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WilliamShrugged
03-03-2011, 11:34 PM
I understand government gives out loans/grants but i don't know how to explain how that effects the prices. I've heard Schiff and Paul explain it, I but still need help grasping it. Articles and links would be nice.

South Park Fan
03-03-2011, 11:37 PM
Whatever you subsidize, you get more of. Since government gives out student loans which lower the present cost for students to attend college, that increases demand to attend college and thus increases the price (since numerous regulations regarding educational facilities prevent any corresponding increase in supply). The end result is that thos who can actually afford college end up paying more for it, and those who can't end up with worthless degrees and in $100,000 in tuition debt.

eduardo89
03-03-2011, 11:41 PM
Also it inflates prices by giving all students more money. If the government gives you a student loan, you're able to pay more for college, meaning schools can raise their tuition fees.

WilliamShrugged
03-03-2011, 11:43 PM
Whatever you subsidize, you get more of. Since government gives out student loans which lower the present cost for students to attend college, that increases demand to attend college and thus increases the price (since numerous regulations regarding educational facilities prevent any corresponding increase in supply). The end result is that thos who can actually afford college end up paying more for it, and those who can't end up with worthless degrees and in $100,000 in tuition debt.

Since there are 1000's of colleges in the U.S shouldn't supply be pretty good? This kinda sounds like a bubble.

WilliamShrugged
03-03-2011, 11:45 PM
Also it inflates prices by giving all students more money. If the government gives you a student loan, you're able to pay more for college, meaning schools can raise their tuition fees.

Is that because they know you'll buy it?

muzzled dogg
03-03-2011, 11:47 PM
peter schiff explains it well

iamse7en
03-04-2011, 12:57 AM
http://www.youtube.com/watch?v=DteBlI2eihA

ronaldo23
03-04-2011, 01:01 AM
colleges know students can pay any possible fee because of guaranteed gov't subsidized loans. Hence they build stupid shit that you don't need, like lavish athletic, dorm and recreational facilities, and then hike up tuition at alarming rates that consistently beat inflation. Like a real business, if they didn't have these guaranteed loans, they'd need to do massive restructuring to survive, as only a small percentage of people would actually be able to afford to go to college.

AuH20
03-04-2011, 01:06 AM
I understand government gives out loans/grants but i don't know how to explain how that effects the prices. I've heard Schiff and Paul explain it, I but still need help grasping it. Articles and links would be nice.

There are no inherent price controls. What are the motivations of colleges to keep tuition low and affordable? They have none with the government providing near limitless capital for loan purposes. Subsidization destroys all responsibility and any sense of risk assessment.

Matt Collins
03-04-2011, 01:12 AM
At least specifically regarding law school (and this might apply to other places of higher education too), they like to have a high ratio of dollars spent per student. Law school ranking largely are tied to cost, the more expensive the school, supposedly the better the education.

low preference guy
03-04-2011, 01:18 AM
I understand government gives out loans/grants but i don't know how to explain how that effects the prices. I've heard Schiff and Paul explain it, I but still need help grasping it. Articles and links would be nice.

They increase people's ability to pay for college. That's obvious, right? So demand for education is increased. When demand increases, prices rise.

Let's think now about the quality. Are colleges encouraged to educate students that can get good jobs by the government loan policy? Colleges receive the money upfront, so it doesn't matter what the student does after he graduates. The college received all the money before the student even graduates. Now, let's compare what would happen if the government was out of the picture.

If the government wasn't in the student loans business, universities would've had to lend the money themselves. So they would have a financial interest in the student's ability to earn money after he graduates. If loans were provided by private banks instead of universities, they would only lend to people who could pay back. Thus, the sociology major who has $200,000 in debt wouldn't have received a loan. Maybe she would've been able to go to a cheaper college or had another major. But then she wouldn't have bid up the price at Northeastern.

So it's easy to see that government loans increase the price without increasing the quality of education. It's wasted money. It finances the partying of 4 or 5 years of a great number of people using taxpayers money, money that should've been lent to businesses to invest and grow the economy, or at least to young people who would've actually gotten a good education.

Here you can hear Schiff talk to a sociology major who is $200,000 in debt.


http://www.youtube.com/watch?v=UMY3lJAT2No


http://www.youtube.com/watch?v=xfSXkvX42xw

nobody's_hero
03-04-2011, 03:45 AM
Since there are 1000's of colleges in the U.S shouldn't supply be pretty good? This kinda sounds like a bubble.

Oh yeah. There's an education bubble forming—no doubt.

I'm constantly joking with my friends that I'm wasting my time going for a degree. I'm just going to wait until everyone has a Ph.D. in liberal arts and no one wants to be garbage man. Then, of course, I'll charge people $50 a week to haul off their garbage. ;)

IBleedNavyAndOrange
03-04-2011, 06:39 AM
The schools also control curriculum which forces students to take classes they don't want or need.
It is often said that it doesn't matter what your degree is in or where it is from, its only important that you have one.

In my field of work (sales), a college age kid that would forego college could easily make $40,000/ year to start. In 4-5 years a person would have that much real world experience and tangible assets as opposed to 20-200k in debt and just starting life.

There is a ton of merit in an engineering or nursing degree, but if you're going to school for a poly sci or history degree, you may be setting your money fire.