Bryan Caplan  

Revealing Sentence on Higher Ed

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Sorrow and Anger... Henderson on the Future of U.S...
From the NYT's piece on the financial troubles of higher ed:
25 percent of the private colleges that Moody's rated did not raise tuition in fiscal 2011 at or beyond the rate of inflation; 21 percent of rated public universities did not do so.
In short, 75% of private colleges and 79% of public universities raising tuition by more than inflation is considered a tough year!  How many other industries would see this situation as problematic?

HT: Tyler


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COMMENTS (8 to date)
Bostonian writes:

Simple, partial solution: the government should decide what a reasonable cost for tuition and room and board is, say $30K, and allocate need-based financial aid (Pell grants and guaranteed student loans) on this basis (or on a lower figure if that is what the college charges).

Colleges would be free to charge more than $30K, but
their students would not qualify for more federal loans and grants than students at schools charging $30K.

R Richard Schweitzer writes:

As to the suggestion of Bostonian, would that not require that we amend that particular provision of section 8, article I of the Constitution which specifically authorizes the appropriations for those purposes? :-))

Michael writes:

As always when looking at tuition numbers, please do not confuse "sticker price" with actual tuition paid per student. Most schools have a high listed tuition (for signalling purposes, if you will), but give a lot of financial aid and so have a much lower effective tuition. According to an NPR Planet Money podcast from a while back (http://www.npr.org/blogs/money/2012/05/11/152511771/the-real-price-of-college), average tuition paid has actually lagged inflation for many years now.

Thomas Sewell writes:

The current tuition price at most mid to high-end colleges is "All of your money and your parents money, plus whatever we can squeeze out of the government and whatever loans you qualify for."

The actual sticker prices, as Michael notes, is irrelevant to the real prices, other than as an accounting trick or signaling mechanism.

Mike Rulle writes:

Schools care about what they receive, not sticker price. However, part of what they get paid are guarantees from the federal government. The price colleges receive has probably risen even faster than sticker as a higher percentage of students have been using loans.

As long as the Feds keep making up the difference, prices will rise.

Alexei Sadeski writes:

Don't you love the subtle power of framing?

Shayne Cook writes:

To Thomas Sewell:

Jeez, for a second there I thought you were describing the financing scheme for the health care industry rather than the higher ed industry!

Thomas Sewell writes:

Shayne,

No, the health care industry charges you whatever they feel like that week, then say you should have had insurance, but that they'll be happy to put you on a payment plan if you can't afford it all upfront.

Unless you're doing vision or cosmetic surgery. That you have a choice of cheap providers for. Sort of "grey market" medicine without third-party payers.

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