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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 coll
by 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 agoSo 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 agoThe 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 agoand since college loans aren't dischargeable, you get to keep the student in hock for the rest of their life!
- adamjernst 13y agoThat'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 agoColleges responded to the availability of easy federal money by raising prices to capture the subsidy (ie. big fat administrator salaries).
- throwaway420 13y agoThis 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 agoYou'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 agoWhat 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 agoI like how you agree with the premise of the article while simultaneously calling it "bullshit". Big Brother is proud of your doublethink.