lolschool2011 wrote:Easy money = bubble formation, people willing to pay inflated prices, etc. Refer to housing market from 2000 to 2007ish coupled with the accessibility to easy money.
The more disturbing realization of all this isn't how the government overtly subsidizes the university system while passing on the risk (debt) to students, but how people with bad grades (or lets say "lower") subsidize those with higher grades.
A person that made it into their "reach" based on thier numbers is frequently compelled to attend said school whilst paying sticker (reliance on rankings only amplify this dynamic) which then allows said school to offer scholarship to students with higher numbers.
And, on a side note, if someone who's received a substantial URM boost helping them get into a school with students who have done substantially better throughout their academic career, guess who will likely end up "subsidizing" the latter students ranking upon graduation? Who then is more likely to get the top jobs?
It's a tough, unforgiving world out there... and the university system isn't much different then the business world in several of these respects.
It would be interesting to calculate how much the cost of attendance would be if no financial aid was given and compare it to the actual rate sticker-students are paying. The problem, also, with this approach of subsidizing need-based aid by raising rates is that it's a never-ending problem. By creating need-based aid, the schools charge more, and then a greater number of students need aid (the ones who could've afforded the tuition if no need-based aid was given, but can't afford the rate that it takes to subsidize other students).
I also agree w/ MTAL about the larger demand for subsidized education. If you take out $150K in undergrad for a degree in English, you're a fool b/c the expected return on that degree probably isn't high enough to really justify those loans. But for some reason, not many people find it bothersome to pay $40K out of pocket for an English degree from a state school, and pass the remaining cost onto state taxpayers (I'm from CA where the high cost of public education has become extremely burdensome). It's the same problem w/ most public goods...detaching the cost from the benefit will skew people's choices.
When this bubble bursts, it'll be interesting to see if people blame the government or blame the lenders for this problem since people tended to mostly blame the lenders for the housing crisis.