Can someone smarter than me answer this question...

[ExiledInIllinois]

Don't burden these people with something they might have to think about

 

May have to think about... Both my children have nice (and growing) education funds set up. Way more than a 5k a year.

 

[ExiledInIllinois]

Go crap in someone else's thread. I asked a serious question to those w/ a better understanding of economics than me.

 

 

I don't think he is crapping... Cheffy is right.

[Boomer860]

May have to think about... Both my children have nice (and growing) education funds set up. Way more than a 5k a year.

 

In that case if they went to a private college right now ,200,000 minimum for both of them.Hopefully the fraud will keep his mitts of those funds you are building. Of course there are always scholarships full a partial available. Good luck.

[Chef Jim]

That's a fair question, and why I included the disclaimer about dubya bashing:

 

I picked 8 years because it incorporates the two years prior to and since mine own collegiate years.

 

I went to an INSANELY expensive school- voted third most expensive by one group's scale just a year ago. It's always been expensive, and it's always been expensive relative to other schools- but since my freshmen year (2002-2003) total package has risen from something like 32K to over 40- almost 33% increase. Since I never followed college costs before I was a student, I can't say that this is an unprecedented jump, but it seems that it's an UNSUSTAINABLE jump, and given present costs, one which couldn't have been constant over the years or else it would have been way over 32k in 2002.

 

Fair enough. It's just when I hear I don't mean to bash so-and-so to me mean that they are.

[blzrul]

I believe eight years may also be an appropriate timeframe because it was that recently that many state university systems were allowed to have more control over their tuition.

 

This is what happened in Texas. In 1997 I enrolled my children in "Texas Tomorrow". This was a pre-paid tuition plan that guaranteed, at the end of the contract, that whatever the going rate in 2006, it would have been paid for at 1997 rates.

 

It was a great deal, because the contract for a 4-year public university cost $15,000. The guarantee for my daughter is that whatever the current per-credit-hour cost in Texas ... is what she gets. So whereas we paid an average of $117 per credit hour, the plan guarantees WHATEVER the CURRENT cost is in Texas. (The tuition in WA is lower so...we pay for room and board only, and not even full price since there is money left over from the tuition that gets applied.)

 

After 2000, the Texas university system was "deregulated". Tuitions skyrocketed. Net-net: Texas Tomorrow had to shut down, because it would have run out of money to meet its commitments - it couldn't accept new contracts. It was only just reincarnated a few months ago with all sorts of caveats and restrictions to be sure it doesn't run into the same problems.

 

Regarding the question on the $5,000 loan...or any loan...I think the only correlation between a loan and tuition rates may be the availability. If there's money all over the place for loans, and that generates more demand for college...I guess the college will charge what the market will bear, within whatever regulations are in place to maintain its "not for profit" status....

[mead107]

To get the $5000 the student would have to do some community service ???

$40,000 time 10,000 students , wow!

[SDS]

Of course, OTOH the private schools with endowments bigger than many countries' economies have eliminated tuition altogether. Another reason to get Andrew into Hahvahd

 

Well, given my sugar momma of a wife - we don't make the cut for the Harvard deal, but Deborah has her sites on working at Johns Hopkins in about 7 years. That gets a 50% tuition break...

 

I would still like to see your thoughts on the subject (I was thinking of you and TPS mainly when I started this). Apparently though, everyone thinks they are smarter than me.

[SDS]

Tuition costs are not driven by the amount a student can borrow, especially true for publicly funded institutions.

 

If you could provide a more thorough discussion when you have time - that would be greatly appreciated.

[YellowLinesandArmadillos]

Can you explain whey tuition inflation has run rampant over the past 8 years? I'm not fishing for dubya bashing here, I'm legitimately curious.

It has been going on a lot longer than W. It has been increasing as much as the stock market and housing costs. As more folks had more money, tuition and health care inflation has been rampant as demand has increased exponentially. There are more people going to college now then ever before.

 

Simple supply and demand.

[GG]

Well, given my sugar momma of a wife - we don't make the cut for the Harvard deal, but Deborah has her sites on working at Johns Hopkins in about 7 years. That gets a 50% tuition break...

 

I would still like to see your thoughts on the subject (I was thinking of you and TPS mainly when I started this). Apparently though, everyone thinks they are smarter than me.

 

I'm not so smart anymore....

 

But if I was, I'd say it's in between TPS's and bills fan's answers.

 

Tuition is not directly driven by financial aid, but the availability of the financial aid does play a competitive role in admissions. So while there's probably going to be a minor impact in the very near term, if a significant part of student cost support is permanently cut, colleges will have to make up the difference somehow to keep attracting students. They can do that by cutting tuition, but since tuition doesn't cover the full cost of the education, the end result is either to tap the endowment or lean heavier on alumni. State schools will have a bigger hand out to government.

[YellowLinesandArmadillos]

College Enrollment rates, historical date trend lines and date, two graphs

 

http://nces.ed.gov/programs/youthindicator...ubPageNumber=22

http://nces.ed.gov/programs/youthindicator...blesHTML/22.asp

 

http://nces.ed.gov/programs/coe/2008/chart....asp?popup=true

 

One of largest increases have come from women.

 

This combined with increased income in the 90s could intuitively explain the large increases in tuition. Combined with the fact the loans have been relatively cheap and accessible it doesn't take a rocket scientist to figure out why tuition and fees have increased especially at State Institutions.

[Bill from NYC]

Well, given my sugar momma of a wife - we don't make the cut for the Harvard deal, but Deborah has her sites on working at Johns Hopkins in about 7 years. That gets a 50% tuition break...

 

I would still like to see your thoughts on the subject (I was thinking of you and TPS mainly when I started this). Apparently though, everyone thinks they are smarter than me.

 

Scott, much obviously depends on the economy. It is not as easy these days to get into state schools because people are less able to afford private schools. Imo yes, tuition would go up in state schools if everybody received 5 K. The profs are obviously civil servants, and they will get their raises in the fashion of Long Island teachers.

 

This would probably have WAY less effect upon Ivies. Most of the kids are rich and receive no aid. As for the less wealthy, if your kids get into an Ivy, my guess is that you will send them. This would also include schools such as Duke, Stanford, MIT, U Chicago, and a few others. I am thinking that you would sacrifice virtually every cent you have and do it.

 

As for the middle ranked privates, it is tough to say. They really might not be able to raise tuition the full 5 K because credit will be tighter and parents are losing jobs. It might actually be easier right now to get into a private school ranked in the 2nd tier by US News than in previous years.

 

Btw, I am not sure of all of the above, nor do I think that I am even almost as smart as you. As I'm sure you know, I put 1 daughter through an Ivy, and the other is a junior at Stony Brook. In the process, I have visited a ton of schools, and really did my homework wrt college admission.

Generally speaking, my train of thought is that elite schools are always the best choice, followed by inexpensive state schools.

[StupidNation]

The increase in loans will directly increase tuitions. Take away the loan money the college will have to be competitive for students who can afford schooling.

 

All institutions increase their pay schedule in direct proportion to subsidies. Medical costs are a perfect example. Look at the cost for hospitalization which is subsidized vs the cost of lasik which is not subsidized. One cost has risen, one went down and the only difference is subsidies.

[X. Benedict]

If every student was offered a $5000 per year student loan, wouldn't the cost of tuition just raise that much faster, such that the pre-loan tuition cost and the post-loan tuition cost would just be the same?

 

Interesting question. It is hard to imagine tuition going up faster than it has been.

I would think that as a loan, it wouldn't do much to change that.

[X. Benedict]

The increase in loans will directly increase tuitions. Take away the loan money the college will have to be competitive for students who can afford schooling.

 

All institutions increase their pay schedule in direct proportion to subsidies. Medical costs are a perfect example. Look at the cost for hospitalization which is subsidized vs the cost of lasik which is not subsidized. One cost has risen, one went down and the only difference is subsidies.

 

The one year of federal interest subsidy on a $5000 student loan at 6.8% is how much? $350 per year or so.

[The Big Cat]

College Enrollment rates, historical date trend lines and date, two graphs

 

http://nces.ed.gov/programs/youthindicator...ubPageNumber=22

http://nces.ed.gov/programs/youthindicator...blesHTML/22.asp

 

http://nces.ed.gov/programs/coe/2008/chart....asp?popup=true

 

One of largest increases have come from women.

 

This combined with increased income in the 90s could intuitively explain the large increases in tuition. Combined with the fact the loans have been relatively cheap and accessible it doesn't take a rocket scientist to figure out why tuition and fees have increased especially at State Institutions.

 

This is why message boards exist. Thank you.

[TPS]

If you could provide a more thorough discussion when you have time - that would be greatly appreciated.

Speaking from my experience in going to a state uni and teaching at one: tuition is a function of state support, which is a function of the state budget. When I attended a UC, I paid $176 per quarter. State budgets were fat, and there was a commitment to higher ed. For the past 20 years, there have been more lean times for states than fat years, and one way to compensate is to cut allocations to the state uni systems and raise tuitions--it has nothing to do with with student loans. In fact, more than likely, student loan levels increased to keep up with rising tuition; not the other way around. My experience in SUNY is similar: whenever state budgets take a hit, they cut our funding, and we either have to cut costs, raise tuition, or both. Since NYS' budget is so closely tied to Wall Street, we are currently taking cuts (our largest increases since I've been here came in 2006 and 2007 because NYS tax revenues were flush from wall street's bubble). There is talk of a tuition increase, but this is because the state will cut its allocation to SUNY due to the cut in state revenues typically generated by Wall street. 18 years ago our state allocation was 50%, it dropped to a low of 30% about 4 years ago, and last year reached 40% again. We're starting another down cycle.

 

Answer: if there is a relationship, student loans increase to keep pace with tuition increases.

[Taro T]

Speaking from my experience in going to a state uni and teaching at one: tuition is a function of state support, which is a function of the state budget. When I attended a UC, I paid $176 per quarter. State budgets were fat, and there was a commitment to higher ed. For the past 20 years, there have been more lean times for states than fat years, and one way to compensate is to cut allocations to the state uni systems and raise tuitions--it has nothing to do with with student loans. In fact, more than likely, student loan levels increased to keep up with rising tuition; not the other way around. My experience in SUNY is similar: whenever state budgets take a hit, they cut our funding, and we either have to cut costs, raise tuition, or both. Since NYS' budget is so closely tied to Wall Street, we are currently taking cuts (our largest increases since I've been here came in 2006 and 2007 because NYS tax revenues were flush from wall street's bubble). There is talk of a tuition increase, but this is because the state will cut its allocation to SUNY due to the cut in state revenues typically generated by Wall street. 18 years ago our state allocation was 50%, it dropped to a low of 30% about 4 years ago, and last year reached 40% again. We're starting another down cycle.

 

Answer: if there is a relationship, student loans increase to keep pace with tuition increases.

Purely out of curiosity, primarily because you would have far more access to the studies than I (if they exist), have you seen any where that relationship is analyzed and how the leads and lags of tuition and loan availability relate to each other?

 

PS - I really will read that paper you sent me, unfortunately I probably won't get a chance to read it until I'm on an airplane heading for my mother-in-law's house at Christmas. (3 planes and 14 hours should get me through most of it.)

[Typical TBD Guy]

If every student was offered a $5000 per year student loan, wouldn't the cost of tuition just raise that much faster, such that the pre-loan tuition cost and the post-loan tuition cost would just be the same?

 

If you replace the word "student loan" with "government grant" or "universal scholarship," then your assertion is correct; the market for a college degree would quickly reach a supply-demand equilibrium where the tuition basically becomes $5K/year more expensive.

 

However, bear in mind the (very) obvious: loans are not free money. Not only do you have to pay the principal amount back, but you have to pay the interest charged as a service fee for borrowing that money.

 

So just because every student was offered a loan doesn't mean every student would necessarily be persuaded to take it. The cost of education will still rise because money for education has now become that much more obtainable, but the percentage of this tuition rise will depend heavily on the loan's interest rate and the expected stability of this rate over the consumer's borrowing period. The tuition vs. loan interest rate relationship is inversely proportional.

 

If we want to talk more broadly about the factors behind the increase of education costs over the years, here's my opinion of what they are (some of which have already been talked about in this thread):

 

1. More readily available student loans made by government, which began with the G.I. Bill in 1944.

2. Major private banks recently getting in the business of lending credit to students.

3. Increase in the sheer number of female high school students also wanting to attend college, going back to the late 60's.

4. Housing bubble which provided greater money access for middle class families.

5. General inflation of the U.S. monetary supply due to the Federal Reserve's actions.

6. A runaway "Giffen good" mentality toward higher education that has been collectively shared between employers and parents alike...for example, a $200K Ivy League-type private school education believed to be that much superior to a community college/state school/vocational school education that costs a very small fraction of $200K.

[YellowLinesandArmadillos]

The question I have for this board is would tuition rates have risen any where near as fast if the number of students attending college had not increased exponentially with or without subsidies? Another words did subsidies create the increase in demand or would that have happened anyway at near the same levels as we are seeing?