Gifted Issues Discussion homepage Forums General Discussion Free tuition at US public Universities?

"Many colleges, particularly private schools, will take other data into account before determining your actual aid amount, but the federal EFC is usually the starting point." - College Confidential.

And from the NYT article: "I also have to explain that the E.F.C. is the minimum a family is going to pay. In many cases, they’re asked to pay considerably more."

So fixing the EFC is no panacea.

Ummmm: "the lack of liquidity in one’s home."

Hasn't the author ever heard of a HELOC?

I did find this line amusing, though: "Much of the college’s contribution comes in the form of a discount from the school’s already inflated tuition, which, with a straight face, administrators call a grant."

Some may favor this approach and/or whatever it takes to have the costs and cost increases clearly understood by the public... was the steady increase in tuition truly due mainly to the availability of credit?

Yes.

The mammoth origination of credit (that had no business existing) was a major factor in driving up the cost of tuition in recent years.

I don't know whether it was 40% or 60% of the reason, but it was the largest of all the factors.

I've seen that hypothesized many, many times-- and while I don't necessarily disagree with it in principle, since I can certainly see a plausible mechanism at work there-- I sure wish that there were direct EVIDENCE to support it.


I'm not convinced that parallels to the housing bubble are accurate since educational debt is effectively unsecured debt any way you look at it, and real estate is not.


If there were clear causative evidence, I'd be a lot more comfortable with solutions like that proposed by Bostonian's link above.

As it stands, though, I'm hesitant, because I can certainly see the potential harm in some of those limitations for lower SES students.

I see it as equally plausible that "because we can" has been reason enough to drive costs and that demand has simply not evaporated because of the marketing industry surrounding higher ed, ergo demand has been driving increases in available credit, not the other way around.

Another theory to throw into the mix -

http://theweek.com/article/index/25...-can-explain-the-higher-education-bubble

Chay, that's the theory that I fear is actually most correct.

It is also the one that makes the most sense of the observations that I have made both as a parent and also as an insider in higher ed-- that the actual PRODUCT (the education itself) doesn't really differ substantially between, say, $55K/yr Private College and $8K/yr State Uni... at least not in terms of the benefit received by the average tuition-paying student.

It's like taking Wonder bread and plopping it onto a paper towel versus a Spode salad plate.

Now, I know that those who are paying for white glove service and Spode want to suggest that it's different bread... but I'm simply not convinced that this is so.

I think that what people are paying for is the IMPRESSION that the bread is better. The impression that OTHERS hold, I mean. I suspect that many of those paying for those "elite" colleges out of pocket or on credit are doing so for the very real phenomenon of social mobility as a result-- or at least for the promise of it, anyway.

We've (personally) decided that the premium isn't worth it since the "social network" probably is mostly illusory anyway if you're not already one of them. (By "them" I mean the wealthy, elite, etc-- those who aren't too worried about their kids getting in, or of paying for it if they do.)

Yes, at elite institutions, no question that the students are more 'striving' types, and many are brighter than the average bear at NoName State.

I just don't see that as being worth a premium of 80-100K.

What really angers me is that I also see NoName State deciding to "rebrand" itself as "Fine Dining" and spending $$ on things that are not central to the mission in an effort to "lure" students there...

which is at least potentially where cost increases are coming from-- "Look! Brand new! In-room Sushi Chefs!"

"New football stadium! Go Team!"

Chay's theory certainly has shown an influence, particularly on private schools and those considered elite. But I think it's only part of the explanation, because for every Louis Vuitton buyer, there are at least ten others who say, "Look, I don't care about status; I just need something that can carry my stuff," and buy a generic, off-the-rack bag at Target. Louis Vuitton has no influence on that segment of the market.

So... state schools, the generic bag of the educational world. Why are they also so expensive?

- College is price sticky, because buyers see it as necessary for maintaining their way of life, or achieving a better one. They are therefore not equipped to make rational decisions on price.

- Arms-race spending to move up in USNews rankings.

- Easy credit to fuel the first two.

Depending on the field the student is entering, $80-100K could be a fair price--even a bargain--for that network. For students interested in politics or business (especially entrepreneurship!), having the right name on their CV can open doors, earn preferential financing, and get deals done that might never otherwise have been made. Within the programs I've attended, there is a surprisingly open and supportive network of support within the alumni community. I can literally contact anyone who has ever attended the programs with the reasonable expectation that I will be given air time, which I think is an amazing asset.

Case in point: I attended a speaker session hosted by a CEO of a tech start-up. Chatting with him after the discussion, we discovered a common undergrad background (albeit about 15 years apart). Moments later, he was making an e-introduction for me to a friend of his who also attended the school and could help me with a start-up I'm working on.

Is the same network worth $80-100K for a literature or modern languages student? Probably not.

This is my point with the "credit has no business existing."

You don't originate mammoth amounts of credit for Veblen goods because such origination is simply stupid.

Also, these loans do have underlying security.

They are simply a re-run of the old American tradition of indentured servitude.

I viewed law school as effectively purchasing a "letters patent." I was quite content to be extended credit to purchase this degree.

And yes, I actually talk about law school this way.

Increased demand for college/uni education may also be heavily promoted precisely because the economy is soft: There may exist a strong motive to drive a delayed entrance of individuals into the job market; Four or more years of college/uni translates to that number of years during which that person is not competing in a dwindling job market.