high-profile administrators, in some cases), and many people are willing to donate their time to speak to students as guest lecturers. Good luck getting someone to pay for faculty & staff wages and benefits, though.
coryrc 13y ago
"Market forces" are you making a decision to go to that school and not one of the thousands of others that offer reasonable tuition. None of that describes the school I went to.

kyllo 13y ago

Colleges have responded to the availability of easy federal money by doing what subsidized industries generally do: Raising prices to capture the subsidy. Exactly. This is an American problem though, the Europeans figured out many years ago that making tuition free for the students is a win-win for society. Everyone wants to go to college, so just make everyone pay for it, progressively, over time.

billsix 13y ago
I was under the assumption that college is free for students in many European countries, assuming the student passed certain tests. If those tests aren't passed, no college. Is that not correct?
- wavefunction 13y ago
  Are you implying that not everyone sufficiently motivated cannot pass the necessary tests? A question for a question ;)
- Ihmahr 13y ago
  That is correct. For example, if you want to study engineering you have to have certain math skills. Otherwise university won't let you in, no matter how much you pay. Oh, free college no. But tuition is something like $700 annual in germany/france. There is no housing or anything.
  - dnautics 13y ago
    this is all and good for something like engineering where it is possible and maybe desirable to set some reasonable, objective standards. What about something like political sciences? Almost all of the upper-level public servants in a country like France come from the same school (ecole sciences-po)... Doesn't this become dangerous? Who gets to be the gatekeeper?
    - mordae 13y ago
      Well the entrance tests for Faculty of Philosophy that my close friend attended have been in the form of interview and they mostly asked about what authors did you read, what were they trying to say and such. It's actually not that complicated for people invested in some area (of science, politics, culture) to spot good candidates when you give them a chance. Sadly, the quality of education in Czech Republic have degraded significantly in capitalism. We have gotten rid of Marxism-Leninism but have also let significantly more people in and set the incentives to produce a lot of graduates with much less knowledge, with rest of the bulk being thrown out after 2 years so that the university gets maximum state support. We are probably going to end up with student loans and lower government participation, which will ruin our education system completely.

ebiester 13y ago

So.. We make it so that only people likely to pay the loan back get student loans. Then, we watch as the actuaries figure out that students frompoor families are the ones who disproportionately pay their loans (since they don't have the same familial support during and after college.) So, poor students are disproportionately denied loans, and we continue to see generational wealth inequality expand. There are no great solutions, and there are tradeoffs everywhere. However, leaving it to the market seems immoral too.

dnautics 13y ago
why is 'leaving it to the market' immoral? If you think the poor should be granted preferential financial treatment, then you should reach into your own pocket and help pay for them. Or help scholarship funds raise money. Or at least pressure your alma mater to set aside some funds for the economically underprivileged. If you don't do any of the above, then you don't really believe in it, do you? It's also kind of insulting for you to assume 'the poor are the ones who won't be able to pay back'. In my experience (and it's possible that I had a unique college experience) it was the students who came from tougher backgrounds that buckled down, didn't get stupid degrees, or even if they did, managed to pull decent, well-paying jobs out of college, because they used their education, and it was the upper class students that were loafers or chose their degrees in a silly fashion, so in a way, the good education of the less privileged was subsidized by the poor choices of the rich.
- dnautics 13y ago
  should clarify, my 'unique college experience' was that I went to a fairly expensive private research university in the US; I strongly suspect that the waste of time in college cuts across socioeconomic lines at many big box state schools.
Jach 13y ago
> ... generational wealth inequality expand. People automatically assume economic inequality is bad, though here's an argument for its merits: http://www.paulgraham.com/inequality.html http://www.paulgraham.com/inequality.html I'm more concerned about the wealth floor in a society going down, which is at odds with the general trend over the past centuries of it going up, even if not at the same rate as the wealth ceiling.

hkmurakami 13y ago

>A 2010 study by the Goldwater Institute identified "administrative bloat" as a leading reason for higher costs. The study found that many American universities now have more salaried administrators than teaching faculty. It's not just the number of administrators but also the pay. They tend to make many times that of actual professors. And there's no question which camp brings more value to students.

pnathan 13y ago

College is an interesting situation. It might be argued that collectively we all have an interest in seeing a more educated society, regardless of the earning power. It might also be argued that collectively we need to focus more on not "going to college" but instead focusing on things like "learning a sustainable trade". And, for an individual looking to maximize earnings & employment, a bachelor's in STEM/business is still a really good buy, supposing you didn't go to $$$ SLAC/Ivy League. Whereas subjects that are less fiscally shiny lead their students into a dark hole of debt. One solution is to simply collectivize the cost: everyone gets free college. That's really expensive and without good cost controls, well, is susceptible to being taken advantage of. Another solution is to go at colleges with the dieting plan. That's the current one. IMHO, that's exactly the wrong way to go about it. Another solution is to aggressively force state schools to cut overhead; i.e. cut the administrator staff. Well, asking people to fire themselves is sort of utopian, doncha think? :) --- I don't really buy any of the solutions that I currently know about in the US. My thought is that there are far too many colleges in the US. Too many states trying to stretch too few dollars over too many campuses. I instead think that federal funding should go to a select few - perhaps three or four - in the US. These colleges would be fully free and fully funded by the feds. Professors would be encouraged to congregate there and focus on having huge departments where all sorts of research could go on. The overhead per college is so high; it's considerably more scalable to focus on having a few large campuses than the small ones everywhere. Each campus requires a mini admin to be set up. Worse, the larger a department is, the more interesting collisions can happen: small departments work against this by not having that interesting person to run into(they are in the other state). Anyway, that's my undercooked idea to help college education. Education in the US is, I think, a wreck, and it has a variety of causes. Among them, the historic anti-intellectualism of Americans, the loss of historic mission, the rank foolishness of levelling egalitarians, the shrinking dollars for defense research, etc. More causes could be added.

purplelobster 13y ago
About collectivizing costs, you speak as if it has never been tried and you discount the idea based on your own assumptions that it would be too expensive? As someone who has gone to university both at a free*(you actually get money to study) (~top) Scandinavian university as well as a (~top 10) US university, there is not much difference in the actual education from what I could tell. Where there's a real big difference though is research. US universities consistently outspends and outproduces European universities by a large factor. My theory is that the undergrads are paying for the professor's research and grad students, but I'm not sure. The money has to come from somewhere. Either way, neither I nor my parents would ever have been able afford US tuition + living costs. I took a loan for all the living costs that were not covered by subsidies, a loan with an interest of about 1.9%, so I can't even complain about that. My point is that in the US, I would probably not have been able to afford a decent college, and I think that's a broken system. Research and fancy campus gyms should not be funded by stepping on poor undergrads. By the way, it also seems that student loans for US students mainly consists of tuition payments. There is rarely any mention of livings costs which I find curious. Do people just take it for granted that the parents will pay that part? Myself, after 5 years, I was roughly $50,000 in debt, all of it living expenses (note, that's only $10,000 a year in a country with high cost of living). My family didn't (and didn't have to) pay anything to put me through college. From what I can tell, this is the norm here, students take loans for their living expenses and parents are not expected to support them.

charlieflowers 13y ago

I have wondered for a long time now where all the college tuition money goes. Consider that: (1) the cost of tuition has grown FAR faster than inflation, and is now sky high, (2) A huge percentage of students need and get student loans, (3) student loans are one of the few types of liabilities that bankruptcy can't wipe out. So "everyone" (speaking loosely) goes to college, and "everyone" gets a loan. The college gets its money up front, and bears no risk of having that money taken away. This represents a huge flow of money into universities. Where does it go from there? How does college tuition revenue yearly compare to Apple's revenue from iphones yearly? In the case of Apple, I can see where the money goes ... Apple employs a huge number of people working on expensive ongoing operations. What are colleges doing with all this money? Surely all of it is not being soaked up by overpaid administrators?? A money stream that large ought to have a big, obvious wake behind it, but I don't know where that money goes. Can anyone enlighten me?

rdouble 13y ago
The increases in spending are indeed soaked up by overpaid administrators and their teams, known as "institutional support." For state schools, budget information is public and you can see for yourself how the university spends its money. This opinion piece regarding the University of Minnesota distills some of that information: http://www.startribune.com/opinion/42550752.html http://www.startribune.com/opinion/42550752.html But in one category, expenditures have nearly doubled over the last five years. That category is "institutional support," which consists essentially of central administration. The 2008-09 budget plan increases expenditures for institutional support by more than $143 million, or 80 percent, over the figure for 2004-05. The spending increase in this category alone covers the amount by which the governor proposes to reduce the state’s annual appropriation to the university. What has the university bought with all this additional money spent on "institutional support"? Among other things, a growing array of vice presidents and associate vice presidents. The university now employs 12 VPs, several of whose positions have been created during the last five years. Every occupant of such a position earns a six-figure salary, starting at around $250,000 per year. Multiply by twelve, add a number of associate VPs, then staff support, plus assorted expenses for everything from office supplies to travel — and the institution spends millions more each year on central administration This same pattern can be seen at almost any state university in the United States.

eightyone 13y ago

For an opposite view point, see the Salon article Tuition is too damn high. It argues for the vast majority of people tuition has increased because government has drastically cut funds to public education. Not because of Pell Grants or "easy money". The author has some interesting data, as well. Here's a glimpse: "The first step in grappling with the rise in the cost of higher education requires understanding where students go to school. There are three main categories — public schools (which include both four-year public universities and two-year community colleges), private nonprofits (the Ivys, most liberal arts colleges, etc.), and the for-profits (Kaplan, University of Phoenix, Corinthian Colleges, aka “career schools”). Here’s the key statistic: Fully 70 percent of the 19 million undergraduates and 3 million graduate students enrolled in post-secondary education in 2010 attended schools considered to be in the public sector — by which it is meant that some portion of their funding comes directly from government." "The problem: The word “public” doesn’t mean as much as it used to. Direct state support for public colleges has cratered over the past 10 years, and really fell off the cliff after the financial crisis. Yes, tuitions have risen, but not by as much as state and local appropriations for higher education have fallen. Just between 2008 and 2009, for example, average tuition revenue at public research institutions increased by $369 per student, but the loss in state and local appropriations per student was $751. Similarly, at public community colleges, tuition revenue rose by $113 per student, while appropriations fell by $488. Since the recession of 2001, tuition hikes, as exorbitant as they have been, still haven’t kept pace with the fall in government support." http://www.salon.com/2012/05/11/tuition_is_too_damn_high/ http://www.salon.com/2012/05/11/tuition_is_too_damn_high/

zanny 13y ago
The article you link touches on it, but before you even consider where students go to school you must ask why they do. And that is a very vacuous answer most of the time. I got my CS degree only because my peers said it would be significantly easier to be consistently employed with a BS even when it cost me 20k to get. In reality, young adults don't go to college to learn. They did that for ~15 years (even worse, they did for 15 years by compulsion without much say in the matter) and the vast majority want to do something else. Most of them are there for credentials, not knowledge, and that is the problem. The most important problem here is the necessity to disconnect education from schooling. The intent of the latter is to cause the former, but the former is not dependent on being confined to the latter. You can apprentice, you can self-teach, you can dive in as a high risk newbie in an industry. None of those involve going to prohibitively expensive summer camps turned annual to get lectured at. The Internet enables a lot here - where previously it was very hard to find like minded individuals interested in participatory group learning about a subject, now it is stupidly easy, a search away. Learning resources are also rampant online in what used to be confined to a tome from the local library or a prohibitively expensive book purchase. So the third viewpoint is that the problem has nothing to do with how the government behaves here because it is symptomatic of a baby-boomer irrational quest to get pieces of paper saying "bachelors" on it for everyone currently under the age of 30. The solution is to get a significant chunk of the people currently attending college and accruing these insane debts into more productive and better directed paths to careers in the things that interest them without the cultural baggage touting a phd in some field writing on a chalkboard as the golden goose of learning. The real, true, bottom of the barrel reason I think this entire debacle even exists or came about in the first place, and I think it is at the root of most societal shifts for 30 years, is that the ultra-concentration of capital and wealth into so few people has dramatically slowed down the productivity engine of the first world. There is little motivation when you already pull the strings of international business to invest in risky youth labor, and when you control a huge chunk of the economy your lack of risk taking on new talent means huge droves of the population are never given a chance to succeed. It is safer and (here is the key) more profitable to play games with rigged fiat money and banks or stocks of fortune 500ers than to actually create goods and services by growing productivity and creating value.

dale31 13y ago

Why not just cap the annual payout of federal loans to a reasonable level? This would surely put downward pressure on tuition.

javert 13y ago

Any form of government subsidized education is immoral. The universe doesn't owe you an education, which, like all values, is inherently expensive, and must be produced. Neither does society; and neither do I. This may seem cruel, but it's actually kind. Were it not for government control of education, education would have already undergone the same kind of massive transition that has happened to every free-market industry: much better, much cheaper, much more widely available. If you want to see what happens to an economic sector as the government becomes more invasive, look at the finance sector, which is the most controlled sector in the US, or look at the "federal telecom bureaus" (AT&T, Time Warner and Verizon).

chrisrhoden 13y ago
I really, really wish all objectivists had been born (actually) underprivileged.
- maxharris 13y ago
  It is better to take cognizance of how things really are rather than how you really, really wish them to be. Where you start in life doesn't matter, but how big a jump you make in improving your lot does, and that's something that's entirely up to you. Please lay off the Rawlsian stuff - it doesn't square with the things I've observed in my own life. Nor does it square with the experiences of many of my friends that started life out poor, and chose to make something of themselves. At this point, some might say, "you didn't earn your brain/parent's money/etc." I say that's nonsense, because the entire idea of "earn" arises in order to distinguish real people who choose to act toward a goal from those that choose not to. To do that, we have to look at adults - lots of them, ranging from bums to billionaires, across time and professions, on and on. Then at young adults, then at small children (to fully see the contrast with adults). Choice is the crucial thing here: nobody could arrive at the idea of "earning" or "deserts" or "justice" by studying newborns or fetuses. Relying on "earn" (which depends on the idea of choice and free will, as I've indicated above) in a statement intended to undermine the idea of choice and free will is bogus. EDIT: I am making some serious points here. Disagree all you want in comments, but downvoting me reflexively does not refute my argument.

dnautics 13y ago

I'm surprised the absolute nondischargeability of student loans is not brought up in the article. This is, ultimately immoral, because that is exactly (fractional, voluntary, nonchattel) slavery. The US, to Obama and congress's credit (those who know me know I'm not a huge fan) engaged in some credit reform in the wake of the 2008-2009 economic crisis. Credit cards firms were required to allow their customers to restructure their loans and became obligated to outline the loan payments afterward, and rotating credit became dischargeable in bankruptcy proceedings. One wonders why college credit hasn't undergone such reforms. Does academia have that powerful of a lobby?

joshuaellinger 13y ago

I just realized my earlier comment on the WSJ being misleading did not really clear. He has the facts right but, to get published in the WSJ, he can't point at the real issue. It is same problems we have the with banks. These institutions have tons of hidden subsidies. They always will. Subsidized industries behave differently from non-subsidized ones in general but the WSJ approved solution is to pretend that it is possible to remove the subsidy. For public goods (utilities, parts of finance, education), you have to have government intervention and deal with the side-effects. That means regulation and rules about what you do with the money. I don't think the author would disagree when I say that the administrator are stealing from the taxpayers. But what is 'bullshit' is saying that we just have to accept it. When people are stealing from you, you deal with it head on. If they were employees, you would fire them. I don't have a great answer for colleges but you need to at least let the administrators know that they are acting immorally. It is not the loan process that is immoral -- it is the people who are running the colleges.