Why Are College Costs Out Of Control?
“At some point we will see the breaking point.”
CNBC reports.
College costs are out of control
A college education is now the second-largest expense an individual is likely to make in a lifetime — right after purchasing a home. Ironically, one of the reasons the price tag continues to climb is the abundance of loan dollars that discourages schools from keeping their costs in line.
While families are paying less out of pocket than in the past, they are relying on loans, scholarships and grants more than ever before.
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Tuition stays the same but fees keep rising
Nothing “ironic” about it.
There are two common quantifiable and mathematically exact things which humans know about (slightly) and understand (slightly), but nevertheless, at some deep, fundamental level, simply will not believe. One is statistics/probability, and the other is economics.
Here, they will not believe that price is the ratio of demand to supply. They always believe that some sort of clever micro-control of all variables can control prices in some beneficial way. And there are some subsidiary costs which it can control. But the basic supply/demand ratio can’t be controlled without controlling … you guessed it … supply and/or demand.
The ways to lower educational prices are to increase supply or decrease demand. And these are the only ways (and that’s the part people viscerally reject). Some decades ago demand received a huge boost when it was a convenient way to avoid Selective Service. The demand has continued because of easy credit (that is, student aid of various forms).
To say this is not to say that student aid is useless or should be dropped or even sharply curtailed. It has a useful function … but lowering the price of education isn’t it.
If this was one of Parkinson’s Laws, it would be stated something like “costs rise to absorb all the money available.” Unfortunately this understates the problem a bit, as “money available” means money available now and in the future, which is what “credit” is.
Yes, due to advances in human civilization, you too can spend your future, and you don’t have to wait—you can spend it today! Oh boy, sign me up!