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Parts of this article bother me. Let's say that banks could set rates based on risk and this did force lower quality colleges to reduce their tuition. Those c

by beloch 12y ago

Parts of this article bother me. Let's say that banks could set rates based on risk and this did force lower quality colleges to reduce their tuition. Those colleges would bring in less revenue and program quality would likely suffer, possibly resulting in a feedback loop. Meanwhile, ivy league universities that are funded primarily by endowments would be able to raise their tuition without burdening their students, who would be able to afford larger loans given that they would be paying lower interest rates. In short, rich schools get negligibly richer while poor schools get significantly poorer. More importantly, Ivy league program quality would not improve significantly while lower tier college programs would spiral downwards. If the goal is to promote quality education, the current system lets ivy league students subsidy lower tier college students to some extent. It makes more tuition dollars available to institutions that depend entirely on tuition at the price of restricting tuition dollars available to institutions that are less reliant on them. The status quo has significant advantages over what this article proposes. Higher default-rates are a problem, but the lesser of several evils (unless you happen to be a banker). North of the border, university tuition is subsidied by provincial governments and regulated by them as well. It varies from province to province, but average tuition in Canada is far lower than it is in the U.S.. In most provinces, tuition is still expensive enough to be considered an investment, but cheap enough that thrifty living, summer jobs, and a minor scholarship or two can see you through undergrad without debt. It's a different approach that's worth considering.

ploxiln 12y ago
College tuition has been rising much faster than inflation for probably 20 years now. That together with your example of Canada shows that it's still quite possible to offer a good education at a lower price. If you want to help the poorer schools out, it's probably better to just give them money. It seems probable to me that the political desire to give every student a full loan to any college (for equality!) is one of two or three primary causes of tuition (and university spending and such) going crazy.
- icebraining 12y ago
  College tuition has been rising much faster than inflation for probably 20 years now. Actually, not really. The average price students actually pay has only increased $320 in the last 12 years (from $12650 to $12970). That probably doesn't even cover inflation. What has been rising much faster is the sticker price, but few students actually pay that. http://www.npr.org/blogs/money/2012/05/11/152499671/figuring-out-the-real-price-of-college http://www.npr.org/blogs/money/2012/05/11/152499671/figuring... http://www.npr.org/blogs/money/2012/05/22/153316565/the-price-of-college-tuition-in-1-graphic http://www.npr.org/blogs/money/2012/05/22/153316565/the-pric...
Swizec 12y ago
And yet in much of Europe (or at least where I'm from), colleges where you pay tuition are considered substandard whereas colleges without tuition are considered high quality. Mostly to do with the expectation that if you pay tuition they will make bloody certain you get that degree, whereas colleges without tuition fail some 50% of their students. Hell, Universities don't even want to accept tuition-based colleges under their umbrella because the quality just isn't there.
- aianus 12y ago
  This just seems bizarre to me. How can state funded schools compete for good professors with rich private schools?
  - Swizec 12y ago
    Professors in state funded schools get enough free time to run businesses on the side. They also get access to grant money. Also there's the prestige involved with being part of a University with 100+ years of tradition versus a college with 20 years of tradition at best.
  - Tomte 12y ago
    In Germany the "rich" private schools are almost exclusively business schools. So it's only an option for you, if you're a professor of economics or finance, not if you're a physicist or a philosopher. Well, I think there is one highly esteemed journalism school (not a university, but run by large media companies) and a pretty good law school. (Interestingly enough all those "rich" private business schools here fail after a few years because they run out of money -- not without taking quite a bit of taxpayer's money trying to save them.)
  - jadyoyster 12y ago
    The private schools don't care about having good academics, just about making money. Good professors want to be associated with the trusted and traditional publicly funded universities.
    - 12y ago
_broody 12y ago
Perhaps facing a crisis is what low-quality colleges need. The current system is a failure. It doesn't make sense that in an age where so many top-end study materials are available so ubiquitously, easily, and much cheaper than ever (even freely!), getting a diploma has become such an onerous undertaking, and that the accompanying tuition is proving to be increasingly inadequate to prepare its graduates for a cutthroat job market. Throwing more money at the problem isn't going to solve anything when we don't even know what the hell the system is doing with all the cash funnelled into it in the first place.
- dajohnson89 12y ago
  Much of the cash is being funneled into administrator salaries and lucrative construction/service contracts.
hatbert 12y ago
I doubt the feedback loop would be very severe, simply because most tuition is not used to pay for faculty. Instead, most goes to the ever-increasing army of administrators whose actual responsibilities are harder and harder to pin down. The more likely scenario is that colleges would be required to trim the fat.
jasonlfunk 12y ago
You are right. This is exactly how a free market works. A bad school starts losing money and either changes or closes. If the Government insured or backed all the loans, bad schools have no market incentive to change.
IgorPartola 12y ago
Random aside: I was under the impression that very few schools were funded by endowments in any significant way. Harvard was a big exception to that rule, which hit them really hard in 2008. They had a team of high profile Wall Street traders who did a pretty good job raising their endowment to the point where it funded at least a third of their operations. With this newfound wealth, Harvard started a whole lot of construction projects which were then cut short in 2008. Another response to the financial crisis: Harvard stopped offering their students free coffee.
Amezarak 12y ago
> North of the border, university tuition is subsidied by provincial governments and regulated by them as well. It varies from province to province, but average tuition in Canada is far lower than it is in the U.S.. One thing that often goes unmentioned is that public universities in the United States are subsidized by state governments. In fact, the rapid fall in state subsidies is one major reason for rising tuition costs. Most states also fairly strictly regulate public universities; you'll probably find there's something along the lines of a Commission or Board of Trustees appointed by the state governor to oversee and regulate universities. The difference, of course, is the degree, kind, and aims of our subsidies and regulation. Furthermore, most every public university offers free tuition if the in-state student scores sufficiently high on the ACT or SAT. I think these factors are important when comparing the US system to other countries, as is likely to happen in this thread.

by beloch 12y ago

ploxiln 12y ago

College tuition has been rising much faster than inflation for probably 20 years now. That together with your example of Canada shows that it's still quite possible to offer a good education at a lower price. If you want to help the poorer schools out, it's probably better to just give them money. It seems probable to me that the political desire to give every student a full loan to any college (for equality!) is one of two or three primary causes of tuition (and university spending and such) going crazy.

icebraining 12y ago
College tuition has been rising much faster than inflation for probably 20 years now. Actually, not really. The average price students actually pay has only increased $320 in the last 12 years (from $12650 to $12970). That probably doesn't even cover inflation. What has been rising much faster is the sticker price, but few students actually pay that. http://www.npr.org/blogs/money/2012/05/11/152499671/figuring-out-the-real-price-of-college http://www.npr.org/blogs/money/2012/05/11/152499671/figuring... http://www.npr.org/blogs/money/2012/05/22/153316565/the-price-of-college-tuition-in-1-graphic http://www.npr.org/blogs/money/2012/05/22/153316565/the-pric...

Swizec 12y ago

And yet in much of Europe (or at least where I'm from), colleges where you pay tuition are considered substandard whereas colleges without tuition are considered high quality. Mostly to do with the expectation that if you pay tuition they will make bloody certain you get that degree, whereas colleges without tuition fail some 50% of their students. Hell, Universities don't even want to accept tuition-based colleges under their umbrella because the quality just isn't there.

aianus 12y ago
This just seems bizarre to me. How can state funded schools compete for good professors with rich private schools?
- Swizec 12y ago
  Professors in state funded schools get enough free time to run businesses on the side. They also get access to grant money. Also there's the prestige involved with being part of a University with 100+ years of tradition versus a college with 20 years of tradition at best.
- Tomte 12y ago
  In Germany the "rich" private schools are almost exclusively business schools. So it's only an option for you, if you're a professor of economics or finance, not if you're a physicist or a philosopher. Well, I think there is one highly esteemed journalism school (not a university, but run by large media companies) and a pretty good law school. (Interestingly enough all those "rich" private business schools here fail after a few years because they run out of money -- not without taking quite a bit of taxpayer's money trying to save them.)
- jadyoyster 12y ago
  The private schools don't care about having good academics, just about making money. Good professors want to be associated with the trusted and traditional publicly funded universities.
  - 12y ago

_broody 12y ago

Perhaps facing a crisis is what low-quality colleges need. The current system is a failure. It doesn't make sense that in an age where so many top-end study materials are available so ubiquitously, easily, and much cheaper than ever (even freely!), getting a diploma has become such an onerous undertaking, and that the accompanying tuition is proving to be increasingly inadequate to prepare its graduates for a cutthroat job market. Throwing more money at the problem isn't going to solve anything when we don't even know what the hell the system is doing with all the cash funnelled into it in the first place.

dajohnson89 12y ago
Much of the cash is being funneled into administrator salaries and lucrative construction/service contracts.

hatbert 12y ago

I doubt the feedback loop would be very severe, simply because most tuition is not used to pay for faculty. Instead, most goes to the ever-increasing army of administrators whose actual responsibilities are harder and harder to pin down. The more likely scenario is that colleges would be required to trim the fat.

jasonlfunk 12y ago

You are right. This is exactly how a free market works. A bad school starts losing money and either changes or closes. If the Government insured or backed all the loans, bad schools have no market incentive to change.

IgorPartola 12y ago

Random aside: I was under the impression that very few schools were funded by endowments in any significant way. Harvard was a big exception to that rule, which hit them really hard in 2008. They had a team of high profile Wall Street traders who did a pretty good job raising their endowment to the point where it funded at least a third of their operations. With this newfound wealth, Harvard started a whole lot of construction projects which were then cut short in 2008. Another response to the financial crisis: Harvard stopped offering their students free coffee.

Amezarak 12y ago

> North of the border, university tuition is subsidied by provincial governments and regulated by them as well. It varies from province to province, but average tuition in Canada is far lower than it is in the U.S.. One thing that often goes unmentioned is that public universities in the United States are subsidized by state governments. In fact, the rapid fall in state subsidies is one major reason for rising tuition costs. Most states also fairly strictly regulate public universities; you'll probably find there's something along the lines of a Commission or Board of Trustees appointed by the state governor to oversee and regulate universities. The difference, of course, is the degree, kind, and aims of our subsidies and regulation. Furthermore, most every public university offers free tuition if the in-state student scores sufficiently high on the ACT or SAT. I think these factors are important when comparing the US system to other countries, as is likely to happen in this thread.