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John Horst's avatar

Holden... From the Yale study, as to #4 (cost), the real story is told here: https://www.amazon.com/dp/B08BZW7N1K/

I run a business, and very clearly recall the sales pitch I once got from a wealth management firm. They were offering 4-6% return on an asset otherwise guaranteed by the government and not dischargeable in bankruptcy - student loans. When you look at that offer from the perspective of an investor, the first question is: "Where do I sign?" The second? "How do I get more?"

I declined... My boys were in high school at the time, and with a reasonably good idea of how the economics of all of this works, it was clear to me that this amounts to a monetary bazooka aimed right at higher ed... while the "supply" (seats for the incoming freshmen) remained static. That's a no-brainer - higher prices.

The Yale study conveniently looked only at tuition - as if that is the only "sink" for this monetary inflation. It did not address fees. Nor did it address books - which are published with the most expensive paper, full color, and with a lot of fluff most professors will admit is irrelevant to instruction. The whole idea seems to be making the book "heavy" so at least it feels like you're getting something for your money.

As a father of two boys now out of college, at least as to cost, the Yale study is frankly a joke and an example of an immutable law of nature: You will not find what you are not looking for. If they really want to find out why Americans are angry about the overall cost of education, you simply have to come to terms with the distorted incentives.

First, there are the good intentions of making higher ed "affordable." On paper this is wonderful. In practice - when handed off to government - the incentives in government work against the intentions. Student loans used to be originated and then sold to investors (my experience was before this was taken over the by government). Beyond the taxpayer guarantee and bankruptcy exemption, the risk was spread out by way of securitization. Now, with USG backed loans originated and held by the government, the risk is still spread out across the tax base. This is a distinction without a difference because when there is no risk in lending there is no one to ask whether the money is being lent into an education that will actually prepare a student to be productive enough to pay it back. And when it all goes bad, who in government loses their job? If a lender actually assumes risk and their shareholders lose their shirt, management lose their jobs. This is not the case in government.

School are most certainly not innocent bystanders. The "non-profit" status of traditional higher ed is a joke. I have run small non profits and you have to run your organization in the black. If your expenses exceed your income, your upkeep will be your downfall. The only difference between a for profit organization and non-profit is where the money goes. In higher ed, the size and salaries of faculty have not been increasing. Administrative staffing has, along with upper echelon salaries. They like to attribute this to market forces. But you cannot have a "free market" when the money supply in that market is unrestrained by lending with no attachment to risk. And we haven't even started talking about the constant construction - replacing facilities that were only built a few years ago.

The immoral corporatism masquerading as higher ed is why America is angry at the academe. You cannot solve that until you're willing to see it through our eyes. Read the book I link to above and the story becomes clear. And Yales's explanation is revealed to be a weak joke.

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