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

[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.

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

[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