Bloomberg, WSJ: Student Aid Increases Tuition

retroworks writes "Bloomberg News makes the case that when the federal government offers tuition assistance, students apply to more expensive colleges, giving the institutions an incentive to raise tuition and a disincentive to lower it. (The Wall Street Journal has a similar article, but it's paywalled.) This reminds me of the debate over President Reagan's cuts to the Pell Grant program in the 1980s. MIT's Campus Paper 'The Tech' quoted the MIT administration as saying it had 'no idea what really will occur' when Reagan's proposal to cut Pell came to Washington. So the question is, 25 years later, do we know now? Did cuts to federal tuition assistance hurt the education of the lower income students? Did increases to Pell grants create more opportunity? Or is federal money the milkshake, and students are just the straw?"

Comments

Re:well, duh

[stevegee58]

Took the words right out of my mouth. "Duh"

College tuition is a page right out of Econ 101: Supply and Demand. Too many (cheap) dollars chasing relatively few goods (schools) = inflation.

Re:well, duh

[Anonymous Coward]

A) Minimum wage in the US is NOT hovering around $10, it's $7.25. The difference between $10 and $7.25 with regards to pay is huge, not a rounding error.

B) You cannot live on minimum wage in the US anymore.

Applies to many situations

[m0s3m8n]

This applies to many programs of this type. Back when I lived in Minnesota there was a big todo over welfare moms having more children simply to get an increase in welfare aid. Same same same. The programs intentions were good, but the outcome was not. And if you make this argument you are called a cold-hearted bastard. Well I guess I am a cold-hearted bastard, and all such programs should be eliminated. Flame suit on.

Re:well, duh

[stewbee]

I would not calling living on minimum wage in the US as surviving, at least in major cities. Take for example Chicago, since I am most familiar with it. For simplicity, lets assume you work 4*40 hrs/ month. this equates to 160 / month. Minimum wage in Illinois is $8.25/hr (which is more than the national minimum btw). this is a net of $1320/month. Looks good, but Illinois now take 5% leaving $1254. The feds will take 15%, leaving $1056. I don't know the exact rates for Medicare and SS, but lets assume that it will put you under $1k.

So you pretty much need a place to live. The rent for a studio apartment, assuming you don't get a roommate, is going to run about $600 - $700 /month leaves you with about $300-$400/ month. Transportation is going to be about another $100/month for a monthly CTA pass. Taking you down to $200-$300 month. Oh, you want to eat too? ~$200/month (granted, you probably qualify for food stamps, but you still need to pay some money out of pocket). An viola, you are out of money. I didn't even mention utilities or other living expenses.

tl;dr version:
Living on minimum wage is hardly a living wage. It is hardly enough to cover the bare necessities in the US. Most likely you will need to get a second job to make ends meet.

Of course it's the market!

[twoallbeefpatties]

Why is it the market? Because we say it's the market! Don't bother investigating or ask colleges why they raised tuitions! Just assume it's the market! MARKET! The link in the OP is, predictably, an opinion piece and not any sort of survey or discussion with actual educators.

This link leads to a study by a nonprofit group that had some different answers:

The main reason tuition has been rising faster than college costs is that colleges had to make up for reductions in the per-student subsidy state taxpayers sent colleges. In 2006, the last year for which Wellman had data, state taxpayers sent $7,078 per student to the big public research universities. That's $1,270 less (after accounting for inflation) than they sent in 2002.

Public universities have been reining in overall spending per student in recent years. Flagship public universities' spending per student has risen from about $12,400 in 1995 to $13,800 in 2006 after accounting for inflation. But since 2002, spending at public colleges has generally not exceeded inflation.

Increases in spending were driven mostly by higher administration, maintenance, and student services costs. Public universities spent almost $4,000 per student per year on administration, support, and maintenance in 2006, up more than 13 percent, in real terms over 1995. And they spent another $1,200 a year on services such as counseling, which was up 23 percent. Meanwhile, they spent about $8,700 a year on classroom instruction for each student, up about 9 percent.

Big private universities, powered by tuition and endowment increases, have increased spending dramatically while public schools have languished. Total educational spending per student at private research universities has jumped by almost 10 percent since 2002 to more than $33,000. During that same period, public university total spending was comparatively flat and totaled less than $14,000 a year.

Re:well, duh

[hackula]

Unfortunately, most students get enough to cover tuition at the most expensive school they can get into, the cost of eating out every meal, rent an apartment in a trendy & safe place, and enough weed to last the full 6 years it will take them to graduate. Fine by me, I worked my way through to come out with 2k in debt and a good paying job, so that after interest I will have something like a 20 year head start on most of them. It sucked majorly feeling weak and hungry all the time for a few years, but I would do it again a hundred times to be in the position I am now.

Re:well, duh

[danaris]

You are not intended to live on minimum wage. Anybody who shows up on time and sober will be making above minimum in three months.

Conversely anybody who can't produce at least minimum wage worth of value per hour will never ever be able to get (or keep) a job.

Good God that's poorly informed.

I mean, I don't currently have direct evidence that you're wrong in the literal sense. However, I do know that there are plenty of places where youmay not make minimum wage, but you still don't make anywhere close to enough to live on, and no matter how long you work there (doing a good job, showing up on time, etc), you have no guarantee of making more.

I have personal knowledge of a job making $8/hr at a chocolate store, where the owner is on the lookout for more adults to hire, part time, for that much money, on a long-term basis. And has no intention of raising the pay, making a full-time position, or anything of the sort.

Minimum wage in this country is a joke, and while raising it to be a living wage would, indeed, cause some short-term loss of jobs, over the longer term, as the poorest working people were measurably better off and able to spend more money, it would contribute greatly to the country's economy.

Dan Aris

Re:well, duh

[englishknnigits]

The only reason why the loss of jobs would be temporary is if inflation kicked in (which it would) and effectively lowered the minimum wage back down to a level where they would be worth hiring again. What raising the minimum wage really does is hurt the middle class by raising the cost of everything they buy without giving them any extra benefit. People who make a million dollars a year will be fine if they have to pay twice as much for a cheeseburger due to burger flippers being payed double what they are now. People who make 50k a year may not be ok. The minimum wage is a job killer on the front end and an inflator on the back end. If you really want to help poor people, a reverse income tax would be much more effective (although it has it's own set of problems).

Re:well, duh

[timeOday]

Pell Grants have gone down in recent decades (i.e. increased at less than the rate of general inflation - to say nothing of the much higher rate of inflation in education costs) while loan programs have exploded.