Making College More Expensive: The Unintended Consequences of Federal Tuition Aid

Cato.

Same reason that health care costs have spiralled upwards.

 

While it might be true that it would make tuition costs go down in the long term, in the short and medium term it would totally hammer the American educational system and the economy, and by the time it actually might start working no one would really be able to enjoy those tuition decreases. One of the main reasons so many tech jobs are being outsourced to Indians and Chinese is because they have state-sponsored relatively high-quality higher education. It would make American workers horribly uncompetitive in the international market.

 

Not even a minor reason

The reason tech jobs are outsourced is that they work cheaper in India. If they worked for the same price the jobs wouldn't outsource regardless of their country's education level. India is already feeling pressure from China where they work even cheaper. This despite the fact that China is woefully short of advanced education space for their students. Many in both countries are forced into the private education sector where they pay and that payment only appears cheap to us. For them an education can still be expensive with their earnings levels.

The law of supply and demand states that costs will rise to the demands ability to pay. This is why student aid pushed up prices and is why raising the minimum wage has only a temporary affect. There, Riccardi's law states that wages for basic labor will always stabilize at subsistence levels. Artificial controls (such as unions or minimum wage laws) or temporary labor shortages can affect that only temporarily as when wages are pushed up artificially costs will inevitably rise to offset the wage advances.

 

It's a bummer, all right.

I heard some figures concerning high school students...something like a tenth of all 9th grade students will complete a bachelor's degree...so why have we crafted our high school system to stress University prep?

 

Re: Not even a minor reason

They work even cheaper in Cambodia and Guatemala. Why aren't they taking tech jobs? Tech jobs require a huge investment in education to get skilled workers. Tech companies have NO incentive to provide this education themselves if they can get educated workers applying for their jobs and someone else paid for that education.

Part of tech jobs includes computer skills, another part includes communication. India started off with a huge advantage because of the historical use of English in higher education. The Chinese have a much higher linguistic barrier when it comes to working internationally, beyond the Asian sphere. It will be interesting to see how it shapes out in the next 5-10 years.

 

Wolfram is proposing a phase-out over a period of 12 years.

State-sponsored education is taxpayer-funded education. The taxpayers are denied the choice of where and how to spend their money as it is spent on whom government people choose and how government people choose.

 

You're lost in the chicken and the egg conundrum

The fact that they have a good taxpayer paid education system is not the main reason the jobs are going overseas. That is what you said and it is not true.

The reason that jobs are going overseas is that they work much cheaper not that they got a good cheap (or free) education. All things being equal, it would still be easier to do the work here than farm it overseas, even if it meant bringing the workers here. Cost is the primary cause moving it overseas, period. If you work in the IT sector (I do) you would know that many, if not most, of the foreign consultants who work here were not trained by the state paid educational system in their country. They were given private training, often paid for by the agency that sent them over here. Others went overseas to get training unavailable to them in India and China ( take a look at any US, Canadian or UK campus and see how many Indians or Chinese are students there). China's and India's state educational systems (good or not) are woefully too small for their populations and can barely support their own country's needs.

The CHEA had an article on China this week concerning the explosive growth of private institutions in China and the Chinese governments concern that they need to expand their public systems to meet their country's future needs. These private institutions may be cheap to us but they are not cheap to the people that are using them in China. However, their willingness to pay and work to get ahead mirrors the characteristics of their brethren that live here in the USA. That is what you should be pointing too, not their educational systems.

Having good communications skills isn't as important when doing the work in your home country. It was important when working here and one needed to communicate with US workers but coding is coding.

 

Only part of the reaon for health care

Only a small part of the reason. Others are:

a. Oversupply of medical practitioners in some areas. Medicare did a study where they compared costs in areas with high rates of access to medical treatment with the costs in low access areas. Health care costs per patient were as much as 300% higher in the high access areas without any increase in life expectancy. In fact, LE was often lower as these areas were often metropolitan areas.

b. Drugs, people take many, many more drugs than they did even a decade ago. Drugs cost money.

c. Technology advances, the new medical treatments and tests cost more money. These treatments make us live longer on average but they also cost more money.

d. Advances in medical testing and diagnoses. Decades ago a visit to the doctor would result in a examination by the doctor and maybe a simple blood and urine test. The procedures may have stayed the same but the tests they run on the urine and blood have multiplied. Notice they take much more blood then they used to? Each test cost money.

e. Malpractice insurance increases and law-suit avoidance testing. Malpractice insurance has gone up and doctors run extra tests just in case they are sued. This leads to increased costs.

 

Re: Only part of the reaon for health care

Oversupply leads to increased cost? What is increasing demand?

Technological advances generally result in lower costs where market forces are in play. An example would be the blood analyser introduced by Kodak some 30 years ago. That device replaced much larger, more complicated (to use) and more expensive devices.

Agreed.

 

Another useful question might be why have we crafted our university system to stress completion? Many people's needs are met with less than a degree's worth of college education. Offering a "take-what-you-need" approach that didn't consider noncompletion of a degree to be a failure would likely benefit a wide range of students.

 

Admittedly, I didn't read the report. They propose to lower costs of HE by limiting demand, i. e. reducing access to education?

What's the point??? Well, sure, it will halp richer people who don't have access to financial aid, but do these people really need help so badly? What's the big idea?

 

The idea is that the subsidies of the product have increased the cost of the product. That helps none.

The universities needn't be cost-conscious, innovative or responsive to changing times or student needs as they are effectively assured their funding.

 

You simplify

Oversupply in this case leads to increased costs because the doctors schedule unnecessary visits and prescribe unneccessary tests in order to increase their revenue. How many people really question the doctor about what he is doing when it is their insurance that is paying for it?

Purchasing technology and running tests costs money, period. More technology means more equipment to purchase to run a hospital or open an office. MRI machines cost WAY more than the x-ray machine it supplements. A visit to the doctor 10 years ago may have lead to running 1 or 2 tests. Today that visit can lead to 6 tests. Look in the average hospital room today. When I was in in 1976 there was an IV in my arm. Today they have all kinds of monitioring devices running and they bill your insurance for each and every one.

Market forces have little or nothing to do with the medical industry. That is most of the problem. I mean, who shops around in an emergency situation....

 

Re: You simplify

If you mean insurance as supplied by a private employer then that opens a new can of worms. Although, a worm is pretty much a worm.

AFAIK, company provided health plans are now mostly provided with deductibles to make people pause before rushing to the doc and to give them reason to question what's being done.

Agreed. But I would question how much of medical costs go to emergency procedures.

 

Sorry, I just don't buy that. I beleive universities are often cost-conscious, as per-student funding seems to be in decline. Education just happen to cost money. And denying some people opportunity to get education - and therefore better life - that's help none.

 

Insurance is insurance

You have dedutibles but they apply and may be the same whether the bill is $100 or $1000. Thus, no motive to watch spending. Also, since there are caps for catastrophic illnesses they phase out when the bill goes higher. Again, no motivation to penny pinch.

Emergency or non-emergency is about the same. For non-emergency care people go to what is convenient or what they're comfortable with. Either way, few really question their doctor or even understand the bill if they were inclined to.

 

I don't know why that should happen to be. A classroom minus laboratory is a room with bodies and air.

Paraphrasing Proximo: "Bodies and air, Spaniard! We are but bodies and air!"

 

Re: Insurance is insurance

I don't know how well the thing works but companies are taking measures to make the employees share the pain.

 

An assistant attorney just showed me a student loan consolidation repayment schedule. At today's rates, you can take thirty years to repay $100,000 for a few hundred dollars a month.

They make slavery easy enough!

 

Just look up Dr. Borcher's endless arguments about the importance of a "full time faculty", "relevant current research activities" and "AACSB accreditation", or Dr. Kennedy's equally endless rant on how vital a "rigorous assessment" is. Then browse some traditional college-related forum and see how everyone seem to need "small class sizes" and "individual attention" along with "qualified instructors". All of this translates to craploads of highly skilled labor, wich is expensive. Plus, "laboratory" that you dismissed so lightly also costs money. Add facilities, infrastructure and gazillions of supplementary services.
And what they are proposing is to "lower the demand" for higher education in order to decrease costs. I wonder if any of the report's authors are patriotic and consistent enough to deny their own children of higher education - for the common good.