Cost of College and its Consequences

[Altherion]

In the Careerchat thread, there was some discussion of a student with $140K in college loans and whether this is reasonable. It's an interesting topic that I think deserves its own thread. The basic problem is that American colleges are really, really expensive: they're expensive relative to other countries and the costs have grown way faster than inflation. Most people think of the cost of college as just the tuition, but in fact there's a bunch of services that goes into it so even the free schools are usually not entirely free. The largest expense after tuition is room and board and after that come healthcare, various administrative fees, textbooks, transportation and so on. College typically takes 4 years (or 2, but the 2 year degree is worth much less) so these costs add up.

Here's a link with costs for various types of college. As with most products in the US, there's a wide variety of options, but briefly, the costs vary rather dramatically between public colleges in the state where the parents live, public colleges in other states and private colleges (anywhere). There's a whole lot of numbers on that page, but to give some idea for people who don't want to go through them, the average annual cost for 4-year colleges is $22K for in-state public schools, $38K for out-of-state public schools and $50K for private schools. Note that these are averages -- some are much cheaper and some are much more expensive. Note also that these are the sticker prices and relatively few people pay them because there is a wide variety of scholarships available. The common ones are need-based (for poor families) or merit-based (for exceptional students) and are handed out directly by the schools, but there are also quite a few totally random ones such as those for children of people of various professions (firemen, journalists, etc.), descendants of certain ethnicities or nationalities, participants in various extracurricular activities and so on and so forth.

Still, even with all of this possible help, it's a lot of money so many people wind up borrowing some. For most people, this is OK -- either they only borrow what they can reasonably expect to pay back or, as in the case of that $140K in the Careerchat thread, they have family co-sign the loan and help pay it off. However, "most" is not "all": since a very large number of people go to college, the number who wind up with loans they have no way to repay is still quite substantial (hence the various loan forgiveness political movements).

So, what is to be done about this? The obvious possibility is to force the colleges and universities to cut their prices, but, with a few exceptions, this is not feasible without massive changes -- many colleges are barely operational even as it is. Another relatively obvious possibility is to increase the tax subsidies for public schools, but, as Iskaral Pust pointed out in the Careerchat thread, this is regressive taxation. A less obvious approach is to nudge students into career paths where they have less trouble repaying the loans. The US does not do this, but it is done, in, for example, Australia, where courses in different subjects cost different amounts of money.

Does anyone know of other ideas? Or perhaps we can just commiserate on the absurdity of these costs...

[Zorral]

The first thing that needs to be understood about Higher Education is that it's business is not education, but real estate first, and brand-marketing completely entwined with gate-keeping second; this includes the sports teams and the enormous university investment of space and money and personnel in them.  The third thing is government contracts.

The students serve as the collateral.

This is particularly the truth for the largest section of the student population, which are the undergraduates.

 

[Ormond]

Well, as a faculty person I of course think that almost all colleges and universities these days have too many administrative staff and pay the upper levels of that staff too much. Most places could do without some of the vice-presidents they have.

But more importantly I think whatever one does about this that one should remember that in the USA although the debt that college graduates have is way too much, it's much worse for the tens of thousands of Americans who have taken some college but never finished a degree. They also often have great debt without the degree, and a college degree is still very important in terms of the ability to get a well-paying job so one can pay back those loans.

https://www.npr.org/2019/07/18/739451168/i-m-drowning-those-hit-hardest-by-student-loan-debt-never-finished-college

I shudder to think about all of the low-wage workers out there who have college debt without degrees who have lost their jobs due to the Covid crisis. They will be among the hardest hit by all of this. And remember in the USA college debt is particularly awful because it is way harder to get rid of it through bankruptcy than most other kinds of debt.

Really, allowing student loan debt to be discharged through bankruptcy as easily as other debts would be one of the first things that should be done about this issue in the USA.

https://www.debt.org/students/bankruptcy/

 

[Wilbur]

And there are large numbers of undergraduate students attending college who don't really have any business there.  Kids from affluent families who go to college for the "college experience" but who are not leadership material or particularly scholastically inclined.

[OldGimletEye]

21 hours ago, Altherion said:

snip

I have often complained about the basic labor market model that gets presented in economic textbooks. One of my problems with it is that, I don' think prices clear labor markets because there are large informational problems. Anybody, that has one point, spent time looking for employment intuitively understands this.

Employers often use a college degree as a signalling device, to distinguish between potential employees. And it seems to be getting worse, with there being "degree inflation" whereby employers demand college degrees for jobs that don't really require them or didn't once and a masters degree is the "new" bachelor's degree.This seems to me to be a waste of resources. I would like us to find cheaper ways for employees to demonstrate they have the skills for a job, without necessarily having to bear the expense of college a degree. I'd also like to see an expansion of CLEP type testing, whereby somebody can demonstrate their competency at a particular subject for much cheaper.

I think we also need to think about new ways to deliver education. Right now, I'm a big fan of online learning.

[Targknight]

College is a scam to get money. You should go to college if you are going to be a Lawyer,Dentist,Doctor, Scientist, and Engineer, and a Nurse.

Most of the courses really don’t matter. No one is going to hire those jobs.