Surprise, cost of college dropping?

Discussion in 'General Distance Learning Discussions' started by Bill Huffman, May 2, 2023.

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  1. Bill Huffman

    Bill Huffman Well-Known Member

  2. laferney

    laferney Active Member

    If the federal govt stopped it's student loans program colleges would be forced to drastically cut costs and unneeded programs as without these loans a majority of people simply couldn't afford it Even after graduation they often have loans that take years to pay off. I paid 4 dollars a credit hour to go to college in 1977. A full load (16 credits was 64 dollars. There were no major add on fees. and books were much cheaper and could be sold back for a fair price.
    Value of $4 from 1977 to 2023
    $4 in 1977 is equivalent in purchasing power to about $19.92 today, an increase of $15.92 over 46 years. The dollar had an average inflation rate of 3.55% per year between 1977 and today, producing a cumulative price increase of 398.08%. So keeping college cost at the price of inflation over the years the 16 credits would now be 318.72.
    Today while relatively cheap by todays standards this college charges 109 dollars per credit which is an increase of 105 dollars per credit. and the program I went to was nursing - I paid 4 dollars a credit and it is now 165 per credit. so this would now be 2640.oo per 16 credits. plus fees and high text books ,
    I know this is a simplistic look and there are other variables. But this give you an idea of the picture. I was able to go on to graduate school and put my two kids through college on a modest income without loans .I wouldn't be able to do that today.
     
  3. Stanislav

    Stanislav Well-Known Member

    $20 a credit hour works out to $320 a semester. Which is practically free, and was possible thanks to government funding. And this could have been a reality (at least on 2-year level) had full Biden's Build Back Better agenda passed Senate. I'm all for that.
     
  4. Rich Douglas

    Rich Douglas Well-Known Member

    I would say "yes" and "no."

    "Yes," the costs would go down. But "no" to the reason why.

    Federal student aid puts a lot more dollars into the marketplace chasing the same supply of product. As such, prices will go up. This is the same dynamic we saw in the run-up to the Great Recession in 2008, when we saw so many lenders approving unqualified borrowers. Prices shot way up as so many dollars chased for-sale houses. It eventually crashed and took the economy with it.

    The difference here? The nature of the loans. In the case of mortgages, banks were protected by the amounts put down--lost from the buyer in foreclosure. But it got too big for even that. In the case of student loans, the lenders are much more protected by how difficult it is to discharge student loans. (I'll likely die with mine still active.) No need for a crash because the loans are going to be paid off, one way or another.

    I'm all for student aid. But when the costs in the higher education sector persistently rose faster than the inflation rate, that should have set off alarms that there was a huge imbalance in the marketplace.
     
    SteveFoerster likes this.
  5. Vicki

    Vicki Well-Known Member


    Ugh... mortgages..... I worked for a HUD program around 2002 and saw those skeevy mortgage programs firsthand. In my role, we were able to prevent some of our clients from becoming a victim. Our program was for home rehabilitation. Bringing homes up to code for low-income families with $14,000 loans that did not have to be paid back as long as they lived in the home for 5 years. (We visited them periodically to confirm). If our clients refinanced their first mortgage, the banks would request a subordination agreement to move their loan ahead of ours. There were instances where people were refinancing to pay off credit cards and all sorts of things, and the loans were for double or triple the home's value. If we denied the subordination agreement, then the loan would be denied. But we didn't just leave them hanging. We would pay them a visit and see what was going on and, if possible, find better solutions and connect them with applicable services. On the first-time homebuyer side of it, we weren't allowed to call a lender "predatory," even when it was obvious. We could provide a list of lenders they could call. So when a new client came to us, and we saw the red flags, we had to find creative ways to lead them to a more reputable lender. It was really bad. They preyed upon low-income, uneducated, and immigrants.
     
    Rich Douglas, Rachel83az and Johann like this.

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