This started out as a comment on yesterday’s blog post, but I’ve been terrible lately about posting, so I’m turning this into a full-blown post.

Reasons for tuition going up:
1) Greater demand. Tony is spot-on here; when American culture has gotten to the point where you _must_ go to a four-year university to “find yourself” (i.e., drink until you vomit) and the mere concept of physical labor is sub-human, universities are in a position to charge more.
1a) Corollary: smart people sucker not-so-smart people into giving the smart people money. There are a number of people (your average elementary education major, for example) who should never step foot on a legitimate university campus and who basically get taken (or have their parents get taken) to the tune of $150-200K for four years of partying. Think Wall Street but with more ivy and cheaper booze.
2) Restricted supply. Universities must be state accredited and must maintain this accreditation. Like other industries with state-enforced (or State-enforced, if you prefer) regulations, these barriers to entry protect the existing firms by preventing potentially-innovative firms from entering the market.
3) Subsidies. If a bill passed Congress tomorrow stating that every undergraduate student would receive $10,000 a year in “free” federal funding, what’s the first thing that happens? Universities raise tuition by $10,000. The marginal university student was willing to pay $X to get into a school. When everybody gets a level boost, the marginal student is now willing to pay $X+10,000. Look at how state and federal student funding has gone up over the years and see the natural result.

I do not consider loans as such a bad thing, nor are they a huge reason for tuition increases. A loan is nothing more than an agreement in which a person is allowed to re-distribute expected earnings from a later time period to an earlier time period. This means that there is some effect from the existence of loans, allowing certain people an opportunity to pay who otherwise would never have been able to afford an undergraduate education…but I don’t think it’s really that much. Instead:
3a) Subsidized loans. Here’s the part where Tony’s argument becomes a lot more valid. Those low interest rate loans tend to be federally subsidized.

I don’t like any of our resident Penguatroll’s proposed solutions. My solution would be to eliminate the problems as they exist:
1) Re-introduce a culture in which blue collar work is honorable instead of something you want to avoid. This is not something a government could do directly, but instead must happen through the efforts of people interested in this cause.  There is something that educators could do (with government support, in our current system):
1a) Make high school much, much harder. Not everybody should graduate from high school. I absolutely hated this idea ten years ago, but something like the German system of early tracks, good vocational schools, and expectations that relatively few people will actually make it to a university would be better than No Child Left Behind, Common Core, and cradle-to-school ridiculousness.  It might even be better than the pre-Head Start American system.
2) Remove accreditation altogether from state or federal purview. Let schools compete on the merits and private accreditation sources will emerge (e.g., something like an expanded US News and World Report). This would also allow new institutions to enter the market. I know the cry against this would be that people could just buy diplomas, but I have a two-fold response: first, those diplomas would quickly become meaningless as people obtain information about the diploma mills; second, college football and elementary education. Tell me finger painting and basket-weaving courses reach the rigour of higher education and that those students most assuredly are the intelligentsia of tomorrow. Actually, don’t: I’ve already seen Idiocracy.
3) Eliminate government subsidies of universities. I’m tempted to say all subsidies altogether, turning “public” universities private. But because I’m feeling moderate this evening, I’ll just stick with eliminating the demand-side subsidies: federal and state grants, loans, and other payments to students. This would force universities to drop tuition costs significantly, in an amount which just about matches the drop in subsidies.


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