Thursday, February 4, 2010

Rising College Costs: A Federal Role?

The editor of the New York Times ask a legitimate question: Rising College Costs: A Federal Role? Like medical care, college costs have been rising. What bothers me is the apparent inability of some pundits to recongnize that subsidizing an activity, even one as laudable as a college degree for everyone, is - in the end - self defeating. Worse, the US is teetering on bankruptcy so where is this college aide supposed to come from?

As an example of a pundit not recognizing limits, Jane V. Wellman fancifully writes: "The states are broke, and they can’t continue to pay for the lion’s share of funding for higher education. So increasing federal need-based aid should be a top fiscal priority, and the Obama budget proposal is a good thing." So how is the Federal government going to provide financial assistance if it is broke too. Furthermore, even if the Federal government was able to provide financial assistance, where is this money going to come from? Taxes of course!

A fellow contributor to this debate, Patrick M. Callan partially noted the futility of subsidizing education: "These grants do not cause higher tuition, but runaway tuition undermines their effectiveness in supporting access for low income students." To me, Mr. Callan remarks is cutting hairs, similar to the argument concerning whether a cup is half full or half empty. Fundamentally, the simple large scale availability of "easy" money allows colleges to "test" higher tuition rates.

Another contributor, Arthur M. Hauptman, noted that: "If anything, more Pell Grants will lead to lower completion rates because more people are likely to give college a try but not all will finish."

A responder Buh-Bye, Ben Bernanke to the debate weighed in with an important observation, that the student loans are guaranteed by the government, therefore there is little risk to either the school or the financial institution in making inappropriate loans. As previously mentioned the availability of cheap money permits tuition to be raised.

MFF offers this observation: "The most fascinating thing is this: why is that neighboring Canada, where college is not free, is still capable of offering affordable university educations--and ditto for England, where college is also not free."

Elizabeth offers an interesting take, that I agree with: "No mention of outrageous sports budgets of colleges? Why not? Why not support intramural sports and scrap all of the rest? People will adjust. Is there really any reason to pay head coach multiple million dollar annual salaries/ packages etc.? Why are state supported colleges doing this? Is our country so off kilter that it is thought justifiable to use college educational funds in order to develop talent for our pro teams?" Seems to me that pro-teams should pay the schools for their draft picks and that the money should go towards student education.

Obviously my quotes have been picked to make the case that subsidizing college attendance results in ever higher tuition costs because fiscal constraints are removed. We also need to recognize that the money for subsidizing tuition assistance must come from somewhere. That somewhere is taxes. There are real limits, we need to recognize them and adjust our programs accordingly. To conclude, thisteensy, wrote: "Student loans are the worst thing that ever happened to higher education."


Anonymous said...

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Steve R. said...

Thank-you very much for your kind remarks.