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

well, duh

[therealkevinkretz]

If more money is made available to to students for education, then:

1) more people will become students (intended)

2) educational institutions will raise their prices so as to absorb all the available funds (unintended)

Re:well, duh

[Anonymous Coward]

If I am a school and I have learned that students can borrow $60,000 a year from the government, then I am sure as hell I will raise my prices to get htat "free money".

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

[ohnocitizen]

If tuition assistance evaporated, enrollment would drop. With less students coming in, would universities:

1) Cut payroll/pay/offerings significantly
2) Raise tuition to make up the difference
3) Lower tuition significantly enough to reach students who can't afford college without assistance
4) Find non tuition based forms of funding
5) Fold

I think 3 is incredibly unlikely, and the original article is a bit foolish not considering the other side of the coin. 2 Doesn't seem likely (or wise) either. That leaves 1 (which I've seen happen over and over again in the face of budget issues), 4 (which works for a few universities, but isn't sustainable for all of them) and 5.

Of all the likely results of ending college tuition assistance, the most likely involves a few private institutions thriving, and most public/private institutions massively cutting their programs and pay. More electives suffer the cost of a society that increasingly doesn't value education beyond the immediate "will this turn our kids into productive workers", and the already tight job market for professors tightens (with less pay at the end of the road).

If we want to continue having the types of colleges and universities that truly enrich our society, we need to find smarter ways to make them more accessible than cutting tuition assistance.

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

[dgatwood]

The problems I have with that logic are that A. schools are not for-profit entities, with few exceptions, so there's no incentive to raising the price because the market will bear it, and B. the cost of running a school is for the most part roughly linear in the number of students (except that the cost per student increases when the size of the school drops below a certain threshold) because there are no scarce resources involved. Even facility upgrades (to handle more students) average out to be roughly linear based on the number of students over the long term.

Re:well, duh

[Dunbal]

3) The perceived value of achieving any given degree will decrease (unintended). After all if everyone has an MBA then you're just another MBA. Especially when they are so easy to get...

Re:well, duh

[mjr167]

I think the question we have to ask ourselves is which model of university do we want. Do we want everyone to learn "general enrichment" things from a university, or do we want everyone to learn a trade and a minority to get the "general enrichment" path? We should actually the question and think about the implications of both models instead of spouting retoric about "art is good!" or "productivity is good!"

Re:well, duh

[vlm]

If I am a school and I have learned that students can borrow $60,000 a year from the government, then I am sure as hell I will raise my prices to get htat "free money".

No, not at all. If you had a full campus while charging $5K/yr, you'll raise your tuition to $65K a year, because you'll collect the "free" $60K plus your campus full of students obviously can afford $5K/yr.

Not one extra person will attend (duh, the out of pocket cost remains $5K) and not one extra person will not attend (free money for all !!!)

Re:well, duh

[demonlapin]

Just because schools operate as not-for-profit enterprises does not mean that people don't make money off them. Administrators like bigger budgets and paychecks.

Re:well, duh

[CubicleZombie]

They could roll back tuition quite easily.

My college has doubled tuition in the decade since I graduated. All the 50 year old buildings that held my classes have been razed and replaced with state of the art brand new architecture. There are numerous new sports stadiums for teams nobody's ever heard of. They're paving the streets with marble - literally, marble. It's like they are struggling to find ways to spend all the money.

Same professors and same classes.

Re:well, duh

[jmorris42]

> cost of a society that increasingly doesn't value education beyond the immediate "will this turn our kids into productive workers"

Count me in that group. I'm against all such aid on principle but if there is going to be ANY student aid it isn't unreasonable for me as one of the taxpayers being forced at gunpoint to donate to your education to insist in return that you at least use it toward something that has a reasonable chance of allowing you to a) pay off the loan and b) make you more a productive taxpayer so as to help with the burden of educating the generation which will follow. Discover yourself and take those * Studies on your own fracking dime.

Raise private funds and give scholarships if you believe it is that important. It is a certainty that you will do more good than the government would with the same resources.

Re:well, duh

[icebike]

We covered this topic a few days ago in a side rant about the cost of education expanding to absorb all available funding. Upon further digging into the scarce data on the subject I found that it does appear that many universities are shifting the total cost to the student (and thereby to Federal Student Loans).

State funding levels (for state run institutions) have remained largely the same in many cases, while university budgets have mushroomed, (mushroomed all out of proportion to enrollment, out of proportion to salaries).

The budgets are being inflated for new dorms, buildings, and equipment, all funded by student tuition. Professors aren't getting much beyond cost of living raises.
But I need only look back at my school to see expansion of physical plant way beyond the size of enrollment, and a huge increase in the annual budget.

There will be those (arriving here in about ten seconds) that insist we can't know if the cost of an education has increased without a detailed analyses, seeking to hand waive the problem away. But the bottom line numbers suggest that the cost of 4 year post secondary programs have indeed expanded to absorb all available funds, while the cost of the prior 4 years (high school) have not expanded significantly beyond inflation in over 20 years.

I'm not even sure there is a conspiracy, simply each institution seeing an apparently inexhaustible pool of funding, and figuring out how best to tap it.

Re:well, duh

[Grishnakh]

I wonder how it'd be different if two things changed. As I see it, one of the problems with college education is that there's very little competition, so schools just take advantage of the situation and raise tuition as much as they can. It's basically a monopoly or oligopoly situation.

1) in-state vs. out-of-state tuition. The problem now is that if you're in State A, you only have probably 2 or 3 schools that you can go to to get a good education. Of course, you could go to community college or a trade school, but that's going to have a major impact on your career, whereas going to a good state school, like the University of State A, or State A University, will generally keep most avenues open to you. Now, of course, you can go to the state next door, or any other state, and go to State B U. instead, but because you're "out of state", the price is now three times higher, so that severely limits competition. If we got rid of this idiotic in-state vs. out-of-state distinction, then it wouldn't matter which school you went to as much, and you could compare the schools based on their merits, their tuitions (which would probably be pretty similar within the same class of school), the cost of living of the areas they're located in, etc., instead of having a giant surcharge for anything outside your state.

2) foreign students. From what I'm reading, lots of large universites these days aren't even bothering to recruit students in their own state, and are recruiting overseas, because foreign students pay out-of-state tuition. What exactly is the point of having a "public university" (which is supposed to educate the citizens of that state or country) if they're ignoring all the citizens and trying to fill up all the slots with foreigners? If they were private schools, that'd be fine, but these are not private schools at all.

If we massively reduced the number of foreign students (in public schools), and got rid of the in-state/out-of-state distinction (since most of the money for state Us comes from the Federal government anyway), I think the economics of the situation would be very different; universities would be forced to compete with each other, and would have to cut costs (and administrator salaries) to stay competitive, even if student loans were still available. After all, if I can get $X in loans, and going to the school in my state would still require me to get a side job to pay all the bills, whereas going to another school across the country would cost half as much allowing me to focus on studying, why would I stick with the school in my state?

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.

Re:well, duh

[Great Gravy]

3) States will disproportionally cut university budgets to solve statewide budget shortfalls, effectively shifting the burden of state indigence to university students (intended?). If a state can't afford pensions for state park employees, the temptation is to plunder university budgets because students will make up the difference with their own debt. So indirectly, students are now paying for pensions of state employees, and the state stays in the black (or less in the red).

Re:well, duh

[PraiseBob]

There are plenty of students who won't borrow 60k just because they can. They might in fact shop around for a cheaper institution, so they don't have to borrow money. Not everyone is eager to go into massive debt.

Re:well, duh

[tranquilidad]

There are many incentives other than profit: increased research budgets, increased salaries, increased opportunities for sabbaticals. Increased tuition at state institutions allows for decreased budget allocations to the universities.

Re:well, duh

[demonlapin]

If you're taking my tax dollars to study something that won't make you more productive, you're a leech. People who want to party for four to six years and major in something bullshit can either pay for it themselves or convince their parents (or someone else) to.

Re:well, duh

[umghhh]

so till now that is common sense - people get incentive so they do desired thing and the rest is market behaviour. The interesting question would be: does this have any merit when one calculates all benefits and costs - are more students finishing university?

Re:well, duh

[khipu]

1) more people will become students (intended)

Is this really a good thing? How many art history and psychology majors do we need?

Re:well, duh

[Sir_Sri]

Depends on the funding and legal model around universities.

In canada for example the government (provincial) sets tuition fees for a university to be able to accept public funds. You can charge more than that, and be accredited, but you won't get public money. The Richard Ivey School of Business at Western is an example of a programme that went that route (but only for 2/4 years of undergrad and grad school or something weird, they're somehow part of western sometimes and separate from it others, but whatever).

Now the problem is that costs to run universities are increasing. Most of them are full of old buildings, so when the cost to heat or cool things goes up, they're screwed. There's just general inflationary pressure, the fact that staff need to be paid more as time goes on. As it is the technical faculty are becoming separated from industry rates and it's a real problem. A starting faculty at 70k is what a comp sci grad can get straight out of a bachelors.

If costs go up, you need to get more money. In canada at publicly funded universities you typically pay 5-7k per year, and the government chips in another 13k or so (foreign students pay the full amount). If tuition fees go up, well then student loans need to increase to compensate. It's not like students can magically live on 6 or 700 dollars a year less this year than last.

Now rightly, universities are trying to get as much money as they can. They may not run a profit, but they can't run at a loss indefinitely.

So that's one scenario, where cost increases and government approved tuition hikes to meet cost increases drive increased student loans.

In a more european system, where tuition is even less if not zero then it's entirely the government negotiating with universities on the price per student. And then you don't really have effect 2, and least not on core educational things, you might see more expensive restaurants on campus though.

The US system is a bit messier. There are enough schools that set their own tuition rates that you could see a bit of both going on. Where loans are increased in part to keep pace with public price changes, and private schools are taking advantage of that increased capital. But then loans have to be made available for students going to the expensive US schools which means the public ones can demand more money. In canada and europe if you want to go to a school with 20k tuition that isn't med school, well that's your own damn problem. In the US if you want to even go to a school like UCLA you're looking at 12k and tuition rates seem to vary much more wildly even within a state than they do elsewhere.

Without loans a lot of people wouldn't be able to go to school, but somewhat sadly, we're at the point where we're significantly over training in some areas (english, fine arts, history, drama, psychology, etc.) and giving out loans for a lot of those grads is just going to saddle them with debt for decades.

Re:well, duh

[alexander_686]

I think there is a subtle point you are missing. The Federal Government subsidizes a good – any good - for simplicity; let us say $100 per student. This subsidy will be split by the consumer (student) and the producer (school.) How will it be split? The article argues that the lion shares goes to the school.

First, while schools are non-profit, very few are staffed by Franciscan monks who have taken a vow of poverty. Schools are interested in upgrading their campus, doing basic research and increasing staff salaries.

Second, there is a mismatch between the students and the schools. Young kids have a hard time determining the value of the education they are buying. On the other hand, parents have to disclosure all of their information to the school. If a kid wants to attend a school and the parents can pay for it the school can use price discrimination and charge them full price.

Re:well, duh

[moeinvt]

This is a great discussion.

Try visiting Yahoo! news or Politico or Huffington Post and explaining how guaranteed loans make college more expensive and you get flamed and accused of being a rich 1%er that only wants wealthy kids to go to college.

Visit /. and there's no need to explain the obvious.

"well, duh"

Succinct AND accurate

Bravo.

Re:well, duh

[dgatwood]

Sure, but most college administrators aren't exactly raking in the dough. Here are some hard numbers.

Re:well, duh

[Rostin]

Most universities could stand to trim some fat. Administrative costs in higher education have mushroomed in the past few decades. For example, at the very large public university where I'm a grad student, we have an office of "diversity and community engagement." The person in charge is one of the vice presidents of the whole university. Several assistant VPs, associate VPs, executive directors, etc are also employed by the university to lead different portions of this office. Each of these people has a staff, of course. According to the organizational chart, which I'm looking at right now, they come to a total of 44 people. All to address diversity concerns, or something. I'm actually not sure what they do. It seems somewhat doubtful that the expense of employing 44 people (which must run into the millions or maybe even the tens of millions of dollars per year) is actually accomplishing much of real value.

Re:well, duh

[ohnocitizen]

Let's look at what you said practically. "Your" tax dollars huh? Given the percentage that goes over to military spending, police, fire, libraries, infrastructure and public works, public schools, health initiatives, financial/economic initiatives, etc, only a tiny tiny amount is left for college. Of that, most aid comes in the form of student loans. So suggesting your personal tax dollars go to pay for leeches is quite misleading, since it is more like your personal tax cents.

Further, what major won't make you more productive? I studied philosophy, and now have a job as a web developer. Looking at people I've worked with, I see art history, psych, even sociology majors. A given major isn't bullshit (though some can be more than a bit funny sounding) - it comes down to how effective a given student is at taking advantage of what they chose to learn.

Re:well, duh

[ThatsLoseNotLoose]

Mabye not, but a Pell grant isn't a loan. I wouldn't borrow $60k for education, but there's no way I'd turn down a grant.

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

[jedidiah]

Public universities were increasing tuition rates as much as they could legally get away with long before any of these changes were made.

This is just a weak excuse for robber barons and associated wannabes to rob from the poor and give to the rich.

It's the WSJ after all. Although Republicans believed in investing in public infastructure once upon a time.

Re:well, duh

[vlm]

There are plenty of students who won't borrow 60k just because they can.

They don't make that decision. That decision is made for them by the school when they set their tuition rate.

Its like mistakenly thinking individual home buyers set the price of homes. Not so... They've got a out of pocket budget of (for example) $1000K/month and the govt sets the interest rate which sets the amount they can borrow which sets the price of the house.

In a similar way, a school knows the median student (and family) can toss in $5K/yr outta pocket, and the govt will toss in an additional guaranteed $20K. Therefore the price will be set by the school at $25K because $5K + $20K = $25K.

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

[Shadow99_1]

lol, so everyone magically makes more (providing they are sober?) than minimum wage in three months huh? So all those people forced to live on minimum wage where I live because companies no longer pay raises (going on four years now) are supposed to have magically gotten raises right? I mean they are generally sober (certainly at work, not so much outside it for some) and so they get this automagically correct?

Re:well, duh

[Applekid]

No, not at all. If you had a full campus while charging $5K/yr, you'll raise your tuition to $65K a year, because you'll collect the "free" $60K plus your campus full of students obviously can afford $5K/yr.

Not one extra person will attend (duh, the out of pocket cost remains $5K) and not one extra person will not attend (free money for all !!!)

Well, no, you don't do it all at once. You raise by $2.4K to $7.4K/yr, and the cashier's office can heavily advertise free government money to help cover the increase. People in the middle of getting their degrees aren't going to leave their living and work situations and their friends for an increase they just have to fill out a form to basically ignore. Maybe some new students will go someplace else, but since education grants are universal, every other institution has incentive to raise rates, too. Institutional education is a racket, just like when all the insurance companies decide to hike rates on compulsory coverage.

Then, 25 years later, you've raised tuition to $65K/yr and we take a step back and ask ourselves, "how did we get here?"

Re:well, duh

[swb]

No, but there a lot of ways for them individually to benefit.

Larger programs, headcounts or facilities make their positions inherently more valuable when viewed from a "competitive salary" perspective, so they may get raises simply because they are administering a larger entity.

Job transfers, within the school or to another school -- you can climb the career ladder by showing that you've done a better job bringing in funding, expanding programs, etc.

There's no profit motive for the institution, but the individual actors have personal motivations to increase their personal profits (pay). This is actually a great example of collective self interest at work.

Re:well, duh

[vlm]

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.

LOL you must not be from the US, or live in a hyperinflated area like Manhattan or Hollywood. Merely on time and sober won't even get you a job of any sort in most of the country.

If you're not intended to live on minimum wage, what are you supposed to do for your "three months", spend three months dead for tax purposes (douglas adams reference, although also a serious question)?

Re:well, duh

[jmorris42]

> 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.

So? It is the MINIMUM. It isn't intended to allow you to live a fully independent existence and enjoy it. Yes, being poor sucks, been there and done that too and didn't get the t-shirt because I couldn't afford it. But you can survive. Minimum wage is low enough that there is still the possibility for a kid to get on the ladder in the first place. We have already sawed off most of the bottom rungs, lets not raise it again and saw some more off, unemployment amongst the youth is already shocking, doubly so for minority youth. Let people get A job, any job, and learn how to work. Anybody worth a damn won't be making minimum long.

And is it really too much to ask people, for whatever reason, earning at the bottom to work a second job, live with roomies, move back in with the parents, whatever until they can work their way up the skill level tree a bit or fix whatever problem other is keeping them in the low earning part of the job market?

Re:well, duh

[jedidiah]

> State funding levels (for state run institutions) have remained largely the same in many cases

In your dreams. State governments have been gutting higher education funding over the last 20 years. Never mind the higher education stuff, even the primary education stuff has seen serious budget cuts in recent years.

Re:well, duh

[Anonymous Coward]

Hint: if you find it difficult to go two weeks, that's not living minimum wage, that's surviving on minimum wage. And you certainly have no allowance whatsoever for emergencies. There is a difference between surviving and living. Expecting access to a healthy diet and reasonable healthcare is not a sense of entitlement. So no, you can't live on minimum wage. Just being able to survive is not sufficient and it hasn't been for quite some time.

Re:well, duh

[ifwm]

Research isn't paid for out of tuition.

So your claim is that there is no research anywhere that is funded in any way by tuition?

Care to support that claim with citations?

Don't bother, you're wrong.

Re:well, duh

[Applekid]

Pell grants are not loans.

Re:well, duh

[Hognoxious]

There are plenty of students who won't borrow 60k just because they can.

Well there I was thinking aid meant teh gubmint gave them the money. Then, I confess, I read TFA.

Nonetheless, I'd say that from the recipient's (sorry, debtor's) POV a loan that doesn't need to be repaid for a very long time (and maybe not at all depending on yadda yadda bla bla) might seem like a donation. I'll leave the psychologo-economic implications of that to the psychenomonists..

Re:well, duh

[ifwm]

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.

This is wrong. My wife is the GM of a retail store, and her company only hires store associates at minimum wage. Why?

Because the line of teeny boppers looking to work in a trendy store is LOOOOOONG and the job requirements are low.

They only give raises at one year intervals.

In addition, I happen to live in an area of the country where RN's make around 17-20 an hour, and skilled tradesmen are the same. In short, the wages are LOW. Minimum wage, while not in any way comfortable, is liveable.

Every single thing you claimed in your post is wrong in regards to my area and direct personal experience.

Re:well, duh

[vlm]

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.

Or move out of Chicago. My bachelor pad was $425/month about 100 miles north living alone and it was a little fancy for my social class, my fellow students were dropping only $250 to $300 for crummy student grade housing (subdivided houses that were falling apart, that sort of disreputable establishment). That extra $250/month paid for a pretty darn nice car and its insurance. Also my taxes were lower, as a "rich" middle age dude you wouldn't think $75/month would matter, but it really did at that low of an income. I couldn't afford medical insurance for myself unfortunately, because a single dudes monthly med insurance, if there is no employer plan, is more than I earned per month. Also food is cheaper the further you get from the city, I ate like a freaking king for about $80/month, given nearly 100% inflation since then I'd say $160/month but if you cut back on steak and caviar $100 is probably reasonable. I was told I could get food stamps but I didn't feel that poor so I never applied (heck I lived in a pretty 'leet apartment and had a nice car compared to my university buddies). The GI bill took care of tuition.

Re:well, duh

[hackula]

You would have to stay pretty lucky to live on minimum wage for 2 years. For example, I have type 1 diabetes. Without insurance (which I probably could not afford), my medication would be about $800 per month. If there was one day I could not afford it, I could be in a coma. It has nothing to do with lifestyle and comes on without warning. Long story short, shit happens and it is pretty gd scary on minimum wage. That is not even considering the fact that many people on minimum wage have kids as well, each with their own potential for costly emergencies that cannot be ignored. Also, most people on MW that I have encountered are in the process of racking up loads of debt (not saying that was your case), meaning they are not really getting by, they are just delaying the inevitable point when they are totally screwed beyond doubt.

Re:well, duh

[hackula]

You will not be paying those taxes at minimum wage. Sorry to nitpick, I still think it would be horrible, and if you put in utilities it would add up the same.

Re:well, duh

[vlm]

Schools are interested in upgrading their campus, doing basic research and increasing staff salaries.

Don't forget they drop a lot of promotional advertising money. In fact, the more money you sprinkle on the buyers, the more competitive the buyers, so the more you need to spend on advertising. TV commercials, billboards, hundreds (thousands?) of dollars of direct mail per high school senior...

Re:well, duh

[ifwm]

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.

So, did you not bother reading the article that proves you wrong?

Inflation kills when you raise minimum wage.

It's been proven so many times that I can't believe this nonsensical trope still has legs. It's like you completely ignored the story and the downside of inflation.

Re:well, duh

[Billly Gates]

The problem is when everyone does it (like now). Then your options frankly suck because those who do price shop know that stupid people outnumber them and will happily go in their place.

Same thing happened 2001 - 2006 in the housing market. Refuse to pay $400,000 for that 1200 sq foot home? Fine the seller will just sell it to someone who will pay with a dumb bank forking the bill instead. Home prices are still 20% over and rents are 30 to 40% over valued today and not coming down. People want that 1 million dollars and will do everything they can to keep prices sky high with a middle finger to everyone else who was not lucky to be born earlier.

Colleges are doing the same, yet they are receiving HUGe cuts from the states as they no longer have the money to fund R&D and student tuition. So colleges are hurting too even if they are charging too much for tuition and it is going to cost the next generation dearly as this can not continue without turning the US into a third world nation as debt forces people not to consume.

Re:well, duh

[CanHasDIY]

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.

The Voice of Experience calls bullshit on that one. Some jobs don't offer more than minimum wage, period, regardless of how long a person works there or how well they do their job.

The problem isn't that minimum wage is too low - the problem is that there are too many jobs that should but don't pay more than the minimum wage, because they have no legal (or, apparently, moral) obligation to do so.

Also, not enough hours; sure, $7.25/hr is a (barely) livable wage @ 40 hours a week, but I doubt you know anyone who makes minimum wage and gets more than 20-25 hours a week.



Personally, I don't think people should voice an opinion on topics they have fuck-all experience with; unless they've lived on minimum wage, they're really just talking out of their asses.

Re:well, duh

[CubicleZombie]

I also busted my ass and lived in squalor to graduate almost debt free. Honestly, I wish I'd signed on the dotted line and lived on loans to graduate three years earlier than I did. At this point of my life, it would have been worth it. Instead I missed the best years of the dot-com era, got reamed in the housing bust, and now I'm starting a family in my late 30's.

In hindsight, it wasn't really a head start.

Re:well, duh

[Githaron]

While student loans are not free money, I doubt most students realize how much money it actually is and the ramifications of taking on such a loan. Most students don't think about student debt until after they graduate.

Re:well, duh

[Billly Gates]

It you did that today that loan would be $60,000 and not $2,000.

No, that part time job at the book store will not cover your tuition either. You would be fucked if you tried to do it over and this is why the younger people are angry as the older generation does not see the inflation with the economy after graduation picture. The world has changed

Re:well, duh

[Altus]

you know, if you had spent 25 bucks a week more on food (probably more than you would need to) you would have accrued 5K or so more debt over 4 years. While that seems like a lot, the benefits, both physically and mentally, of not being malnourished while you were in school probably would have been worth the expense you would have incurred in the first year or 2 of work.

5K of debt shouldn't stick around for very long

Re:well, duh

[stevew]

This argument is naive on it's face and ignore supply and demand forces for housing.

My house is worth more in San Jose, CA than it would be in Greeley, Co. If the only things that mattered are what you are saying, then this wouldn't be true because the interest rates are the same for me in both places!

In my mind - the price of tuition has been going up for many more reasons than JUST available money, though that is certainly a large contributing factor. There is theemployee unions contributing to the sky-rocketing cost as well. The same forces that are forcing cities into bankruptcy affect government sponsored schools.

There is devaluation of our money in real terms as well. My college costs were $1500/year 30 years ago versus about $20K per year for CA schools. It's called inflation!

So roll it all up together and you get rising costs. Surprise!

Re:well, duh

[demonlapin]

I can assure you that in my case, it's tax dollars. Even if it were cents, though, it's still leeching. Just because there are more than 300 million of us to split the bill doesn't mean that you're not taking someone else's money and spending it on yourself with no intention of giving ROI.

As for your job, it sounds to me like you didn't need a bachelor's degree to do it. (You might need one to get it, but that's a rant for another time.) So tell me why it was the job of your fellow Americans to subsidize you and your coworkers while you spent four or more years learning philosophy, art history, or sociology, just for you to turn around and start doing the kind of job you could have started doing straight out of high school. I'm sure that you enjoyed and benefited personally from college, but when applied to society as a whole, the question is: did you benefit from it enough to make it worthwhile? And that rapidly turns into: how much more money will you make?

Re:well, duh

[vlm]

Of course, you could go to community college or a trade school, but that's going to have a major impact on your career,

You've got to be kidding. Nobody cares where you went to school after your first "real job". Just does he have a BS degree or not, checkbox yes or no. Also to the best of my knowledge none of my "real job" employers ever found out I did my first two years at trade school and transferred in. In fact at my current employer I'm on the honor system, they have no idea if I have a degree or not, having never requested a transcript. They were extremely interested in my references who work here and my boss knew me tangentially from being in the "biz". I'm only 7 years out of school and already school doesn't matter at all. Nobody in the "biz" knows or cares where I took public speaking, or calc, or pre-civil war american history, or even my first post secondary programming class.

The major impact on your career, is you'll have a lot less debt.

Re:well, duh

[Altus]

You know not all schools cost the same amount right?

You don't have to go to the most expensive school you can get into.

Re:well, duh

[Hognoxious]

Not to mention prestige. If I'm deputy second assistant refectory accountant at a 65 grand a year college I might only be a deputy second assistant refectory accountant.

But I'm better than a DSARA at a 35 grand school. Nearly twice as good, when it comes to willy-waving.

Re:well, duh

[VAElynx]

The problem with the logic right here is that the cost certain luxury (as in, not needed for survival) goods, say a cell phone, X-Box and a few more such trinkets in the US is comparatively low to the cost of basic needs, say, healthcare , or housing.

This means that if you are poor enough to not be able to afford any of those, you will be majorly screwed up if anything at all goes wrong with your health, and can end up in the street quite quickly, too. I don't know, but I don't think that anyone who's employed, i.e. doing productive work for the society should live like that, especially not while others swill champagne and carry their arses in Armani suits.

Re:well, duh

[Billly Gates]

What job is that?

I had to get a degree before I could get anything above that and worried about getting fired for being 3 minutes late for work 3 times, plus had to sell commission just not to get fired.

It was a miserable existence and a great motivator to finish school ... now I am unemployed again I am looking for these jobs. In an employers market everyone is devalued into minimum wage because it is so profitable. Only in an economic expansion or for those who have a heavily interested skillset can break out of it.

Re:well, duh

[Githaron]

I never really understood why people who can barely afford their own expenses have kids.

Re:well, duh

[PCM2]

I wish people would post where they actually live when they make claims like this. It's hardly some legal liability issue, where you have to say, "I'm employed by one of the leading automakers," and "my part of the country" is pretty vague.

Re:well, duh

[vlm]

you know, if you had spent 25 bucks a week more on food (probably more than you would need to) you would have accrued 5K or so more debt over 4 years. While that seems like a lot, the benefits, both physically and mentally, of not being malnourished while you were in school

Most important life skill at high school graduation is knowing how to cook. Not how to read directions on a frozen pizza wrapper, but really cook. Aside from the obvious health benefits its incredibly freaking cheap and tasty food simply puts you in a better mood, not to mention how the ladies enjoyed my home cooked meals. Try to survive on hot pockets and McD value meals and Raman and you won't live well or long.

Re:well, duh

[techno-vampire]

In a similar way, a school knows the median student (and family) can toss in $5K/yr outta pocket, and the govt will toss in an additional guaranteed $20K. Therefore the price will be set by the school at $25K because $5K + $20K = $25K.

And, of course, if well-meaning do-gooders raise the government's contribution to $25K, the total price goes up to $30K. No college administrator will ever admit it, but they all set their tuition according to Nicholas va Rijn's mantra: "Everything the traffic will bear."

Re:well, duh

[Billly Gates]

Not that I am pro making that much as I just argued against minimum wage, I have to ask if you would be willing to pay $14 for a box of chocolates?

I think not every job should pay that little, but in this case $8/hr sounds reasonable as a teenager could do that job or a bored house wife who needs just a little income. There is a limited amount of resources available and if everyone was a millionaire you can make a bet that the particular porche you are eyeing would still be only available to the top 2% of the population as a result. Inflation ..

Right now huge debt with student loans, housing, and credit cards are crippling demand which is why employers are rushing to pay everyone minimum wage as no one wants to pay anything since they owe the banks money.

Re:well, duh

[PCM2]

There are regional variations also. The current minimum wage for businesses in the City of San Francisco is $10.24/hour, and it has been raised incrementally every year for the past decade (with some exemptions for small businesses).

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

[vlm]

This argument is naive on it's face and ignore supply and demand forces for housing.

Ah but interest rates are the Strongest force controlling house prices. Your local income rates set how much you can spend per month. Govt controlled interest rates set how much can be borrowed for that monthly payment. Those two factors control 99.999% of housing price.

(Your median resident walks in with $X downpayment) + (The govt controlled interest rate means you can borrow $Y given (the median income available for housing for the median resident))

There is also speculation... if you're in a non-recourse state, or judgment proof, then you may as well buy whatever you want while the bubble is going up, or even, heck, on the downside. If you're not intending to pay, doesn't matter.

Unions don't really matter... ten union janitors at $50K/yr don't make a dent compared to five $250K/yr VPs and one $1M/yr CEO.

Re:well, duh

[PraiseBob]

That decision is made for them by the school when they set their tuition rate.

Nobody is forcing the student to go to a particular school. If a family (or student) CAN toss in $5k, or can find a school that cost $0 and is covered by grants and scholarships, they don't automatically go to the one that costs more. Despite what everyone seems to think, more expensive != better, and students won't automatically gravitate to the most expensive option. I personally opted to go to a place where I had a full scholarship and stipend, specifically because the cost was much cheaper than my original first choice and I didn't want to go into debt.

Its like mistakenly thinking individual home buyers set the price of homes. Not so... They've got a out of pocket budget of (for example) $1000K/month and the govt sets the interest rate which sets the amount they can borrow which sets the price of the house.

I'm not sure what country you live in. In mine, the government does not set housing prices. The seller sets the price of their house based on comparables in the neighborhood plus any unique features which raise or lower their specific value. This has been inflated by varying degrees in different parts of the country. In my state, there was no real estate bubble. Individual buyers choose how much to pay for the house, or negotiate a better price, or don't buy the house. Each and every buyer made the decision to go along with the increased price because they thought it was the right decision for them. If people don't like high prices for homes, all they have to do is not buy them and the prices fall. Buyers absolutely set the price they want to pay.

Re:well, duh

[__aaeihw9960]

Yes, being poor sucks, been there and done that too and didn't get the t-shirt because I couldn't afford it. But you can survive.

Have you been poor enough that members of your family take turns skipping meals because there's not enough for everyone? Have you been poor enough that you have had to drink water from streams or ponds around your house because the 'city water' got turned off? Not being able to afford new Nikes does not equal poverty.

Anybody worth a damn won't be making minimum long.

This implies that there are an infinite number of jobs in every area of the country for all workers. This is not the case. As hard as it is to believe, some people still harbor prejudice against minorities, women, and people in poverty. As hard as it is to believe, many employers don't look to pay their employees much, in order to 'maximize profits'. These things all make it harder to move up.

And is it really too much to ask people, for whatever reason, earning at the bottom to work a second job, live with roomies, move back in with the parents, whatever until they can work their way up the skill level tree a bit or fix whatever problem other is keeping them in the low earning part of the job market?

This implies that you've never actually lived in poverty. Second jobs are implied. So are third jobs. Roommates bring drama, and in poverty stricken areas, drama generally leads to law enforcement issues. No one wants that. Parents? Okay, that tells me your parents are married, or separated, but are still alive, and want to be in your life. What about the poor kid who has parents that resent his hard work, and cut ties when he goes to junior college? What options exist there?

I know that it's entirely too liberal and hackneyed to say that bootstrapping doesn't exist. It does. People move up every day, few, few people. The problem is when someone who lives in situational/temporary poverty equate not being able to wear designer clothes with chronic hunger. Let me try to explain myself in story form:

A single mother works two jobs to support her three kids after the father goes to jail on drug charges. She lives in government housing, and has food-stamps to help out. She goes to college to become a nurse, to make decent enough money to support her family. In the mean-time, her kids never see her, because she's working 70-80 hours a week and going to school full-time. Her kids don't see that their mom is making good choices for them, they see that she's not there, and the pusher at the bottom of the stairs is. He offers them easy money, just dropping little packages off around town. Arrest records are arrest records, regardless of ignorance, and most arrest records, especially drug related, impact future employment options.

I did a terrible job of setting up a chronic poverty scene. But I hope you get the point. Sometimes, just sometimes, bootstraps aren't there.

Quite honestly, the problem isn't that people in poverty can't go anywhere, or that they can. The problem is that the people who dialog about it and make laws/regulations related to issues of poverty are either people like me, who have come from abject poverty, and vaguely remember what it was like, or worse people who feel morally righteous enough to make choices for someone based on bias and prejudice. The problem isn't that they can't pull themselves up, the issue is that they don't have a voice in the national stage, because they're mostly just trying to get by.

Re:well, duh

[jmerlin]

That list shows the real problem. You're looking at administrative numbers. Down at the very bottom where the numbers start hitting $60K/yr, cut that in half and you're seeing what the numbers look like for professionals working non-administrative positions in Universities, from professors to IT professionals to doing all the damn paperwork that makes those Universities function. The pay scale is literally upside down. Administrators provide almost no value. The president of my tiny little local state school was pulling in $350K/yr base salary with TONS of added non-financial contributions on top of it. That's over an order of magnitude higher than the average salary in that area. And the man did absolutely nothing, ever. Useless bureaucracy with massively inflated salaries doesn't do anything for education. Fundamentally broken hierarchical structures completely undermine the education system, and when they raise tuition, the only people who see a salary increase are administrators. The rest of that increase goes into budgets. So you end up with IT professionals with 5-15 years of experience making under $40,000/yr while entry-level administration positions are sitting at $90K with a fat raise to $110+K in a year. Those positions aren't even business critical -- try running a University without IT these days. This system is beyond totally broken.

Re:well, duh

[trout007]

You have law and reality. In reality there are people whose job skills are not worth the artificial minimum wage. They are unable to produce enough wealth to be paid minimum plus mandated benefits. They will be permanently unemployed or at least until inflation decreases the real minimum wage to a point that matches their skills.

If you remove the artificial minimum wage a natural one will be created based on job skills just like it exists for most skilled workers today.

Also the minimum wage is a trap because you can't get job skills without a job. An employer might take a chance on someone with no skills for the right price.

Re:well, duh

[Hognoxious]

243, but you need to allow for sickness, training etc.

Call it a round 300.

Re:well, duh

[Darth Snowshoe]

The problem is that not everything should be, in a reasonably just society, subject to the unmitigated forces of the market. Senator Ryan imagines families taking their medicare vouchers and shopping very carefully for the most cost-efficient medical care. It doesn't happen that way. If your grandmother arrives at the emergency room, having received CPR on the ambulance ride, you don't want to have to shop around. You want care right then - in the room that she's currently occupying.

Similarly, your daughter wants to be a geologist. But the best geology program is (I'm making this up) North Dakota State. You don't have the option of moving your family to North Dakota to score in-state tuition. You can't tell her that her best option financially is to study to become a nurse instead. Education is not a commodity that you buy by the pound or by the linear foot.

Most people understand that a higher education is their best option for improving their lot in life. It's dawned on universities that they sell something of high, but uncertain, value. They realize they can raise their prices to compensate (and some, simply to take advantage). Do you want the higher education your kids are getting to be a shell game, where some of them are guaranteed to get the value out of it that they put into it, and some of them do not?

The truth of the matter is that, over the course of the last few decades, federal and state subsidies to private and public universities, and also to academic research generally, have shrunk and shrunk. Private loans to individual students are a poor compensation for that. Even people who never have kids of their own derive some value from living in a society where higher education is valued and pursued.

One of the reasons that the best and the brightest from around the world come to America is that they perceive the value of a university education here to be high compared to elsewhere. If that becomes no longer true, there will be less motivation for talented people to come here and participate in our economy.

Re:well, duh

[VAElynx]

Your analysis assumes: 1) They don't get some tax refunded. I don't know about Illinois tax code, but if you make $1320/month, there's no way you're not going to get all of your withholding back.

Well, good he didn't .. let's say that he loses 200 bucks less. Given the above analysis didn't consider other assorted living expenses, you know, like water , (gaseous) gas and electricity, congratulations - if you get tax returns , you can actually make ends meet.

2) They can't get a roommate. People shack up all the time. It's actually recently (post WWII) that we didn't continue living with our families before we were ready to start our own families, and by that time you had a "real" job.

Not everyone is on a well-enough relation with their family to make this work. Besides, what if there aren't any suitable jobs available from around the locale your family lives in? You might as well assume that the person also has inheritance from a rich uncle to live on.

3) They must have transportation. I thought the benefit of a city is that you can walk where you need to?

I thought that too, the problem is that there's a difference between availability of services (where it's true) and availability of work (where it isn't). It isn't always possible to live close enough, and while walking is great, doesn't work beyond a radius of maybe ten miles.

Again, it's entitlement mentality. It's hard to make due, but minimum wage isn't supposed to be a sustainable wage.

Sorry ,but if wanting to live like a person when you are doing the work of one is "entitlement mentality" then fuck yes I am entitled. Especially when looking at how banks and similar scum got a free government handout to pay for their screwups.

It's supposed to be an entry level thing, the minimum in which you must pay your employees otherwise it's downright exploitative. But even if someone is a fuck up or felon, you can survive with some hardship but who says the government has to make sure your life is nice and cush?

Congratulations! You got it spot-on , because it *is* downright exploitative!
Let me fill you in. The purpose of a minimum wage is to make sure that the jobs that are offered pay enough to be able to live on. If that doesn't happen, what you get is either the government having to chip in , and pay a chunk of people's paychecks, making them a machine that takes money from a taxpayer and stuffs them in private individual's pockets - the government might as well employ the people directly and the profit from a state-run company goes back into the budget thus reducing need for taxation
Or, the person in question has to work two jobs, meaning the increase in job availablility doesn't really happen because now everyone down there needs more than one job, and needs both near enough so he can commute, and furthermore, this is just a fancy way to bypass 8 hour worktime, which is mandated by law - it's just done in a way that makes it look voluntary.
Therefore, the logical solution is to set a minimum wage that makes one able to live sustainably.

Re:well, duh

[Thelasko]

3)More educational institutions will be established to take advantage of the high profit margins.(intended?)

Part of the problem is that older, more established institutions are viewed as more valuable in the eyes of the consumer. This makes it very difficult for new universities to enter the market. How long does it take for a new university to establish credibility?

Re:well, duh

[alexander_686]

Student Loans is aid. Nothing “psychologo-economic” about it.

You are a bright 18 year old of modest means and you want to be a doctor. To do this you need to borrow 100k to buy the education. Banks would charge high rates for this type of risk loan. In this case the government offers cheap money (I have seen 10 year student loans with a lower interest rate than 10 year treasury bonds.) While you have to pay the loan back the interest rate is deeply subsidized.

Personally, I think we would get more bang for our buck if we did more grants then loans. In the case of loans the benefits flow to those who pay the most for education. i.e. A private college graduate gets more subsides than a state college graduate., which is kind of unfair because one would expect the private college graduate to earn more money. The people who need it the least get it the most. A (indirect, some generalizations made) subsidy for the rich in effect.

Re:well, duh

[niado]

I'll help!

I live in Huntsville, Alabama which is a smallish city (~180k pop) surrounded by a couple of semi-affluent suburbs. Surrounding the suburbs are a very poor rural area dotted with small towns. The area (as well as most of the state, and most of the region) has an extremely low cost of living. Minimum wage is at the Federal minimum of 7.25.

I have two brothers and a sister who all live here and make at or near minimum wage at various jobs. They have occasional raises that seem to add up to around $1.00 per hour each year or so.

Working full-time at minimum wage you end up with a take-home of less than $1000 per month. The cheapest 1bdrm apt you can really hope for is around $350/mo. (You can potentially save some money here by playing the roommate lottery.) Utilities will bottom out at around $50/mo on average if you are careful. The area is very spread out and not pedestrian friendly, and we have very poor public transportation here. Gas is around $3.10/gallon right now (it recently dropped from around $3.70 or so, where it had been holding for a couple of months) so depending on the commute you'll be spending somewhere in the ballpark of $100/mo or so on gas.

So, after gas and housing you're looking at $500 to live off of each month. This is just barely manageable from my experience. Frugality is a must in this situation, and medical bills are basically un-payable. Since most retail and other min-wage jobs are only part-time, lots of people end up working multiple jobs to make ends meet. Luckily this area was not hit as hard by the recent economic unpleasantness, so there are still lots of low-end jobs to go around. Anyone who has student loans, car payments, or any other significant bills is pretty much on rice-and-beans-with-the-lights-out at this income level.

Re:well, duh

[darkwing_bmf]

Here's a good start...

http://www.economist.com/node/21556575

Re:well, duh

[vux984]

The seller sets the price of their house based on comparables in the neighborhood plus any unique features which raise or lower their specific value.

His argument is that the seller sets the price of their house based on what the market will bear. His premise is what the market will bear is a direct function of: how much money people in your area make, and what the interest rate is.

He has a valid point. Your right about comparables and features to a point. But say your house has a market value of X. Tomorrow interest rates go up sharply, the price of your house will go down. Why? basic economics: The number of people who can afford your house drops sharply, and you rapidly end up with a glut of houses at X$ on the market competing for a much smaller number of people able to pay X$. You get a glut of supply... and what does that mean? Prices go down.

So... your neighbors who are motivated to sell start to lower the price to reach a wider market. You don't have to follow suit, but if your neighbors are dropping to $X-Y and Y >>0 then you better have one hell of a view and a top of the line kitchen.

Thus interest rates have a very real impact on the price of a home. Its hardly the only factor, but it is a factor.

Re:well, duh

[Solandri]

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.

This is so misguided. You're putting morality ahead of reality.

Making the minimum wage a living wage is equivalent to saying anything you can be paid for doing, you should be able to do for a living. Now think about that. I pay kids to shovel the sidewalk for me in winter. Should an adult be able to make a living doing nothing but that all his life? The economy is full of different kinds of jobs, ranging from difficult ones which pay a lot, to easy ones which pay a little but are good working experience. If you raise the minimum wage to where it's a living wage, you're not making life easier for those in those low-end jobs, you're eliminating those jobs from existence.

The whole point of paying people for a job is that the value you get from them doing the job (the productivity they generate) exceeds what you're paying them. I pay the kid with the shovel $8/hr because I can use that hour I save to earn more than $8 (or I value the free hour I get to spend with my family more than $8). You pay the burger flipper $8/hr because by selling the burgers you can net more than $8/hr in earnings. If you can't net more than you're paying them for their labor, there is no point having them do the job. You'd lose money doing it. In other words, it would detract from the country's economy, not contribute to it.

e.g. If you raise the minimum wage to give the janitor a better living, he doesn't get a better living. The company which hired him to clean the offices once every week? It's no longer cost-effective to have him clean every week. The clean office was worth (say) $80/wk, and they were paying him $64/day to clean once a week. Now you raise his wage to $100/day. What's going to happen? It's no longer worth it to clean once a week. So they reschedule him to clean every other week. He's making more money per hour, but he (and all other janitors) are working fewer hours. They'd be the same or worse off than before, and everyone's offices are dirtier. All because you've artificially priced labor above what it's really worth.

Don't get me wrong; I completely support a minimum wage to prohibit exploitative labor wages. But people have got to shake ridiculous the notion that somehow every job is something that an adult should be able to make a living doing, and thus the minimum wage should be a living wage.

Re:well, duh

[dohnut]

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.

Yet, apparently, they keep showing up for work and are able to feed, clothe, and shelter themselves in some fashion. Me? I'd move to somewhere where it wasn't so expensive to live. If everyone does that then the business will have no choice but to increase wages or die. I've got no sympathy for someone in a bad situation that does nothing to change it -- especially in America where you have the freedom to do exactly that.

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.

Then the owner can pound sand. Oh, it's the best job offer on the market? Well, maybe you should take it then? Or move. Or start a competing business. Etc.

Pretend I'm typing this in all caps and I'm using lots of exclamation points: You cannot have a living minimum wage. And definitely not in a global economy.

Let's go extreme. Let's raise the minimum wage to $1,000,000/hr. Hell we'd all be living in mansions and driving Bentley's right? No? Why?? Well guess what, those same problems exist (albeit on a smaller scale) even when you bump the minimum wage from $7.25 to only $7.50. There is a short term bump and then inflation and job losses bring everything back into balance. Meanwhile you've just lowered the value of everyone's cash savings. So, in the long run, you've manged to do nothing for the working class and you've reduced the net worth of the middle class and probably screwed over most retirees. Hooray! The rich are OK (of course) since they have their money tied into investments that appreciate with inflation.

I'd love to see America try a free market once -- just once. No more minimum wage. No more corporate welfare or subsidies. No more laws and loopholes for the rich and entrenched interests. A flat tax system. Etc.

Re:well, duh

[Nimey]

Now it's the state workers' fault that tuition is going up? Good gravy. Are you one of those people whose faith says that government is always the problem, or was that just an especially poorly-worded argument?

Re:well, duh

[ifwm]

I wish people would post where they actually live when they make claims like this.

1) why?

2) you could just ask nicely, why didn't you

Re:well, duh

[ifwm]

I wish people would post where they actually live when they make claims like this.

No, you know what, I'll be more blunt.

I wish when people wanted to have a reasonable conversation, and were requesting information, that they don't act like petulant brats, and instead, simply politely

ask for it. It never occurred to me that some lonely internet troll is so desperate for my approximate location that he would throw a tantrum about not immediately and automatically receiving it, like you did in your post.

Re:well, duh

[istartedi]

Loans are arms and the lenders are arms dealers. The people who graduated ahead of you bought the bullets and effectively shot you out of the economy. They effectively pit us against eachother when competing for any big ticket item: house, car, education, etc.

Just as in war, a combatant sometimes wins; but arms dealers always win.

Re:well, duh

[Luyseyal]

A variant of [1] that is being actively pursued at a number of institutions is specialization. Random example: Classics. It is very expensive to maintain a Classics department. There are few grants and other moneymaking opportunities outside of pure tuition. Some schools are saying they'll offer classics and other schools will subscribe to their curriculum. The remote students will utilize online learning to participate with professors at the supporting institution. Tuition for the remote students is typically less but it will still net more dollars for the subscribing institution.

Cutting pay: Colleges seldom use straight-up pay cuts. What they do is eliminate tenured positions via attrition and have both higher adjunct/faculty and student/instructor ratios. They can usually make up for it by offering more tutoring, which is relatively cheap.

Have you looked at the Western Governors model? For the self-motivated student who 1) doesn't need collegiate networking and 2) wants a real degree (not some University of Phoenix garbage or untrustworthy opencourseware-y start-up product), it is a good and inexpensive option.

Cheers,
-l

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.

Re:well, duh

[PerfectionLost]

I never really understood why people who can barely afford their own expenses have kids.

It's those condom's they can't afford... that or self control.

Re:well, duh

[PerfectionLost]

You just linked to hard numbers of many salaries that are atleast 100k+, with quite a few salaries that are 200k+. If that is not racking in dough, I'm not quite sure what is.

Re:well, duh

[10101001 10101001]

Making the minimum wage a living wage is equivalent to saying anything you can be paid for doing, you should be able to do for a living. Now think about that. I pay kids to shovel the sidewalk for me in winter. Should an adult be able to make a living doing nothing but that all his life?

If they can find either 40hrs/week, 52 weeks/year or 80hrs/week, 26 weeks/year of snow shoveling, sure. It's a minimum wage, after all, not a minimum salary. And there's no guarantee that anyone can find work. But setting the standard that "if you work full time, you won't starve to death" seems like a pretty minimal standard for a humane society. And lucky for us, thanks to automation due to tapping fossil fuel reserves, it's quite possible.

The economy is full of different kinds of jobs, ranging from difficult ones which pay a lot, to easy ones which pay a little but are good working experience. If you raise the minimum wage to where it's a living wage, you're not making life easier for those in those low-end jobs, you're eliminating those jobs from existence.

Um, it's called "minimum" wage. And I have to say, having jobs that are "easy ones which pay a little [or none] but are good working experience" only works if you (a) accept that you have to save up money to work for cheap or free and (b) that either your work is so subpar it makes sense they're paying you so little or the company is effectively screwing you over by not paying the minimal of what you're worth--which is, again, enough money so you don't starve to death.

The whole point of paying people for a job is that the value you get from them doing the job (the productivity they generate) exceeds what you're paying them. I pay the kid with the shovel $8/hr because I can use that hour I save to earn more than $8 (or I value the free hour I get to spend with my family more than $8). You pay the burger flipper $8/hr because by selling the burgers you can net more than $8/hr in earnings. If you can't net more than you're paying them for their labor, there is no point having them do the job. You'd lose money doing it. In other words, it would detract from the country's economy, not contribute to it.

Yet people want burger flippers. Maybe some of those people only make $8/hr, but a lot more make $10-$20/hr. So, if that burger flipper gets a raise, then there's still a lot of customers who hourly make enough to eat the extra cost in their burgers to pay enough that the burger flipper doesn't starve to death.

e.g. If you raise the minimum wage to give the janitor a better living, he doesn't get a better living. The company which hired him to clean the offices once every week? It's no longer cost-effective to have him clean every week. The clean office was worth (say) $80/wk, and they were paying him $64/day to clean once a week. Now you raise his wage to $100/day. What's going to happen? It's no longer worth it to clean once a week. So they reschedule him to clean every other week. He's making more money per hour, but he (and all other janitors) are working fewer hours. They'd be the same or worse off than before, and everyone's offices are dirtier. All because you've artificially priced labor above what it's really worth.

No. Odds are good some percentage of the offices will recognize they can't stand a dirty office and think its worth $110/wk while others already thought it was only worth $50/wk and were only hiring the janitor about 40 weeks out of the year. Whether its a net gain or loss obviously depends on the janitor's situation. In any case, it's a pretty absurd wealth redistribution anyways since the office itself exists precisely as a means to sales and cleaning is generally, but not always, an ornate task without much real benefit to anyone (and if that's not the case, it's most often due to a few unhygienic people whom I doubt are really worth the $64/week janitor cost to co

Re:well, duh

[Genda]

Oh yeah, and the damage you did to your brain and body are a model upon which to build a future for our children (and trust me, you did damage, you may not know it now, but when the osteoporosis troll come a knocking, please don't be surprised, he's been to the house of quite a few of my friends who did exactly what you did in the young adult years when good nutrition ensures a long healthy life.

Which isn't to say there aren't a bunch of lazy, sex crazed coed, studying classes that will make little or no contribution to their future and who's nutrition even with money sucks beyond reconciling. Its just a certainty that if you can't afford good healthy food, that sooner or later you'll pay with your health.

Personally I like the idea of a society that supports young people in choosing between college and useful, vital trades that society needs and upon which a young man or woman can build a healthy future. The education cost would be dramatically less, preserve vital skills in our society, and normalize the price of plumbers and electricians and car mechanics, oh my. That would leave the justifiable college bound a much larger pie in which to cut, and more resources to support them in becoming future engineers, scientists, teachers and scum sucking lawyers and corporate capitalists (the scum sucking is obligatory, but seem harder every day to separate from these last two groups.)

It really is a no-brainer, Fail to support the students of today and the future will suck even more than it does now. There are few better investments.

Re:well, duh

[Shadow99_1]

At my state funded university that I work for, the state has cut back the general fund of the school year after year for more than four years now. On the other hand they have increased the funds exclusively budgeted to 'grounds & facilities improvements', which is a separate money stream from the state. So they have tons of money that can only be built for new something on campus... Not one dime of student money goes into those projects, but failure to use the funds given isn't an option either (the state doesn't 'get' not using budgeted funds, this is true in all levels of government that I've ever seen). So instead we get silly marble statues & near constant destruction of the roads on campus as they do one update after another... Which we as taxpayers in my state finance rather than actually providing for the education of students. It's actually gotten to the point that maintenance (part of the general fund) cannot even maintain the sheer number of buildings and works on campus and we will have to start tearing things down because in some distorted sense of reality it is apparently cheaper (or just more politically correct) to provide us nice looking facilities than to educate students.

Re:well, duh

[jwilcox154]

No, starting out at a community college could actually be a smart move. All one has to do is start at a community college, graduate with an associate of science/art degree, then transfer to a state university with a transfer scholarship. When someone earns a Bachelor of science/art degree the employers will mainly look at that rather than the associate degree earned.

Re:well, duh

[PCM2]

The cheapest 1bdrm apt you can really hope for is around $350/mo.

(whistle) Living in California, I've literally never seen that kind of rent my whole life. That was about what I paid for my first apartment, but that was with a roommate, and the rate went up steadily with every move. Right now in San Francisco, they say that the average price of a studio (no-bedroom) apartment is about $2,000. That figure is misleading for a number of reasons, and most people I know don't pay that, but most people I know who have been in the market for a new apartment recently have ended up moving out of town. Mind you, San Francisco also sets its own minimum wage, which is currently $10.24 -- but that will still easily leave you in the position of needing a second job or one that pays really good tips. (Bartending is a pretty desirable job for a lot of people of a certain age around here.)

Re:well, duh

[cosm]

I never really understood why people who can barely afford their own expenses have kids.

Tax breaks/rebates and incentives from the government? WIC/Food stamps/government assistance handouts? The opportunity cost of not having children for some poor families becomes more expensive than having the kids after all government aid is accounted for. Not to mention the intelligence and life-skills of some (I said some! NOT ALL!!!) of people on min-wage for life can be below average and the financial ramifications of raising a family is not even calculated in the risk of bearing children.

Re:well, duh

[Anonymous Coward]

You must have graduated a while ago.
I busted my ass and lived in squalor to graduate with a manageable $50k in debt instead of an unmanageable $100k.

Re:well, duh

[Grishnakh]

Yes, that does work pretty well, and a lot of students do that, which is partly why there's so many community colleges. I took some classes in community college during summers to get ahead and save money while I was in college. You don't even need to bother with the associate's degree; the credits will transfer over directly (make sure you research this beforehand to make sure the state U you're going to will accept them). However, this still doesn't address the problems I brought up. Those final 2 (or 3) years in a state U will still cost a fortune and leave you with crushing debt, though obviously not as bad as if you did all 4 (or 5) years at the state U.

Don't forget, those loans aren't just for tuition; they go to pay all your living expenses while you're in school, which can easily be more than tuition: rent, car, food, etc. So there's some other factors involved in the "Total Cost of Education" (TCE, to borrow a buzzword from Microsoft), which can vary a lot depending on the school and where it is: if it's in a high-rent locale, if there's good public transit available, etc. So of course, living with the parents for the first two years and going to community college can be a lot cheaper, but as I said before, that'll end when you start your upperclassman work at a real university.

Re:well, duh

[HornWumpus]

Live wherever you lived before you got your first job.

I've moved to nicer digs (no job pays minimum here, nobody worth hiring would apply, even McD's) but stated in the mid-west. On time and sober will indeed get you a small raise. Don't expect anything handed to you. Also don't underestimate how hard 'on time and sober' can be to 'mama's boy' or 'rebel', not to mention 'emo' or 'goth'. Many don't remember how stupid and irresponsible the average high school kid is.

I don't really see a problem with 10% actual long term unemployment, what bothers me about that scenario is the 15% morons who hold jobs they can't possibly do (as they say on 'South Park' about 1 in 4 is a tard).

Doesn't matter if they are the bosses son or some GSA 'worker' they would do less damage on the dole, most are net negative producers who hide in large organizations.

Re:well, duh

[HornWumpus]

You're expected to quit those jobs after you find a better one using your new longer resume. If you can't find a better job, take on responsibility, learn something or move (or all of the above).

Re:well, duh

[HornWumpus]

If your boss is ready to fire you for being 3 minutes late 3 times that tells me a lot about you (not your boss). Bet he doesn't enforce those rules 'uniformly', bet you never stop bitching about it, bet you don't have a clue about why.

Rule of 3s. 3 bosses (or girl friends etc) with the same 'issue' and the issue isn't theirs, it's yours.

Re:well, duh

[Attila Dimedici]

And the group of people who typically earn minimum wage experience a decrease in their baseline rate of participation in the workforce.

Re:well, duh

[Great Gravy]

Read much? My intent was to suggest that student loans provide state legislatures with a convenient, yet unfortunate, pressure valve for solving state budget woes. State employee pensions were just an example of a cost being covered indirectly by the infinite well of student loan dollars, but if it makes you feel better you can think of those dollars being applied to patching potholes, building schools, or any other cost for which states are having difficulty paying (Have you heard? There's a little recession thingy going on where state budgets are not doing so well). In your strange world of reading non-comprehension, does that mean that I am against fixing potholes and building schools?

Re:well, duh

[shutdown -p now]

The problem is that not everything should be, in a reasonably just society, subject to the unmitigated forces of the market.

That's an argument for state-sponsored public education where the state both subsidizes it and sets the prices, as in some European countries. Merely pouring public money into private businesses is a horrible way to manage a social welfare program, and does not result in a just society - as TFA demonstrates.

Re:well, duh

[Attila Dimedici]

Yet people want burger flippers. Maybe some of those people only make $8/hr, but a lot more make $10-$20/hr. So, if that burger flipper gets a raise, then there's still a lot of customers who hourly make enough to eat the extra cost in their burgers to pay enough that the burger flipper doesn't starve to death.

Now when that burger flipper wants to buy a burger that someone else flipped it costs him more...as does everything else. So now that raise he got buys him no more than the money he was making before the raise and maybe even less depending on how the price increases work (for example, some union workers make much more than minimum wage, but their wages are calculated as a multiple of minimum wage so that every time minimum wage goes up they get an automatic increase in their wages).

Re:well, duh

[Attila Dimedici]

The thing about those jobs that never pay more than minimum wage is that you should not stay in them long term. They are jobs that can pretty much be done by anybody that has a pulse and can stand upright (the second part not always necessary). The only exception to the above are jobs that people do because they love them. If a job requires actual skills and your value to the employer increases the longer you hold the job and the employer only ever pays minimum wage, they will not stay in business very long because their most valuable employees will always be leaving for better paying jobs.

Re:well, duh

[Genda]

Its not just inflation. At every turn (looking at the California State college system because its one of the largest, best, and most endangered) the Colleges of California are in operational freefall from the Top UCs to the community colleges. With the slow motion disaster that is our state government and state sources of school funding drying faster than a spit puddle in Death Valley at high noon, the cost of tuitions have literally SKYROCKETED, Administrators, insensitive to the disaster have voted themselves huge pay raises while cutting courses and eliminating teaching jobs like there's no future. With every turn the State's education system tries to run schools on less resource, and squeezes the students ever harder, applying tuition hikes on top of tuition hikes. A growing percentage of students are being priced out of their education in mid school attendance. A quality higher education in California will soon be well beyond the reach of any normal middle class family, and require a level of saving and scrimping starting at a child's birth that most families are neither equipt nor interested in making.

We need a system that maintains high standards and demands that students are serious about pursuing that degree, but once the student has demonstrated the desire and the capacity, we need to provide all the resources we can to ensure that student receives the education they desire. Every measure of economic health tells us that well educated professionals are a boon to the economy, leaders in their various communities, and return the investment in their success dozens of times over. With the accelerating technological challenges facing our society, we can't afford not to have a well educated, disciplined and intellectually proficient society of clear and cogent thinkers. The alternative is to hope we can HB-1 our way through the future, and I hate to be the one to tell you, but a growing number of those children are going back home with their knowledge, business experience and professional acumen. We've virtually bankrupted our economy, let's not do the same with our children's future.

Re:well, duh

[axlr8or]

Unfortunately the difference between 'what do I need' ers and teh 'What can I get' ers. What do I needers are responsible citizens and recognize balance. What can I getters Want as much as they can for nothing. They are useless except when you are a country involved in economic warfare.. Those people then become your soldiers. Laying waste to resources.

Re:well, duh

[hpinsider]

Educational institutions are for profit first and foremost, everything else is second. Stop giving money to people who don't deserve it. Im not paying half my income in taxes so some shuck can go to nyu and get a degree and never get a job. Because just wait after someone else pays for college, someone else will pay for welfare.

Re:well, duh

[mrmeval]

You need to think to the future, you raise the price 10 percent higher than the gov't will support so that next year they raise the support.

Then you fiddle with book, lodging, support materials, technology licensing "value added" fess and so on.

It's a negative entrepreneurial enterprise where there is little risk for the gain maker and all the risk is born by the student product.

If a school only could get paid a percentage of what the student would make over 20 years they'd be a tad more productive and would want as many fabulous or evil students to graduate as possible.

Re:well, duh

[10101001 10101001]

Two things. One, fast food is a luxury good; ie, it doesn't stand to reason that a living/minimum wage would afford the burger flipper an ability to afford the burgers he flips in the first place. Two, if the burger flipper flips 60 burgers/hr and he sees a $1/hr raise (~$0.75/hr after taxes), the increased cost per burger for his wage increase would be ~$0.02 (plus ~$0.08 employer FICA taxes plus whatever their unemployment insurance taxes are but probably around ~$0.06, so perhaps $0.16 total); further down the line you'd presumably see similar increases in things like beef, cooking supplies, cleaning supplies etc. Whether that is greater than the effective ~$0.75/hr raise, I don't know, but it's a pretty large jump to presume to know.

Re:well, duh

[Nimey]

You've seriously never argued with people who genuinely think the government is always at fault, forever and amen?

You'd better spend a little more time on the Internet before you dismiss me for misunderstanding you when you accidentally echo the nutty people.

Re:well, duh

[Celarnor]

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.

Care to email that to my boss? I haven't gotten a raise, *ever*. Granted I started at $9.00, $1.75 over the state minimum, but since I only get occasional work when someone needs me to muck around with the webserver, design a skin for a new site, or drive to a client to deploy equipment/troubleshoot something, I don't get the benefit of constant regular hours.

A raise would be killer. ;)

Re:well, duh

[HornWumpus]

They will let it slide for any worker that actually works. When someone produces more then they are paid they are valuable, your boss will punch you in to keep corporate happy if you solve problems, not cause them.

I hope someday you will be able to convince a boss that you are worth the money. The change in attitude you will see is amazing. You won't get it by complaining.

Bosses are indifferent to firing mediocre workers. Ether all your bosses have been complete idiots or you are not as smart as you think you are. I can accept that all the AOL bosses where idiots, but I also expect all the AOL helpdeskers were even bigger idiot script monkeys.

Re:well, duh

[HungWeiLo]

If I want to cook a steak, it costs me more to buy the raw steak and sides than to just go out and buy one at a restaurant.

I just got some grass-fed organic steak, some fingerling potatoes for under $20. The equivalent food at a restaurant of equivalent quality would charge me at least $40. Oh and included in the $20 was a hearty glass of Argentinian malbec.

If you're talking about a $10 tubesteak, maybe.

Re:well, duh

[Quila]

Most people understand that a higher education is their best option for improving their lot in life.

The problem is, many of them aren't cut out for college but still think they deserve to go. In my first year of college I knew a guy taking a college math class that consisted of what I remembered from 8th grade, and he actually had to study to pass. Uh, wrong. He didn't belong in college, period. Such a class shouldn't exist in a college. If you can't hang with college-level math (as in more advanced than high school) then you don't belong in college.

Most systems, such as Germany, that guarantee free college also screen the kids during primary schooling. You don't have the intelligence and work ethic, you don't go to college on the state's dime, vocational school for you.

It reminds me of the Heinlein quote, "Never try to teach a pig to sing; it wastes your time and it annoys the pig." Plus, it takes singing lesson slots from people who can actually sing.

Re:well, duh

[kenh]

You are right - parents have no concept what college costs them & their children. /sarcasam

Re:well, duh

[englishknnigits]

So let me get this straight...your point is raising the minimum wage can't be bad because when we raise the minimum wage the economy doesn't go to hell? Is that really your argument? You might as well say that monkeys like bananas so raising the minimum wage can't be bad. You need to connect your dots.

I don't remember stating the economy would go to hell if we raised the minimum wage. I said the middle class would suffer and there would be no real net benefit to the poor. Some poor people would make more money, some poor people would lose their jobs, and everything would get more expensive for everyone. This isn't an irrational belief, it is as close to a fact as you get in economics. The only real discussion is on the size of the effects, not whether or not they happen.

Re:well, duh

[kenh]

The problem is that not everything should be, in a reasonably just society, subject to the unmitigated forces of the market. Senator Ryan imagines families taking their medicare vouchers and shopping very carefully for the most cost-efficient medical care. It doesn't happen that way. If your grandmother arrives at the emergency room, having received CPR on the ambulance ride, you don't want to have to shop around. You want care right then - in the room that she's currently occupying.

Wow - you went from shopping for the best care available to the emergency room. Much of Medicare services are either provided as a result of a consultation and scheduled OR are repeated, on-going services (i.e. dialysis) - those types of service allow the patient to find a provider they like that provides services they are satisfied with.

Are you really of the position that people should be forced to just accept what is offered, to have no ability to choose their provider?

Re:well, duh

[kenh]

I've met a college graduate who took on $160K in student debt to walk into the 2010 job market with a degree in Theater Management. I met him when, with tears in his eyes, he applied for a substitute teaching position that was paying $85/day. The best he could home for was 7-10 days work a month (because once you go above 10 days a month the district has to pay you $15/day more, so they limit each sub to under 10 days a month if they can)...

Every month, for the next 20 years, this kid was going to be paying over a thousand dollars a month BEFORE he paid for food, clothes, housing, transportation etc.

What did he think he was going to get paid as a theater manager once he graduated?

Re:well, duh

[kenh]

Then explain their ever-growing endowments?

Sure, they pour some money into tuition assistance, but every year endowments go up, and that's money that could have gone towards reducing the tuition.

It was pointed out that Yale has an endowment that could pay every student's tuition at Yale for the next 30 years assuming no growth of the endowment over those thirty years.

Re:well, duh

[kenh]

Aid should be based on need AND merit - simply graduating high school doesn't merit either free money or a subsidized loan rate.

A college degree doesn't guarantee a high-paying career, and in many cases it is a financial drain to the student that lasts for 20 years.

Re:well, duh

[kenh]

Depends, how many more Starbucks are we planning on building?

Re:well, duh

[kenh]

Does every conceivable job warrant compensation enough to qualify as a "living wage"?

The high school kid flipping burgers at a hamburger joint really is providing $20/hr benefit to their employer? Do you think that trebling of the labor costs in a labor-intensive industry like hospitality won't cause prices for the products to at least double?

Re:well, duh

[kenh]

Why should an employer raise wages if they can find any number of workers willing to take their low wages?

If the employer does raise wages, will they sell more product to cover the increase OR will they be forced to raise prices?

If they raise prices will they sell more or less of their product?

If they don't raise pries yet labor costs increase, profits will go down - that drives down the value of the company, the pension plans and mutual funds that hold the stock will lose, and that will take money out of the worker's retirement plans...

Re:well, duh

[anarkhos]

You forgot

3) Becoming a student will become worthless

4) Debt you'll never get rid of

Re:well, duh

[Cytotoxic]

I'll see your "poorly informed" and raise you a "you don't know what you are talking about". Everything he says is accurate in most any job market. The only thing correct about your point is that there are certain jobs that won't ever lead to full-time employment for that employer at a high wage. Well, duh. Like a part-time helper at a chocolate store. (who in your example is actually making a little over minimum, go figure)

However, if you are a good employee with a good work ethic you'll be able to find a job elsewhere for more than minimum wage once you've built a bit of work history. Heck, even fast food pays more than minimum wage, and that's a job primarily aimed at entry-level teen workers. I've hired a couple-hundred people over the years, and none have been for minimum wage - even a position as a clerk who just put stuff away where it belonged was able to demand $12 an hour over 15 years ago. Believe it or not, there are a lot of jobs that are not worth what it would take to pay someone "a living wage". Like mowing my yard. I'm not going to pay you $40 an hour to cut my grass. Heck, I won't even pay $20. That's why I do it myself. (well, and I enjoy the time in the yard) Make minimum wage $25 an hour and most lawn services will go out of business - only really wealthy folks would be able to afford it. The same goes for a lot of service jobs. How much would you pay to have your nails done? I wouldn't pay anything, 'cause I'm a dude, but still... $85? $100? I doubt it. Prices rise above some magic number and then the customers just evaporate - taking the jobs with them.

The "just raise the minimum wage" argument is silly. You can't declare jobs worth more than they actually are by fiat. All that happens is a temporary boon to people on the lowest rung of the career ladder who manage to hold on to their jobs. Meanwhile, the market adjusts and eventually a new equilibrium is reached via inflation or job losses. No matter what you declare the "minimum living wage" to be, you'll be back complaining that it is too low in a few years. Even if you index it to some inflation measure, you'll just introduce other distortions into the market, like increasing unemployment and depressing all wages. The answer to low wages is labor mobility. There are far too many people who are tied down to a given geographic location and employer for reasons real and imagined. If they were able to access all of the jobs that are available and readily relocate to a new job, there'd be much less of an issue with people working a lifetime for minimum wage. Of course, there's still a lot of knuckleheads who can't be bothered to show up on time or give a decent day's work. There's no market fix for that.

Re:well, duh

[ohnocitizen]

First off, congrats on making enough to make those tax dollars rather than cents, that must be considerable :).

You'd be preaching to the choir about the distinction between needing a degree to secure a job, vs a degree to do it.

The many reasons I support college level education come down to the kind of citizens we want. I want citizens with active intellectual lives, the ability and urge to question, tinker, and improve society, and the fire of curiosity in their lives. High school education isn't enough. I value what college brings to the table, from bringing together people from diverse backgrounds and locations, to providing an opportunity to explore subjects with a depth and seriousness high schools don't provide. Yes we need to improve public education, but I'm not willing to let go of the benefits a college educated populace bring to the society I want to live in.

On your question about will it help you make more money - sometimes, though that is not the only metric of success we ought be measuring college by.

Back to the math: http://www.nasfaa.org/EntrancePDF.aspx?id=1320
Essentially 1% of the federal budget goes to student assistance. Of that, most of the money is for loans. Food for thought.

Re:well, duh

[Cytotoxic]

I hope we aren't arguing that "living wage" includes the right to live in your own home by yourself and not have to live frugally. It seems to me that I was living just fine when sharing an apartment with 3 other guys in my early 20's. Sure, Ramen wasn't a kitschy nostalgia item, and "all you can eat" buffets were a chance to eat 3 meals for the price of one, but we lived OK. Not knowing anything different might have helped.

Oh, and $ 350 for an apartment is crazy cheap. My family left Huntsville when I was pretty young, but I lived in Birmingham for grad school and was only able to come up with a place for $450/month - 25 years ago. And I considered that to be awfully cheap.

Re:well, duh

[GodfatherofSoul]

OK, I don't know you but I'm calling bullshit on any university on the planet having 44 people on staff in a diversity office. Maybe they serve on some board a couple times a month at most.

Re:well, duh

[Cytotoxic]

The only exception to the above are jobs that people do because they love them.

This is very insightful. There are certain jobs that attract more people than there are positions available, depressing wages. Like "artist" or "musician" or "actor". There's lots of unbelievably talented and hard-working musicians out there who can't make a decent living at it (most of them are doing something other than music because of this fact). I mention this because there are a lot of other jobs like that. Biology graduates generally make less than someone with a high school degree and 4 years work experience. There must be a lot of people who really enjoyed biology, at least relative to the number of paying jobs available.

When I changed from biology (after 5 years running the central laboratory for a multicenter clinical trial for a cancer treatment) to entry-level computer tech I was able to demand a 50% increase in salary (with no relevant work history) and doubled my salary in less than a year. This despite going from being responsible for an 8.5 million dollar budget to being responsible for building and deploying $1,000 PC's.

In response to the GP, I have indeed spent time working at minimum wage, and I have personally experienced market forces that depressed wages below what would seem reasonable, and raised wages in seemingly irrational ways. Irrational if viewed from the perspective of "your salary is directly related to your value as a person". When viewed from a simple supply-and-demand, what-the-market-will-bear point of view it all makes perfect sense.

That doesn't mean that I didn't feel somewhat resentful of the workers at Caterpillar who went on strike rejecting a $19/hr plant-wide minimum wage as too low. This for entry-level unskilled laborers at a time when my transgenic mouse with a human hemoglobin transgene sporting a site-directed mutation to act as an animal model for sickle cell anemia garnered me an offer at $18k/year to run the affor-mentioned study. I held out for $22k though. :)

Re:well, duh

[Aighearach]

Actually, no, the restaurant pays about 35% for the ingredients. Meat is only slightly more expensive retail, still about 50% cheaper. If the restuarant seems cheaper you probably are comparing a low quality steak in the restaurant to a high quality one in the store.

Re:well, duh

[Etcetera]

All I can say is: Cosby had it right.

http://www.youtube.com/watch?v=nFY0HBkUm8o

Re:well, duh

[Aighearach]

Obviously, the claim that the government sets the price of housing via interest rates is entirely compatible with there also being geographic price differences. It does imply that the geographic price distributions will match wage distributions, which is at least somewhat correct.

The government certainly sets the rates that banks and large companies pay each other for loans, but I am not convinced that there is a close relation between those rates and the rates average home buyers pay. Even if the rates people pay include some government rate as one of the units. The final numbers are very different though.

When it comes to higher education, Adam Smith addressed that in The Wealth of Nations where he has a short appendix that explains that regular supply and demand concepts don't apply to Universities and gives some reasons and a rough formula of how demand functions there. As for unions, that is just a right wing talking point, union membership is going down not up, so if unions were expensive there would be downward pressure there not upwards. And in most cases in public Universities the administrators that set professor pay scales are required to be in different unions that the rest of the staff, and they are the ones that are pushing for raises. Typically claiming that it is required for retention. A formula very popular with administrators right now is, give big raises to top few professors in each dept., require the rest to accept pay freezes, and increase tuition.

Re:well, duh

[Attila Dimedici]

Except that it is not just one burger flipper who has gotten a raise, but every minimum wage employee. The question is, if minimum wage is such a good idea, why don't we make $100 and hour?

Re:well, duh

[coinreturn]

This is a great discussion.

Try visiting Yahoo! news or Politico or Huffington Post and explaining how guaranteed loans make college more expensive and you get flamed and accused of being a rich 1%er that only wants wealthy kids to go to college.

Visit /. and there's no need to explain the obvious.

"well, duh"

Succinct AND accurate

Bravo.

OTOH, the articles are from Bloomberg News and WSJ - both almost as right-wing as Fox News. So of course their "conclusion" is we should cut student aid - and cut taxes on the rich ^H^H^H^H job-creators.

Re:well, duh

[Maxo-Texas]

And then there are the kids who took on debt who blog about how they think of committing suicide almost daily.

The debt plus low employment leaves them with no hope.

I did it the way you did it and never regretted it. Sure- I would have like to have played, but I graduated with experience and so it was easy to get a job. Now I'm likely to retire at 52.

I'll play now instead of during college.

Re:well, duh

[Maxo-Texas]

Not entirely true.

A lot of people hire based on shared university.

An aggie is going to hire an aggie before hiring a teasip or a cougar.

Re:well, duh

[stewbee]

Good point. I just looked up the marginal tax rate of 15% and did not compute the effective tax rate. Thanks for pointing out my error. Stupid progressive tax systems* ;-)

*Before I get flamed to death, and for the sarcastically impaired, I am a firm believer in progressive taxation.

Re:well, duh

[danaris]

They are unable to produce enough wealth to be paid minimum plus mandated benefits

What mandated benefits? Mandated benefits would be like socialism, and that's, like, all evil and stuff.

Yeah, there's no benefits at the jobs I'm describing.

Dan Aris

Re:well, duh

[danaris]

Yet, apparently, they keep showing up for work and are able to feed, clothe, and shelter themselves in some fashion. Me? I'd move to somewhere where it wasn't so expensive to live. If everyone does that then the business will have no choice but to increase wages or die. I've got no sympathy for someone in a bad situation that does nothing to change it -- especially in America where you have the freedom to do exactly that.

This presupposes total freedom of movement, no costs to pulling up sticks and leaving, and no opportunity cost to finding a new job somewhere else. None of these are true.

Then the owner can pound sand. Oh, it's the best job offer on the market? Well, maybe you should take it then? Or move. Or start a competing business. Etc.

Actually, the person I know who's stuck in this job would love to start a business of her own. She's even got several good ideas and some real, solid marketable skills. What she doesn't have is money. Believe it or not, it takes money to start a business.

Dan Aris

Re:well, duh

[danaris]

However, if you are a good employee with a good work ethic you'll be able to find a job elsewhere for more than minimum wage once you've built a bit of work history.

The person I know who's working at the chocolate store only took the job because none of the other companies with open jobs in the area could make head or tails of her 8 years of experience doing design, product development, marketing, and management work for an international company.

She's applied for a half-dozen jobs she'd be able to do with half her brain tied behind her back, and they either ignore her completely (probably because she's overqualified), or choose someone who went to school with the boss's son. (Well, and then there's the couple of jobs she applied for that she later found out they were looking for things that were not specified in the position description—like the one for an "assistant communications manager" that listed a number of skills she has in abundance, but when she talked to the people in the know, they told her they were really looking for a publicist with connections in the media.)

Dan Aris

Re:well, duh

[stdarg]

It's sad, but why would they rather kill themselves than just stop paying? I don't know why people would take on such huge debt that cannot be cleared in bankruptcy, but we don't have debtor's prison. I'm not really sure what happens if you just stop paying, and are also unemployed and have no assets. They really can't do anything.

It's hard to have much sympathy for people who make bad but deliberate decisions. And it's not like they were scammed out of the money -- they got the "college experience" they paid for.

Re:well, duh

[niado]

Yeah, it's my observation that even in the lowest cost of living scenario, a minimum wage job is just barely feasible unless outside assistance is present (living with parents, multiple roommates, living in a dorm and supplementing with school loans, holding multiple jobs and working 60-80 hours etc.).

Re:well, duh

[stdarg]

For some ingredients it's even cheaper than 35%.

I worked briefly at a restaurant that had the best cream of mushroom soup I've ever tasted. So I made it at home. Making a few bowls cost me like $20, mostly in cream. I asked the chef how they charged so little and he said the main thing was they got cream for like $4/gallon. I was paying like $4/pint or so at the store.

Re:well, duh

[stdarg]

Similarly, your daughter wants to be a geologist. But the best geology program is (I'm making this up) North Dakota State. You don't have the option of moving your family to North Dakota to score in-state tuition. You can't tell her that her best option financially is to study to become a nurse instead. Education is not a commodity that you buy by the pound or by the linear foot.

In that case, the best option financially is for the daughter (not the family) to move to North Dakota, work and live there for a year, then receive in-state tuition.

But.. I'm confused why you "can't" tell her to become a nurse instead? If you can't move, and your in-state school doesn't offer geology, and you don't have money... yeah, the best option financially is to do something else. Why is that so difficult? Her only possibility for happiness and fulfillment in life is to do that one thing?

Re:well, duh

[niado]

I hope we aren't arguing that "living wage" includes the right to live in your own home by yourself and not have to live frugally.

Correct. I have never lived alone, though finding roommates can sometimes be very difficult. I have known people that found it impossible and were in bad situations because of it. In my observation, minimum wage is currently livable only at the very bottom of the cost-of-living curve. Remember, I didn't include car repair/maintenance, medical costs, or anything else that often crops up.

Oh, and $ 350 for an apartment is crazy cheap. My family left Huntsville when I was pretty young, but I lived in Birmingham for grad school and was only able to come up with a place for $450/month - 25 years ago. And I considered that to be awfully cheap.

Yes. A $350/mo place here would likely be in a "questionable" location. You can sometimes find a less-questionable place that low through a promotional deal - "move-in special" or something. You can get much better deals in 2 and 3 bdrm places, including rental houses. (I lived in a 2bdrm/2bth for $600/mo for a couple of years with a roommate, and my sister once scored a 3bdrm place with 2 roommates for around $750.)

Re:well, duh

[Rostin]

I think I did misrepresent the situation. There really are 44 people working in that office, but they are not all dedicated strictly to diversity. Looking more carefully at the job descriptions, that number is more like 8. The majority are apparently involved in "community engagement."

Anyway, it's still true that administrative overhead is rising more quickly than costs that are more obviously and directly related to educating students. See, for example these two articles that I quickly found, which both say that while the hiring of instructors and professors has kept basically apace with the growing number of students, the number of administrators and support staff has grown considerably faster.

I read another article a while back that I wish I'd saved. i think it was in the Chronicle of Higher Education. It was about this topic, and it referred to a study that some economists had done in which they formulated a quantitative law of bureaucracy growth. IIRC, the gist was that in most organizations, bureaucrats have very little incentive to organize and coordinate things in their purview to run more cheaply and efficiently because that would imply that they could get by on a smaller budget and with a smaller staff, which reduces their prestige. So, staffs and budgets tend to increase over time, apparently in a fairly predictable way.

Re:well, duh

[jimbolauski]

You can get a decent steak Ribeye $10/pound, Mac and cheese $0.25 per serving, rice $0.1 per serving, salad $1 per serving, and drink $7 6 beers for under $20.
A similar ribeye is going to cost $15-25 with one beer $3-$5 and tip $3-$5 you are easily spending more and getting much less.
Even taking out drinks you still can't come close.

Re:well, duh

[Dripdry]

You may not *need* those things to teach, but the idea is that they give us ideas and points of view that can be of use to us to be better citizens and people who can contribute more to society as a whole.

Sure, I learned a lot of things in college I may never use, but I also learned a lot of things that are useful on a less immediate-to-my-job way. I met people who really inspired me to be more than I was.

Re:well, duh

[cayenne8]

Cheap? If I want to cook a steak, it costs me more to buy the raw steak and sides than to just go out and buy one at a restaurant. This is especially true if you're cooking for yourself. Your options there are to eat the same meal for a week straight (bleh, boring), freeze leftovers after cooking (which never tastes good after), or only make things that have no spoiling ingredients (so no milk, cream, etc). Oh and you're going to throw out half your excess ingredients, because grocery stores don't really sell in individual serving sizes for most things. Meals I cook are generally the same or slightly more expensive than going out to get the same meal, with the exception of nights I just decide on a bowl of cereal.

Then, my friend, you don't know how to cook.

Hell, I still cook in the fashion I did in college..and I can afford quite a bit these days.

I tend to spend Sundays cooking.

I'll cook about 2-4 main dishes (pot roast, stir fry veggies, fire up the smoker for bbq meats, maybe grind and stuff some sausages to eat on, meatloaf, pot of chili...whatever else I'm into cooking that month)....and about the same sides. I like to cook...but I cook like this, and package it up to eat for lunches and dinner during the week. I do this so I can have healthy, good tasting meals, that I don't get bored with....

I don't have time during the week with work, gym and other stuff I need to do..to cook most weekdays, so I do it this way.

Leftovers at the end of the week? Well, time to make some jambalaya.

I don't eat fast food...I cannot tell you the last time I set foot in a McD's. I eat better and cheaper than most people do that don't cook from scratch and eat crap food, and processed pre-packaged food at the stores.

I usually start off before grocery shopping, to look at the sale ads for most of the stores around me...and I figure what I'll cook based on what's on sale...I go to 1-3 different stores, getting the sale items (I do make a list)....and get home and cook.

One thing during the summer that is great...just get some meats and marinate them various ways...get veggies like squash, zucchini, eggplant, onions..etc.....and just grill everything.

then during the week...I do various things with them. Maybe whip up some tzaiki sauce (sp?) out of yogurt and have gyro type sandwiches....toss them in some oil with some fresh tomatoes and basil out of the garden and serve over whole wheat pasta...etc.

That keeps things from being boring...economical...healthy....and VERY quick to throw together during the week.

And I do this for less than most families eat on, that don't or won't cook.

Re:well, duh

[bill_mcgonigle]

schools are not for-profit entities, with few exceptions, so there's no incentive to raising the price because the market will bear it

My alma mater has nearly doubled the square footage of facilities since I was there in the early 90's, made the dorms like a luxury suites hotel, and kept the number of students just about the same. IIRC the number of employees went up by about 50% during the same period.

This kind of spending makes people feel better about their jobs, gives them higher wages, with more helpers they have less work to do, and they get nice offices to do it all in.

When the endowment lost $400M or so (I did better in the market than their 'professionals' did) they fired the dishwashers and administrative staff rather that cutting back on the luxury or much middle management (certainly not among the top brass).

It's a non-profit that pays no property taxes. Oh, and I think tuituion has about tripled.

Re:well, duh

[Dripdry]

In my experience, those who get to deem who is and who is not a pig are what make the system broken...

I agree with you that perhaps that person should not have been there, but they should be given a chance to rise and learn. It might not be that he's stupid, he might not have ever had decent teachers or the ability to develop a work ethic. This idea that by college kids should somehow have all their worldly affairs in order and ready to tackle everything seems a bit warped to me, but I know there are other schools of thought on that as well.

Re:well, duh

[Darth Snowshoe]

I can't believe I'd have to spell this out. Is this a troll?

Look, there's no guarantee of anything in life, you could get run over by a bus tomorrow, but I'm pretty sure most people starting out in life will live a happier life, or a life at least with profoundly more satisfaction and closure, if they're allow to initially pursue something that matches their aptitudes and interests. You're not guaranteed to be a world-class pianist, but you ought to be allowed to try the piano at least, see if you have the skill and fortitude to pursue it. Maybe someone born without any fingers or any perception of musical pitch should be gently encouraged to look elsewhere.

Yes, by college age, actual competitive music performers should have already distinguished themselves, but I'm hoping you get the metaphor here.

I think the presumption that only people whose parents have accumulated "enough" money should be allowed to pursue the education of their interest is kind of a good starting definition of an unjust society. How is that any different from a feudal society? At the age of 16, you're unlikely to have had the opportunity to earn enough money to pay cash for a four-year education. And if you had, I'd say that's pretty likely a function of your family's wealth and available opportunities rather than your own.

Yes some people plainly can't afford college and some people clearly aren't qualified or ready for it. If you turn away a lot of talented young people who would otherwise do well in their chosen fields, solely for money reasons, that's society's loss as well as their own. If only some aristocratic top echelon can afford to educate their kids, the system is broken.

But I also think it's smug and disingenuous for you to say "I'm confused..." Did you pay for your education out of your own pocket? I'm betting you, like most people, got some amount of financial aid, some amount of loans, and lo, someone probably co-signed. Somebody else gave you some amount of lift to get your start in life. I doubt you wouldn't have objected if someone suggested you go study (some other field you are disinterested in) instead of what you really wanted to do.

Re:well, duh

[dcbrianw]

Absolutely.

To counter (2), we could consider price capping taxpayer funded scholarship aid per scholarship awarded. Plenty of high caliber institutions exist as alternatives to the exceedingly high priced schools. GWU, for example, actually prides themselves as the most expensive school in the nation. If such a cap exists, schools may refocussing their funds on affordable, quality education rather than giant rock-climbing walls. (I have nothing against rock-climbing walls. It's just an example of something that higher education doesn't need to fund.)

Re:well, duh

[stdarg]

I'm confused that you think cost doesn't legitimately factor into these kinds of decisions. As for myself, I wanted to go to MIT and do computer science. That would have been really expensive. They don't offer merit based scholarships and my parents are not poor enough to qualify for a lot of aid, and not rich enough to pay it without a lot of pain. So I didn't go to MIT, I went to my local in-state engineering school, and I'm perfectly happy with the result. Yes, my parents helped pay for my education but it wasn't a whole lot of money. I also worked part-time on campus and helped pay.

So in your example, why can't the daughter do the same? Why does she HAVE to go to North Dakota? Your argument that not going to the #1 school in the country is equivalent to not being able to pursue the education of her interest is fallacious, since there are also the #2, #3, ... #n schools that also offer geology. And your argument that choosing something other than geology is equivalent to not being able to pursue an education of her interest is fallacious, since real people have more than one interest. I, for instance, was *this close* to majoring in math. If for whatever reason, like in your example, I *had* to go to MIT to do computer science, I can virtually assure you that I would be an associate professor of mathematics or an actuary or something like that today. It would have been perfectly fine for my parents to say "Well son, you also like math, and that will cost $250k less... so... think about it okay?"

If you turn away a lot of talented young people who would otherwise do well in their chosen fields, solely for money reasons, that's society's loss as well as their own.

I agree with that, but the societal utility of a person's education should be what is looked at, not whether it aligns with their dreams and interests. If your daughter is smart enough to be an engineer, but she really loves reading so she she'd rather major in English... well, if you actually care about society's loss, you'd say she should be an engineer anyway. She can read in her spare time.

I think it would be great if the cost of the degree was inversely proportional to the societal utility of the degree. If we need more engineers, make engineering degrees cheap. But that's rather different than the argument you're making.

Re:well, duh

[Quila]

I agree with you that perhaps that person should not have been there, but they should be given a chance to rise and learn.

That chance was called high school. If he's not ready, he's welcome to do some studying on his own to get ready for college. Otherwise, under a government-pays system, we don't need to be spending our tax dollars rehashing high school material when there are plenty of people who are actually ready for college.

Perhaps something is lost on me. I think the sequence is primary education, secondary education, post-secondary education. You must have completed the requirements of your previous one and be ready for the rigors of the upcoming one before advancing. If you haven't done so, then you don't need to be advancing. Is there something wrong with that, or should we be advancing people who aren't ready, and will only degrade the education of those who are?

Re:well, duh

[stdarg]

First off, congrats on making enough to make those tax dollars rather than cents, that must be considerable :).

Federal budget in 2011: $3.6 trillion http://en.wikipedia.org/wiki/Expenditures_in_the_United_States_federal_budget

College aid budget in 2011: $171 billion http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/edu.pdf (search for AID FUNDS AVAILABLE FOR POSTSECONDARY EDUCATION AND TRAINING to see the appropriate table)

College aid budget in the form of Pell grants alone: $35 billion (same source)

So 4.8% of your federal income tax goes to college aid, or 0.97% just looking at Pell grants.

So unless you paid less than $103.09 in federal tax in the entire year, you spent at least $1 just for Pell grants, let alone the rest of college aid.

Am I reading the table incorrectly? It doesn't seem like a considerable income is needed to get to dollars instead of just cents. Your source was using 2007 numbers, I believe, but it's hard to believe that it could have changed so much in just a few years. The full budget for college aid seems to be 4.5% of the budget, not 1% as they claimed.

Re:well, duh

[Darth Snowshoe]

"...not poor enough to qualify for a lot of aid, and not rich enough to pay it without a lot of pain. So I didn't go to MIT, I went to my local in-state engineering school, and I'm perfectly happy with the result."

I'm not arguing against this sort of calculation, I think that's perfectly reasonable. The nursing option was, I admit, a straw man I set up. What I'm really arguing against is the notion that, as in the FPP, no one derives benefit from PELL grants, for instance, other than university administrators. That government-funded loans and scholarships are the primary driver of higher educational costs (people elsewhere in this thread are doing a fair job of pointing out that federal and state subsidies of schools have plummeted to historically low levels. And yes, a certain level of administrative cruft is adding to costs without producing much of value to most institutions.) And I'm arguing against the Objectivist notion that the government has no business putting money into public or private colleges and universities. And the presumption that the average college-age kids must be lazy, decadent, and surely must be looking to rip the system.

And I'm arguing against the adjunct belief that education should be a free market without any regulation, oversight, selectivity or interference by the government. The government, and the people, have a vested interest in making the process fair, open, productive, reasonably accessible to all. Everybody doesn't have a right to get whatever degree they want at whatever price they want, but there should be reasonable means by which young people with skills, knowledge, and earnest effort can eventually attempt the degree they want and have a fair chance to distinguish themselves, without obscenely burdening themselves or their families with decades-long debt. If middle-class families are priced out of the market for a university education, that's one marker of a faltering standard of living in America, and it can't be good for our future. We shouldn't just roll over and say, "Oh, well, the market has spoken."

Re:well, duh

[dgatwood]

Bear in mind that most schools are not PhD programs. Most schools are in those right two columns, and thus have maybe one or two people making over 100 grand, with most of their higher level administrators making in the fifties and sixties.

Also bear in mind that an administrator at the top of any business of comparable size is likely to be making considerably more than that. So although the numbers may seem high at first glance, they really aren't. If anything, they struggle to compete for the best people.

Re:well, duh

[stdarg]

That's a good snapshot. There's always going to be a bottom segment of society by income level though, it's hard to see how it could be made much more comfortable in an affordable way.

One sad thing is that to really take advantage of the social welfare system, you need kids. A single guy making minimum wage is pretty much screwed. A single mom with 4 kids gets state funded daycare, school, food stamps, welfare, etc. It's not really fair, though I guess it's fair in the sense that anybody *could* have kids, they just choose not to.

Re:well, duh

[mellon]

You can't stop paying. You can't default on student loans. If you stop paying, the loan just keeps growing as penalties and interest on principal and penalties adds up. You can't declare bankruptcy. Your Social Security income will be garnished to pay for the loans. If you got the loans, and you can't pay them, you are meat.

This is a scandalously bad deal, particularly considering all the "vocational tech" schools that sprang up to get the loan money without teaching any useful skills. But the trouble is that when you're 18, and you're thinking about college, you don't have any experience with indebtedness yet, and so you don't realize how massively you are screwing yourself when you take those loans.

Re:well, duh

[hackula]

Well, I guess it's a good thing I shopped around and did not pay anywhere close to 100k+ like you did (I am assuming you must have been in that ball park if you really had the potential to get that much debt). Private schools, out of state schools, and ivy league schools were all out of my price range and I saved many 10s of thousands for admitting that. Also, I graduated only 3 years ago. I still got to go to one of the most respected institutions in my state. I ended up spending ~45k for tuition and everything else. I saved by maintaining a 3.0 which gives you a 2.5k discount in my state per year, graduating in 3 years instead of 4, and living extremely frugally. As far as the arguments that go something like "well, you went to a shitty school, and I wanted to invest in a better school so I could make more money when I got out"; I have not met any of them yet who make as much as I do yet. On average, there is a good chance they will surpass me in income in the coming years, however, with 100k+ in debt right from the get go, they are going to have to make one hell of a lot more than me to come close in net worth a decade or two from now. Add to that the fact that when many of them get out, they get discouraged by the fact that any job they could land with their undergrad in the next few years is barely enough to make the minimum payments on a principle of that size, so most of them go back to grad school where they will rack up another 60k on top (and lose 3 years of wage earning and experience in the process). Compare that to people I know who go become certified machinists or welders at the tech school for 3k in tuition, then land an instant guaranteed job with Boeing (happens to be up the road from me) making 70k with awesome benefits right off the bat and the whole 150k MBA (which gets you a 45k sales job) seems even crazier. I am not saying I have no sympathy for people who get roped into that route - ever single school in the country is spending millions on cranking out marketing from the bullshit factory aimed at impressionable high schoolers. Hell, I would have been in the same boat if it was not for the fact that my mother was a career counselor at a big graduate university and shoved statistics and market trends down my throat from birth. I am glad too, because now I am able to work virtually anywhere I want (and actually do), all without being a slave to the bank.

Re:well, duh

[hackula]

If you have below a certain income level (really low), they will ignore you. As soon as you make over something around the poverty line, they will begin garnering your wages. You are basically screwed forever if you get into this sort of situation, since the interest keeps racking up, and it will be extremely difficult to increase your income enough to get out while living on 15k per year

Re:well, duh

[hackula]

The vocational schools might be the bright light actually. Not to be confused with the for-profits, which are generally evil scum, community colleges are typically a couple thousand dollars per year, and try to teach programs that directly partner with local companies. Most low income students in my area at least pay close to nothing and they can take classes at night or online to get around kids or another job. My brother is currently getting a nursing degree for free at the one in my area (he got extra help for being a single parent), and he will be set when he gets out. Compare that to the typical uni route where he would be paying 50k+ for the exact same degree. Like anything, I am sure you could waste time there if you really tried though.

Re:well, duh

[Maxo-Texas]

Repeating what the others said...

The banks had special laws passed making student loans a very special kind of debt which can never be erased or forgiven.

That's worse than even income tax debt.

Since they knew it was this kind of debt, they loaned way more money than was reasonable. You can pay your entire life and never get out. You will be garnished if you ever get your head slightly above water. Basically, you are doomed forever, and you know it. You can't even easily immigrate to another country any more.

It's VERY easy to have sympathy for IGNORANT YOUNG 18 year old CHILDREN who the banks took advantage of. People should not be able to make legal contracts which have an impact beyond 7 years when they are 18.

The default rate when these laws were passed was 1%. Better than many other forms of credit. The amounts loaned were much more reasonable and college was much more affordable. the colleges are culpable in this too.

Re:well, duh

[hackula]

Well I graduated 3 years ago so.... I am pretty sure it has only increased a few percentage points since then. I am no geezer; I am actually 24. Over the course of getting my undergrad, I spent no where near 60k. I started at a tech school to get my gen eds out of the way my first year. The tuition was nominal at something like 1k. My second and third year I transferred to a traditional university instate which was 10k per year after a 5k discount per year for maintaining a 3.0. We are at 21k now for all the tuition I ever had to pay. I graduated early. I worked as an RA and got free housing. I lived off $100 per month for beans and rice. I also worked in food and bev. I also got a paid internship as a software developer my 3rd year and was hired full time my last semester as I completed my last few classes at night. I worked extremely hard to stay afloat, but I still had time for doing regular college kid tomfoolery. It is quite possible, and really not even all that difficult. I just decided early on that I was not going to live like the kids who had parents to pay for everything, nor like the kids who got their new bank overseers to pay for everything. I did not get to go to an Ivy league, but I did get to go to a reputable school (best marine biology department in the country, great CS department, all around respected liberal arts school, etc.). All I have to say is that if my peers who are pissed pull a run around on me so they make me foot the bill in the end, I will be extremely disappointed. Yes the system is totally fucked, but its is completely possible to get through without signing your future away.

Re:well, duh

[n7ytd]

Similarly, your daughter wants to be a geologist. But the best geology program is (I'm making this up) North Dakota State. You don't have the option of moving your family to North Dakota to score in-state tuition. You can't tell her that her best option financially is to study to become a nurse instead. Education is not a commodity that you buy by the pound or by the linear foot.

Your daughter's an adult when she goes to college, right? No reason she can't move to North Dakota for a year to be eligible for in-state tuition before beginning her studies. Maybe in your family this is less than ideal, so it's time to make a grown-up choice: does she want to be a geologist, or are other things (like living close to mom and dad) more important to her?

The rest of your post is spot on. Supply and demand; if money is being held out for universities, only the stupid universities aren't going to figure out how to maximize their share of the pie, and stupid universities will be corrected or bankrupted.

Re:well, duh

[PerfectionLost]

I've worked at an art school before, and the salaries are very similar to that. My 2c.

Re:well, duh

[n7ytd]

I've met a college graduate who took on $160K in student debt to walk into the 2010 job market with a degree in Theater Management. I met him when, with tears in his eyes, he applied for a substitute teaching position that was paying $85/day. The best he could home for was 7-10 days work a month (because once you go above 10 days a month the district has to pay you $15/day more, so they limit each sub to under 10 days a month if they can)...

Every month, for the next 20 years, this kid was going to be paying over a thousand dollars a month BEFORE he paid for food, clothes, housing, transportation etc.

What did he think he was going to get paid as a theater manager once he graduated?

I've also met graduates with similar (though not as extreme) stories as this man. While my wife and I were in college, many of our peers were building similar piles of student debt with no clear plan for how they would be paying for them in the future.

$60k of debt while earning a History degree, $80k of debt earning a liberal arts degree, etc. Part of it has to do with the lack of perspective that an 18-20 year old has; to tell them that repayment will take 30 years means nothing. The other part of it is a false sense of entitlement; they've been told all their life that to get a "good" job will require a college degree, which many people somehow take to mean that if they do get a college degree the job market will take care of them with no further effort.

Re:well, duh

[butchersong]

There are a number of things that an employer must pay even if they do not pay their employee 'benifits'. Take for instance the 12% of the employees income that is taxed with the employer taking the first half out before it reaches the employees check and then the employee paying the other 6% themselves.

Re:well, duh

[10101001 10101001]

Except that it is not just one burger flipper who has gotten a raise, but every minimum wage employee.

Hence my comment about "further down the line you'd presumably see similar increases". If an industry is heavily minimum wage centered, then yeah, the benefits to minimum wage workers is likely to be low and possible even negative. But in the rest of industries, there will be a net positive for minimum wage workers. So, I'd guess the question is just how many people make minimum wage. After some googling on Minimum Wage workers, it would appear that ~59% of 16+ workers are hourly workers and ~5.2% of hourly workers are minimum wage or lower workers (~3% of all workers total; the "or lower" comes from many states which have waitresses and the like who are expected to supplement their income with tips and hence are allowed to be paid some amount less than minimum wage). Having said that, things like leisure and food services seem to rely heavily on minimum wage workers, so burger flippers would be one of the few minimum wage workers likely to suffer. Yet, in their potential suffering, they by definition will always be paid enough to live on a living wage.

The question is, if minimum wage is such a good idea, why don't we make $100 and hour?

I really don't know if you're being facetious or not, but the answer is obvious: very few people earn $100/hr or more so such a massive shift in the minimum wage would fall into the trap of it being a net negative. Further, such an act would spur significant inflation as people who are "worth more than minimum wage" would see or at least expect to see their wages scale upwards. After all, the point of a minimum wage isn't to group everyone into one pay bracket; it is to guarantee that the small percentage of full-time minimum wage workers aren't effectively worse off for working. It's not some sort of communist plot to give everyone an equal salary so they can be as wasteful as the average middle class American or the rich.

Re:well, duh

[Shotgun]

He didn't think.

With a wife and two kids, I got one of those jobs that promise to pay for education as a benefit. I had to fight tooth and nail to actually use it. Manager didn't want to approve it lot of the time, and it is a bitch to work a 12hour shift and still have to show up for class.

It took me six years, but I got a grand total of $250 is aid from the school, for being a non-black kid at a historically black college (most racist place I've ever been in my life, but that's a different story).

I just find it hard to have sympathy for these people that make such an illogical move as to pay the equivalent of a mortgage for a useless "education". All I can say, is that he got an education, all right, but it wasn't in theater management. Now, did he learn anything from it?

Re:well, duh

[Shotgun]

It's a CHOCOLATE store. How much are people willing to pay for chocolate that they can get in the grocery store? If he were forced to pay $10/hr, he'd probably just close up shop.

Look, there are some jobs that are "menial labor". They don't pay much, because they're not worth enough to anybody to pay much. If I have to pay more that $20, I'll mow my own lawn. I'm sure you're the greatest lawnmower pusher ever born, but it ain't worth more than $20 to me to walk behind one for an hour or so. Come to my house willing to do it for a 20, and you've got a job. Demand more, and you can hit the bricks. Whine all you wanna about how much your rent is, I'll just whine back about how much it cost to get someone to mow a lawn.

Re:well, duh

[Attila Dimedici]

as people who are "worth more than minimum wage" would see or at least expect to see their wages scale upwards.

And you don't think that happens now? If someone started working someplace for minimum wage and they became so valuable to their employer that he gave them a raise to keep them from going someplace else, and minimum wage rises to the rate the employer is now paying them, don't you think that the employer is going to be under some pressure to give them a raise so that they do not leave to go to work for someone else? Of course that likely means that the employer is going to have to raise the rate he charges people for his product. The other thing is, if a job is worth $8 an hour to me, and you make minimum wage $9 an hour, that doesn't mean that I will pay someone $9 an hour to do the job. It means that I will pay someone $0 an hour and either do the job myself or do without.

Re:well, duh

[7-Vodka]

No kidding. Giving people free money increases their willingness to pay and raises prices.

Econ 101 for those of you who haven't spent that "free money" yet.

Re:well, duh

[10101001 10101001]

And you don't think that happens now? If someone started working someplace for minimum wage and they became so valuable to their employer that he gave them a raise to keep them from going someplace else, and minimum wage rises to the rate the employer is now paying them, don't you think that the employer is going to be under some pressure to give them a raise so that they do not leave to go to work for someone else?

So...that 3% of the workforce figure I gave you is probably closer to 4-5% who will be effected by a minimum wage increase because they earn something like $0.25/hr more than minimum wage now?

Of course that likely means that the employer is going to have to raise the rate he charges people for his product.

And? I mean, if labor isn't a large cost of the final product, then very small wage increases are unlikely to matter much in the cost of the final product, certainly relative to an individual and their individual purchases. And if they're the major part, then, well, generally production has already been outsourced to China which has much lower cost of living, has questionable envrionmental standards, questionable employee treatment standards, etc--and we'd have to likely adopt a good bit of that to stay competitive on that front, anyways. This is, btw, why I'm a stronger believer in things like automation, anyways, since it increases productivity per worker and hence readily justifies allowing for decent wages. And if the issue is that given enough automation there isn't enough jobs to go around...well, we're been up that creek for decades due to the obvious point that it only takes ~3% of the population to make the food we need, not much more to maintain and build houses, and very few more to make our clothes. The only way to make a capitalistic system like ours work then where a large percentage of people work is significant, wasteful consumerism. So, one would seem to have to accept the idea that additional consumerism (and additional jobs) just need to be created to take up the slack.

The other thing is, if a job is worth $8 an hour to me, and you make minimum wage $9 an hour, that doesn't mean that I will pay someone $9 an hour to do the job. It means that I will pay someone $0 an hour and either do the job myself or do without.

The question is, why is the job worth $8 an hour to you? To say it's because you get $8/hr of productivity out of a person is absurd, unless you believe that all employees paid the same are equally productive and you have no interest in underpaying employees compared to their real worth. The former is very unlikely precisely because few companies micromanage the wages of people based on productivity--piecemeal work is one of the closest examples but that tends to be abused by employers as a means to cut the price of their products or simply to enrich themselves. The latter is just silly because almost no one pays for anything precisely on the value they attribute to the end product; instead, the group of buyers and the group of sellers reach a junction of cost and available cash to reach an effective compromise price that cuts buyers and sellers out while simultaneously overenriching other buyers and sellers; I say that purely from a free market perspective, mind you, as it's generally considered a positive of how the free market works.

But, in the end, if a person isn't worth being paid the $9/hr to do a job and it takes a $9/hr job to live, then the person is better off finding work that pays $9/hr instead of slowly languishing in an $8/hr job. That you might decide to take the work on yourself indicates you have the free time and there was never a good reason to be paying the person in the first place. And if you do without, then it implies that you could possibly have always done without; of course, that can translate into the company failing, but it seems more likely that if you had 9 $8/hr employees, you'd switch to 8 $9/hr employees and demand greater productivity (for the burger flipper example, that'd mean going from 60 burgers/hr to ~67.5 burgers/hr) and possibly might even bring in machines which are likely more cost effective anyways.

Re:well, duh

[smisle]

I just finished my first year at the local community college, and there are huge numbers of people there who are just plain not very smart. So, I can see your point, but you fail to look at a broader picture... There are also a large group of people returning to college after decades of employment elsewhere, they need a refresher course in the subjects they haven't touched since high school, and maybe won't use in their future degree either, but since we are stuck on liberal education in the USA, they have to re-learn it. Then, there are the people (like me) who aren't great at math, but are exceptional at other subjects. I got an A in my math class last term, but yeah, I had to study. If people were barred from an education simply because they weren't skilled in a subject that they didn't use and won't use in the future, that's pretty impractical and hardly fair.

Re:well, duh

[dcw3]

Only if you're buying your steaks at someplace like Ruby Tuesdays. Way back around 1971, when I was in 8th grade, I took a class called "Boy's Home Economics". We learned to cook, wash clothes, and even sewed. Having remained single until age 30, it turned out to be one of the most useful classes I had taken in grade school. A little planning can go a long way, and you don't need to cook everything on the same evening.. I just a 6-pack of filets at Costco isn't that expensive...I just BBQed a bunch last weekend, but could have easily done them one at a time as needed. Though, admittedly, I ate day old (yes, gasp, leftovers) filet and shrimp...and it tasted just as good as when it came off the BBQ.

Re:well, duh

[dcw3]

There is devaluation of our money in real terms as well. My college costs were $1500/year 30 years ago versus about $20K per year for CA schools. It's called inflation!

Well, one naive comment deserves another I guess. Tuition costs have risen more than four times faster than the rate of inflation since 1985:
http://inflationdata.com/inflation/inflation_articles/Education_Inflation.asp

Re:well, duh

[HornWumpus]

If the Barista has a good attitude and works hard I doubt she will get written up.

3 times, 3 minutes is a policy in place to enable managers to can shit workers at their discretion without paying unemployment.

Re:well, duh

[Quila]

There are also a large group of people returning to college after decades of employment elsewhere

I did college seven years after high school.

If people were barred from an education simply because they weren't skilled in a subject that they didn't use and won't use in the future, that's pretty impractical and hardly fair.

I never said barred from education. I said in a government-pays system, the government shouldn't pay for it. Right now everybody goes to school, no matter how stupid, if they have the money. But if government is paying for everybody, then we have to have standards. We simply cannot afford millions of attempts to teach pings to sing each year. It would be a great example of government waste.

Re:well, duh

[smisle]

sorry, that should have read: if poor people were barred from an education.

I tend to agree with you that there should be greater standards, but I disagree that someone who has trouble with higher math (or any other single topic, especially if it has little to do with their chosen field) should be denied federal aid. Perhaps students could pay for remedial classes out of their own pocket?

Personally, I feel like I've wasted more money on classes I didn't need because of my BA/BS degree than on a couple extra math classes.

Re:Bill O'Reilly

[ZeroSumHappiness]

Maybe they rise over time anyway due to inflation and not inflating student aid reduces the amount of rise? Maybe they rise more like healthcare? Maybe there are a combination of factors that describe tuition and one of those inputs is student aid?

Or are you saying that Bill O'Reilly is so stupid as to say that when the data doesn't fit the simplest possible model then whatever that model predicts must be wrong even of other, more complex models, can come to the same conclusion?

Now it may not matter

[paiute]

Since the feds made student loans not eligible for inclusion in bankruptcy and the rates went up several points past the mortgage rate, I would guess that money is going to chase student loans in the future. Guaranteed payback at more than Tbills, more than the stock market average. The easy tuition loans in the future may not come from signing that Plus Loan with the government, they may come from signing that Usury Loan from the big financial houses.

Re:Now it may not matter

[Anonymous Coward]

It's just like the housing bubble in a lot of ways:

- cheap debt - low interest rates on student loans (home loans)
- debt is securitized and sold off to institutional investors (just like with mortgages)
- promises of big payoffs - higher paying, more-secure job (and house prices will keep going up up up!)
- rising prices are fueled by increases in demand - more people getting an education (more buyers entering the housing market)
- as the bubble pops, people end up getting screwed - can't get a job, owe more than degree is worth (can't sell the house, owe more than it's worth)
- securitized debt gets downgraded, and businesses that relied heavily on this market as a business model go under (I'm looking at you, APOL, DV, ESI, and STRA)

Re:Now it may not matter

[paiute]

You bringing up "big financial houses" is complete BS and has no bearing on the issue.

You misread. I did not assign blame. The money managers don't care why it is, they just care that it is. I propose that they will get into guaranteed 8ish percent returns the same way they got into the mortgage market some years ago.

Re:Now it may not matter

[kenh]

Federal Gov't is taking over the student loan business (as part of the healthcare reform bill, of all things), and the reason student debt survives bankruptcy is because there was a real crisis in student loan repayment - students would either simply not pay the loan off OR graduate college, file for bankruptcy, and then wait seven years to buy your first house, based on your higher income level (thanks to the college degree) and the money you save not paying off your student loan...

Re:Now it may not matter

[GodfatherofSoul]

You know who we have to thank for those student loan bankruptcy laws? Doctors and lawyers. Before the law, they'd rack up debt for their advanced schooling, then declare bankruptcy to wipe the books clean and live cash only on their 6-7 figure salaries until the 7 years were up.

Demand, meet supply

[bigtrike]

So you're suggesting that the supply of education is entirely inelastic?

Re:Demand, meet supply

[Xugumad]

Certainly, there's a huge lag in training new staff. Keep in mind a lecturer has typically two degrees (undergrad and PhD) then possibly several years of training as well.

Re:Demand, meet supply

[Chris Mattern]

Entirely inelastic? No, nothing is entirely inelastic. Mostly inelastic? I suspect so; the resources to put together a high-class university are scarce, and the barriers to entry are high.

Re:Demand, meet supply

[dgatwood]

And there's a lag in building facilities. However, this is happening continuously, so for every university that is in a pinch to try to get enough faculty or facilities, there is always some university that just finished adding extra faculty or facilities and thus has extra capacity. It averages out (over all the schools in a region) to be elastic even if it may not appear to be when you look at a single school in isolation.

Re:Demand, meet supply

[vlm]

You need more instructors and more classrooms and that takes about a ten year timeframe to ramp up.

If you want to be a educational success. If you just want to set up a degree mill to collect money, that takes about six months. Evidence is two blocks from where I'm working, but there are at least 3 other recently opened degree mills in the area here.

Re:Demand, meet supply

[idontgno]

Well, consider the resale value of the product: how much does a degree from Alfred's College of Computers (Est'd 2011) is worth on the job market?

Yeah. I'd say that the unalterable value of prestige, certification, and reputation is a HUGE barrier to entry and guarantees that education supply can't expand by the best standard capitalist method: expansion of competition. So the only viable way is to expand facilities and staffing in current institutions (a process of years and decades) or simply overserve using current facilities (and drive down utility value of that education... although the sheepskin will still be as prestigious, even for having multiple years of "industrial agriculture" style processing behind it.)

Re:Demand, meet supply

[PCM2]

The other thing this whole thread seems to have ignored so far is that even as universities are raising tuition, they've also been cutting staff, eliminating tenure, dropping courses, increasing class sizes, and capping enrollment.

My friends who are currently doing undergrad degrees have seen core classes explode in size, just in the time they've been at their schools. Many of them have been forced to take five or six years to complete their degrees solely because their college only offers some of the classes they need to graduate every other semester, and they might be too impacted to get in.

So if student aid is what's causing tuition to go up so fast, what's causing all of this other stuff?

Re:Demand, meet supply

[aurispector]

That's just part of the process of the market adjusting to demand. Supply and demand affects any market, anywhere. The effect might take some time, even decades but it will have an effect. It doesn't matter what the market is - education is one of many examples. The recent housing bubble/collapse was a direct result of cheap money being made available through fanny may and other federal programs designed to make housing more affordable. The market reacted, prices exploded and when the bubble finally burst the people that got hurt disproportionately were the very ones the federal programs were designed to help - low income families.

The student loan fiasco is just another case where the feds pump money into a market and the market distorts. Bachelor's degrees are now roughly equivalent in esteem as were high school diplomas fifty years ago. They're far more expensive to obtain in terms of percentage of income than they used to be.

All part of the laws of unintended consequences.

Re:Demand, meet supply

[cosm]

I used to get so pissed at my university when I would see tuition going up, while simultaneous egregious amounts of money were being vigorously spent on lawn upkeep, planting flowers, tearing down perfectly good buildings and building newer ones that were only more 'flashy' looking, while at the same time laying off teachers and building massive lecture halls to spoon-feed kids with TAs that just click through powerpoints made 5 years ago for an instructor who barely has enough time to manage the n extra classes he's been burdened with overseeing.

Fuck the American University System.

Re:Demand, meet supply

[Attila Dimedici]

No, but there is another factor. Americans are trained to believe that more expensive colleges are better than less expensive colleges.

Re:Demand, meet supply

[kenh]

If they run out of teachers, they can always head over to Starbucks or Barnes & Noble and start interviewing all the folks with advanced degrees making under $10/hour in most cases.

Re:Demand, meet supply

[kenh]

And what are the facilities they are building - basic dorms and classrooms or are they building student centers with every amenity known to man, a gymnasium that is palatial, and state-of-the-art classrooms with every useless feature known to education and dormitories where each room is like a small apartment, not a closet with bunk beds.

Re:Demand, meet supply

[PCM2]

OK... but given all of what you say, we're still to conclude that if we took away all government student loans, universities would no longer have incentives to raise tuition? And the only reason tuition is so high is because the government subsidizes it? Because that seems to be what Bloomberg is saying.

Re:Demand, meet supply

[PCM2]

Inflation is the best way to skew prices in the economy, and destroy a delicate balance in a complex system. The cutbacks you speak of are the result of the inflation.

The annual rate of inflation, averaged over a decade or so, hovers at around 2 percent. Tuition is going up way faster than that, and the cutbacks happen nearly every semester. Nice try, though.

milkshake

[Anonymous Coward]

The milkshake brings all the colleges to the yard.

Nondischargeable debt

[gatfirls]

That's all there is to say. The banks will loan pretty much anything because they know that the debt is nonchargeable (with very rare exception), the schools know this too so they just keep raising tuition and the banks keep loaning more money. If school loans were allowed to be discharged like any other debt you would see the whole show come crumbling down like (probably more so than) the housing bubble. Tuition assistance is pretty much just the "gateway drug" of school loan debt.

Re:Nondischargeable debt

[kenh]

The reason it is "non dischargeable debt" is because it almost did come tumbling down - default rates were astronomical before they changed the rules.

And?

[HarrySquatter]

Isn't the whole point of the aid to allow them to go to better schools than they could otherwise afford? It's not as if low income people would be able to afford MIT today without aid had the Pell Grants been cut in the 80s anyway.

Re:And?

[HarrySquatter]

Colleges don't make student loans. It was private banks doing the loaning with a portion of the loans having their interest subsidized by the government along with maximum interest rates being set. It was only very recently that the private banks were cut out since they were actually raising he costs over the government doing it itself. But nice try, though.

Re:And?

[Orne]

In 1980-1981, a year of Tuition at MIT cost ~$7,400 before scholarship, a year over year increase of 17%. [$70 million in tuition & fees / 9,365 students]

And the fiscal year ended in a pall of gloom, as severe cuts in financial aid programs seem inevitable for the coming years. Never has our growing dependence upon Federal aid been felt so keenly, as the prospects of its withdrawal grow upon us.

In 1988-1989, a year of Tuition at MIT cost $13,400 before scholarships, a year over year increase of 8.2%.

In 2000-2001, a year of Tuition at MIT cost $31,900 before scholarships.

In 2011-2012, a year of Tuition at MIT cost $40,732 before scholarships.

In 2012-2013, a year of Tuition & Fees at MIT will cost $42,050 before scholarships, a year over year increase of 3.25 %.

Ron Paul said this..

[Anonymous Coward]

If you subsidize something, you get more of it.
- Ron Paul

Re:Ron Paul said this..

[HarrySquatter]

Duh? Because people thought the aid was for less people to get educated?

What about state budget cuts?

[jpstanle]

Increased availability of aid and loans may very well create some tuition inflation, but I seriously doubt it is the major driving factor at public universities. It took me a while to graduate since I got called up to active duty for a while, but the tuition at the in-state public land grant university I attended nearly doubled between when I entered as a freshman and when I graduated. In 2003, tuition and fees was about 2200 USD/semester, but had ballooned to just over 4000 USD/Semester in Spring 2011. As far as I am aware, there hasn't been massive increases in the availability of aid or loans in that span (in fact, I'd argue generous private loans have become LESS available since 2008). What HAS happened is massive state budget short-falls due to economic downturns and short-sighted tax cuts. When the state is short on cash, higher education funding seems to always take the brunt of the damage in budget cuts, so public universities make up the difference by hiking tuition and/or recruiting out-of-state students.

Re:What about state budget cuts?

[oh_my_080980980]

Given the fact that federal funding for college has steadily declined the last 30 years, state funding even more, and college tuition has continued to rise by leaps and bounds, would clearly demonstrate that no federal funding does not increase tuition.

Re:What about state budget cuts?

[jmorris42]

> Increased availability of aid and loans may very well create some tuition inflation ....
> When the state is short on cash, higher education funding seems to always
> take the brunt of the damage in budget cuts, so public universities make up
> the difference by hiking tuition and/or recruiting out-of-state students.

Interesting you don't see the connect there. In-state rates ARE student aid. Just because it isn't a line item on your invoice doesn't make it less so. And as long as the taxes are rolling in, you are right that the rates you saw were kept low. But the per pupil costs were skyrocketing for you just like for the out of state students, it was just being masked by the subsidies from the State. With the Great Recession that subsidy is being reduced and you are seeing more of the actual costs.

If the schools know exactly, to the penny, how much aid you are eligible for, and they process the paperwork for you so they do know, is it unreasonable to assume the bill is going to very closely match the max plus just a little bit more so you will still be a 'starving student' and thus available for slave labor?

Re:What about state budget cuts?

[HarrySquatter]

It's not a subsidy when you and/or your parents are paying taxes to the state that fund the colleges.

Re:What about state budget cuts?

[phlinn]

Is it federal funding when the federal government backs nominally privately offered student loans? By, for instance, not allowing most bankruptcies to include them? There are a lot of steps the federal government takes to relieve private banks of the risk that would otherwise be incurred. They turn nominally private loans into a lucrative rent system.

Re:What about state budget cuts?

[cbulsara]

Exactly. The authors of the Cellini & Goldin study linked to in TFA explicitly state that their findings do not apply to public colleges and private nonprofit schools. Better commentary here. (blog of popularly cited economist and White House staff alum).

Schools Raise Tution Regardless

[oh_my_080980980]

Hate to break it to the WSJ but schools raise their tuition all the time regardless of how students pay. They are not incentivized to raise tution simple because a student has a Pell grant!

Re:Schools Raise Tution Regardless

[tmosley]

Not because A student has A Pell Grant, but because ALL of their students have access to ANY AMOUNT of money via government guaranteed loans.

You might as well tell us that housing prices didn't go up due to lax lending standards. Same damn thing, only now the debtors can't get out by any reasonable means.

Re:Schools Raise Tution Regardless

[alexander_686]

Well, kind of.

http://www.npr.org/blogs/money/2012/05/11/152511771/the-real-price-of-college

Colleges want to 1. Attract the best students and 2. Charge them as much as they can.

Colleges have been raising their headline price. They then look at the kids finances. If the kid has big grants then they don’t have to drop their tution as much.

Re:Schools Raise Tution Regardless

[Shadow99_1]

Lol, as someone who has actually been told they can't finish their degree program because they cannot currently be loaned any more money (and so having gone 3.5 years and been in my senior year when told this)... I can tell you that their is no such thing as " ALL of their students have access to ANY AMOUNT of money". Their are caps and god forbid you ever hit one. It gave me a massive detour in life and now a decade later I'm still working on fixing it.... By having to go to college again. Which I can do only because I had paid on my loans (& refinanced them) and so I can be lent money again...

I don't know where people get this myth of 'unlimited' funds via loans, but it is just that.

Re:Schools Raise Tution Regardless

[Celarnor]

I'm in the exact same position as you--24 credit hours away from graduation, I hit the cap. The financial aid office said the only thing that could be done was to convince my parents to sign a PLUS loan--one isn't creditworthy, and the other hasn't been an active figure in my life since they divorced the other several years ago. So now, I'm stuck in an endless cycle of wage garnishments and the IRS keeping my tax return until someday, 35 years down the line or so, I can get out of default and go back to school to finish my degree. There's no way out, and it really, really sucks.

Re:Schools Raise Tution Regardless

[tmosley]

Wow, you really bought the lie, didn't you? Housing prices fell, so they couldn't sell, so they were stuck in their underwater homes. Degrees can't be resold, so they are stuck no matter what. Get it now?

Also, you are biasing yourself when you look at what others are paid on Google. Those people already have jobs. You probably aren't going to get one when you graduate. Look at unemployment statistics instead.

Re:Schools Raise Tution Regardless

[tmosley]

I never heard of anyone hitting a cap. These are likely new, or you aren't applying for the other various types of student loans out there, including the private ones, which were available in unreasonably massive quantities when I was in school.

If there was going to be a limit before you graduated, I bet you wish it had been a lot lower, huh? Would have been nice if it had the effect of lowering the total cost of the education as well, so you could have actually afforded it.

Re:Schools Raise Tution Regardless

[Shadow99_1]

When I first went to college it was in the late 90's (96 into 2000). I had loans through at least 5 places, but no one would offer me enough to go for my final half year at the college, I could only get about 90% of what I needed and the school insisted I either give up and go home or pony up the extra 10% some way outside of loans (which they had already maxed). After leaving the school I had at least 7 different bills (including the government at state and federal levels) coming in from various places for my education that was aborted. I had to consolidate them because in total they wanted more than I earned in a month as separate loans. Consolidated they were about 1/4 of my income at the time, though it was spread out over 20 years and was like paying off a housing loan for a 100k house. That doesn't include the plus loan my parents took out for me or the credit cards taken out in my name to pay for books (as my loans would not cover them).

The school I went to the first time was a private college and they have zero interest in charging less. Their only concern is to meet the costs to stay in business plus a profit of some size (and in some states that size is fixed). Reducing the loan amount possible for people to get would not even cause them to bat an eye, they would just start asking the students (or more likely their parents to pony up more money) regardless of the merits of being able to afford it. Don't want to or can't pay those rates? Well go somewhere else, we don't care plenty of other people want to come here and they can or simply will pay to do so. I stared that demon directly in the face, so I know exactly how unflexible they are.

This is news?

[russotto]

Us stingy non-compassionate curmudgeonly types not swayed by cries that everyone must be educated or accusations of elitism have been saying this for a very long time.

Re:This is news?

[vlm]

Us stingy non-compassionate curmudgeonly types not swayed by cries that everyone must be educated or accusations of elitism have been saying this for a very long time.

The combined un and under employment rate for recent grads is now 54%... I have personal knowledge of waitresses, sales clerks, and walmart shelf stockers with degrees, and I fail to see why I should want to pay for their degree out of my taxes. I get a benefit from the masters degree my kids teacher has, or my doc and dentists degree. Or the civil engineer who designed the freeway overpass I drove over on the way to work to pay for all these degrees. My bachelors degree waitress? Eh not seeing the point of educating her. If only 10% of jobs need university level skills, I see no reason beyond profit to send more than 10% of the population there.

Don't fall into the mistake of thinking education is only obtained magically solely by spending money on campus. And there's nothing wrong with spending your own money on a useless hobby, I've certainly blown thru enough cash on my hobbies... but I don't send men with guns to take your income from you to pay for my science fiction books... and we shouldn't do the same for my over-educated waitress.

Re:This is news?

[Gunnut1124]

What do you think the proper education level of a waitress is? What about a patent clerk? Maybe you need to remember that the elite aren't the only ones who can put an education to use...

Re:This is news?

[pathological liar]

1. The guy who designed the freeway overpass, your doc, your dentist, and your kid's teacher all did a bachelor's degree at some point. It may well have had no particular application towards whatever professional/graduate degree they ended up getting, I know plenty of people with arts degrees who have Master's degrees in CS.

2. Nobody grows up aspiring to be a shelf-stocker at Walmart. Your 'over-educated' (as if there is such a thing) waitress is stuck in a dead-end job with no use for the skills she (and you) paid for because of the grotesque un/underemployment rate. The world needs ditch diggers too, but a depression doesn't mean we should stop educating people.

I can't believe someone is seriously proposing we need *fewer* educated people.

Pulling up the ladder...

[raydobbs]

The Department of Education doesn't seem interested in the solution to this - which would be to standardize the information taught in core curriculum in college-level courses. Accreditation was supposed to convey a certain level of performance and standards - but given the rampant creation of 'accredited bodies' to which every college can make their own and become a member of; it didn't go far enough. To a certain extent, a standard cost break-down of what core courses should cost based on what materials are taught would help people decide if a particular institution represents the value they claim they possess.

While it is true (limitedly) that when you increase financial aid resources, the tuition at institutions see an increase - placing this measure on services would keep unnecessary cost increases under pressure to remain competitive. Another step that would help is a more in-depth information packet being provided to the student - like a prospectus - showing how education dollars are spent, projections for costs during the time they are attending, and how this might impact their financial obligations.

What the WSJ and Bloomberg's talking heads suggest - eliminating or severely curtailing financial aid in all federal subsidized roles - merely cuts people off from access to these educational resources. While private student loans would continue to exist, the ability to attend college would be limited to those of financial means and upbringing, not merit or skill. The people who could obtain these new loans to attend college would be those who have, traditionally, been denied federal financial aid to go to college - the children of the elite and wealthy; people who do not need loans to attend any college of their parent's choosing. Sadly, a bit of this is 'I've got mine, so screw you and yours' that permeates conservative news media sites nowadays. Others are simply content to use this measure to eliminate 'competitors' to their wealth preemptively.

The answer to every problem with a program here or there is *not* simply 'dismantle and destroy it'

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:Applies to many situations

[Hatta]

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.

Which is almost certainly a complete fabrication on the part of conservatives. State aid is never enough to pay for all the costs a child incurs. Did they have any actual data on how often they claim this occurs? Or did they just make something up (in the grand tradition of Ronald Reagan), and harp on it until people thought it was a real problem?

Re:Applies to many situations

[PCM2]

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.

Classic GOP talking point. "We are the party of Family Values. But when I see all these poor people, with their families and children, it makes me sick, sick, SICK!"

Re:Applies to many situations

[Nimey]

Holy goalpost-moving Batman!

Re:Applies to many situations

[Hatta]

No, my claim is that no one games the system by having excess children to cash in. If you're honestly concerned about people gaming the system, use some examples that actually happened. Otherwise, I'm not going to believe that it's a real problem.

Re:Applies to many situations

[GodfatherofSoul]

The welfare baby mamas driving Cadillacs stereotype was a myth manufactured by Reagan to get mostly Christian Americans to bury they're sympathies for the poor, allowing public services to be cut.

Re:Applies to many situations

[butchersong]

You've obviously never spent much time in low-rent area laundromat. I can assure you I've heard conversations between people on this subject. It's sad but this goes on all the time. Well I can't really say that I know that... I know that 10+ years ago when I spent time in such places this went on all the time.

A really big straw

[Anonymous Coward]

In the same way that giving $9000 to first time home buyers just caused house prices to go up by that amount. This is the same.

On another note, recently a California University system evaluation showed that administration staff was increased by %35 in the last two years. So things cost more, but no one knows why they needed to increase by a third the administrators.

And TFA is just poorly written.

[khasim]

From TFA:

First, universities, unlike the taxpayers, suffer no financial consequences when the underqualified students they have lured into their academic programs ultimately default on their loans.

"lured"? Kind of showing their bias, aren't they?

Second, students who study six years but ultimately drop out receive more financial aid than the diligent "A" student graduating in three years: We reward mediocrity and punish excellence.

How is getting something done in half the time a punishment?

Again, there's quite a bit of bias showing in that article.

Third, there is no adjustment of student-loan interest-rate terms to meet market conditions or differing risk factors relating to individual repayment prospects.

So they're pushing for different interest rates depending upon your major?

Fuck that! How about some GRANTS for people in the hard sciences?

Fourth, the Free Application for Federal Student Aid form, associated with these programs, aside from being unbearably complex, gives colleges private information about family finances that allows them to gouge students more.

Stick to a single point in each point, okay? Either they're "unbearably complex" or they give too much information about family finances.

Fifth, colleges' tuition and fee policies drive the amount of loan volume, rather than the other way around, thus contributing to the college-cost explosion and the subsequent academic arms race.

What "academic arms race"?

TFA needs an editor who is not looking to grind the same ax as the author.

Re:And TFA is just poorly written.

[Anonymous Coward]

While "lured" isn't likely to be appropriate to all schools' process of offering enrollment to potential students, I'm wondering if the author didn't have the for profit schools in mind while that phrase was being penned...

Re:And TFA is just poorly written.

[PraiseBob]

Second, students who study six years but ultimately drop out receive more financial aid than the diligent "A" student graduating in three years: We reward mediocrity and punish excellence.

How is getting something done in half the time a punishment?

Worth pointing out that in my state (Texas), a student going to a state school gets a financial reward if they finish ahead of schedule, without taking too many elective courses. It is a win-win situation. The state saves money overall, and the student has extra incentive to finish sooner. And the school has zero incentive to hold the student back since they have plenty of other applicants to fill the seat.

Re:And TFA is just poorly written.

[niado]

From TFA:

First, universities, unlike the taxpayers, suffer no financial consequences when the underqualified students they have lured into their academic programs ultimately default on their loans.

"lured"? Kind of showing their bias, aren't they?

Well, I will definitely attest to the fact that private, for-profit "colleges" have extremely shady recruitment practices. They also, incidentally, have the highest student-loan default rates.

Fourth, the Free Application for Federal Student Aid form, associated with these programs, aside from being unbearably complex, gives colleges private information about family finances that allows them to gouge students more.

Stick to a single point in each point, okay? Either they're "unbearably complex" or they give too much information about family finances.

Not sure what the author is referring to in the first case...the FAFSA is not complex at all. It requires at least marginal literacy. If you can't fill out a FAFSA, you definitely should not be going to college.

Re:Bill O'Reilly

[Anonymous Coward]

Bill O'Relly claimed that there is no scientific explination for ocean tides as possible evidence for a god. You can find the clip on youtube

Ugh, not this again

[guises]

This is ridiculous, I feel like I have to post some obvious correction every time some republican politician opens their mouth about money these days:

https://www.npr.org/blogs/money/2012/05/22/153316565/the-price-of-college-tuition-in-1-graphic

(Spoiler: tuition increases are not related to student loans)

Usually when I say stuff like this I try to keep it apolitical, but it's really gotten out of hand - republicans vilify every single thing that the government does nowadays (except the military, and state secrets, and domestic spying). Yes, Bloomberg is a republican politician (even if he's officially independent like Lieberman), and the WSJ is a republican mouthpiece just like every other Murdoch rag. I'll stop there, I don't want this to turn into some long rant, but come on: you can't use some twisted logic to turn lowering taxes into the solution for everything.

Re:Ugh, not this again

[Anonymous Coward]

Left wing statist libtard misleading bias

For any youth in the audience, we used to call this "the facts" or "knowledge" before Limbaugh introduced us all to right-wing word salad.

Re:Ugh, not this again

[Ziggitz]

Yes, because as well all know the truth has a well known liberal bias.

Re:Ugh, not this again

[Thavilden]

I don't quite understand this link and your spoiler. What I see there is that "sticker price" has gone up while "net price" (to the student) has remained mostly flat. Something has to be filling the difference, right? The linked article only says the difference can be filled by grants and student loans, but does not give any numbers about how much of either was made available through private or public means.

Re:Ugh, not this again

[guises]

No the difference is not filled by loans, only grants and scholarships. That's the point - the college advertises a very high price and then charges a more reasonable one by using discounts in the form of grants and scholarships. This gives the college leverage in what students it can recruit and makes it look better because people associate high sticker price with quality. Pushing this strategy is fairly new and that is why tuition has gone up so much, not because of student loans.

Re:Ugh, not this again

[Attila Dimedici]

Bloomberg was a Democrat who changed his Party affiliation to Republican when he could not get the Democratic Party nomination for Mayor of New York.

Re:Ugh, not this again

[Thavilden]

I see now: The article says "The net price for you — the part you have to pay for through loans, work and family contributions —". All clear.

Speaking of the Straw

[Bill Dimm]

This article talks about for-profit Corinthian Colleges soaking up federal dollars while many of their students drop out and default. Pretty interesting when considering whether the federal dollars are really helping students.

Re:Bill O'Reilly

[vlm]

Student aid is flat, tuition rates rise, can't explain that!

Low interest rates means you can borrow more means they charge more.

See the housing bubble, where multi-generational low interest rates lead to multi-generational high house prices despite real median family income declining and median family non-housing expenses increasing.

How about....

[Anonymous Coward]

Reducing the amount of credits required for a 4 year degree. Less credits = less money needed = less teacher time.

120 credits really isn't a realistic amount anymore. You can get a solid education with less than that due to the fact that a lot of courses have no real meaning in the real world, such as electives. Get rid of them. Concentrate on the REAL classes that people need to excel. If someone wants a CS degree, get rid of some liberal arts classes that are currently required. etc etc etc.

Example:
Calculus is pointless, unless you want to be an engineer, so don't require it for degrees that are not engineering or require heavy math. Same with physics. If you are going for a liberal arts or psycology degree, you have absolutely no use for calculus or physics. Its just wasted time, money and resources.

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:Of course it's the market!

[alexander_686]

I don't have time to do the numbers, but it faculty, not dropoing state aid, that is driving the cost increases. Salaries of people who hold graduate degrees have been growing faster than inflation. Unlike other industries, professor productive has not grown. Higher Education Price Index (HEPI) goes back for years.

http://www.commonfund.org/CommonfundInstitute/HEPI/Pages/default.aspx

Re:Of course it's the market!

[twoallbeefpatties]

On the one hand, I heard a debate on KCRW's To The Point a while back about college costs. One of the guests was a college administrator who said the same thing - he said that the biggest cost of his small school was faculty wages, and the price of faculty was staying high while some of the other costs were decreasing.

On the other hand, while Googling a relevant link for this topic, I looked into faculty costs a little, and I found a number of links suggesting that professor salaries have essentially stayed the same over the years, rising about the same as inflation. So I'm not sure exactly how true that is.

Re:Of course it's the market!

[alexander_686]

Dig into the HEPI numbers a bit - you may find it interesting.

That being said I still believe that faculty wages have increased faster than inflation – in particular for top researchers. But even if individual salaries did not increase faster than inflation this does not mean wages have not increased faster than inflation.

Base salary normally excludes fringe benefits. Medical and Pension costs have both increased faster than inflation.

The mix of staff can change. I know at my wife’s school the accreditation agency has pushed for more full time faculty and few adjuncts. Other schools are hiring more PhDs instead of Masters. I know of school libraries who have been hiring people with degrees in library science instead of untrained professionals. I would assume this would be more expensive.

There will always be people who can afford it

[gelfling]

So if you remove loans you simply are left with all the people who don't need them. Costs don't go down the number of colleges needed to support that shrinking population does.

Similarly if you eliminate health insurance you don't decrease the cost you simply wind up having to close most of the hospitals.

Re:Bill O'Reilly

[ZeroSumHappiness]

Ah, didn't realize it was a meme. Disregard my statement!

What incentive

[Vinegar Joe]

Do schools have to ever lower tuition if the government is guaranteeing the loans?

coming from an inside source....

[swan5566]

A friend of mine is now a prof, and he says that tuition increases are mostly due to bigger and better cafe's, sport stadiums, better gyms and dorms... things peripheral to the actual education part of higher-education. He also said they if they don't keep up with these things, the college up the road will, and students will want to got there instead. The implication is that most students get enamored with the biggest and best, borrow however much from whomever (after all this is COLLEGE), and not worry about the debt because once they graduate, someone will OBVIOUSLY give them a well-paying job to pay it off, because a degree makes you a superstar (or so the college says). It's a vicious cycle of enable-ment and nativity on the part of the consumer - the student. It's pretty obvious that there has to be a breaking point somewhere - the question is whether or not we'll be the new Greece.

Go to college. End up broke.

[sl4shd0rk]

College (tuition) is the next Housing Market Crash waiting to happen.

Re:Go to college. End up broke.

[melted]

But it can't happen. You can't declare bankruptcy on those loans. Underwater/above water, doesn't matter. You pay them until they're fully paid off.

Re:Go to college. End up broke.

[oursland]

The issue is that an increasing amount of people simply cannot pay. Without physical assets on the line, the banks get nothing and the debtors are ruined for life.

Re:Go to college. End up broke.

[bhtooefr]

Or you die.

Wonder how long before there's mass suicide to discharge student loans.

Re:Go to college. End up broke.

[n7ytd]

But it can't happen. You can't declare bankruptcy on those loans. Underwater/above water, doesn't matter. You pay them until they're fully paid off.

...unless the federal government changes their minds and forgives all or a portion of the loans. Universities are Too Big to Fail.

Tuition is tried to loans AND applicants

[DirkDaring]

If you ran an institution where:

1. You have more qualified applicants than availability
2. Nearly all have access to paying tuition with loans

Now you, being the bean counter - what would you do? Duh, you continually increase rates until #1 drops to a level you are uncomfortable with.

Re:Tuition is tried to loans AND applicants

[GodfatherofSoul]

That makes no sense. Raising rates will eliminate good and bad applicants.

Re:Bill O'Reilly

[tranquilidad]

Rising like healthcare is an interesting comparison. In both markets we are missing a significant consumer component that I believe encourages pricing levels unrelated to the cost of production. When massive third-party funding sources are not only available but widely encouraged and expected we tend to reduce our willingness to perform basic consumer due-diligence related to pricing.

I've bargained heavily for every car I've purchased but never really have a chance to bargain over medical or tuition costs. On the other hand, non-subsidized health care services such as lasik and cosmetic surgery often have price-points as one of the determining factors for provider selection.

Planet Money Podcast on the subject

[twoallbeefpatties]

And for anyone with a few minutes to spare, you can listen to the whole Planet Money podcast on this topic: (Link)

He's right

[bigtrike]

The military is in effect subsidizing doctors. They give people an education and expect them to pay it back with future service.
Would Ron Paul have been a doctor without this subsidy?

Opportunity enables greed.

[PeanutButterBreath]

Obviously, opportunity must be a problem!

I had a similar hypotheses about home prices

[peter303]

I felt some of the booms in the 1990s and mid-200s were several generous tax laws changed at that time. In the old days you could only carry forward gains. Now you can exclude up to $500K gains every two years. And since 1994 you pay lower gains taxes if you holdlonger than a year. People were incentivized to buy the largest house they could qualify for a mortgage on then.

College demand seems more immune to economic down cycles than housing.

Don't Forget About the Easy Loans

[Maltheus]

It's not just student aid, it's also the artificially low interest rates and guaranteed loans. In our race to make college more affordable, all we've done is make it more expensive. Colleges, like any other business, will charge as much as they can, just short of scaring off the customers. We did the same thing with houses too, providing NINJA loans to anyone with a pulse, driving up the costs well above the rate of inflation, leading to the inevitable bust that the entire world is forced to deal with now. Prepared to see a lot of layed off college administrators once the sentiment starts to shift to "college just ain't worth it anymore."

Reminds me

[fermion]

About what the robber barrons of the earl 20th century said about paying workers a livable wage. It was believed that the workers would only waste the money of beer and meat.

Traditional institutions do not traditionally spend money on nothing. They also have donors and funds that help pay for costs and keep costs to students low. What is happening now is the rise of for profit colleges, which reportedly are 1/4 of the defaults and face higher debt and more unemployment. Obviously if one is trying to make a profit, then federal subsidies are the way to go. Just look at military and farmers and the amount of money conservatives love to give to them for nothing.

What I want to see is that a university provides an education. Not job training, but insurance for the future of our democracy.

The schools should be giving a corresponding...

[gatesstillborg]

...break on the tuition. If the student is good enough to merit the scholarship, they should be likewise desirable to the enrolling institution, such that the institution affords them a break. If, rather, the prestigious institution prefers to continue to graduate rich dolts, let them, and see how long their reputation holds out.

Real Private Tuition Not Rising?

[Conception]

Public Tuition seems to be rising due to budget cuts and privates seem not to rising in real dollars for most. Planet Money did a great segment on this, tuition sticker price has been rising, but real prices have been staying with inflation; again for private schools.

https://www.npr.org/blogs/money/2012/05/22/153316565/the-price-of-college-tuition-in-1-graphic

Maximum Pell Grant is only...

[theNAM666]

The maximum Pell grant is only $5500. This is peanuts.

At highly competitive institutions, the actual cost of educating per student approaches $90K. Usually around 1/3 to 1/2 of the students receive any financial aid. Less will even qualify, much less receive the full grant. Back-of-the-envelope, on average, we might expect the average per student grant to be around $1K. If there is a price-push-up, it's probably around or under $500.

Compared to Pell grants' ability to make education accessible, or to reduce indebtedness, for many other students in non-elite situations, I think that amounts to a hill of beans.

Government-subsidized and guaranteed loans, on the other hand... that's another mountain entirely.

This is obvious

[Karmashock]

this is literally econ 101.

Supply and demand.

Increase demand while leaving supply fixed and prices go up.

No, it really is that simple. Some one is going to respond "no it isn't that simple." You're wrong, it is that simple if you speak generally. It can't not be that simple. That doesn't mean there can't be complex ways for it to happen or for the means by which you calculate it to be complex. It just means at the end of the day that's roughly what is going to happen. It's simple in the sense that every action has an equal and opposite reaction. Economics isn't exact. But if you push something one way there will be a response roughly in that direction that will be roughly proportional to the input.

Now if you wanted to subsidize education AND keep costs down... you could pump money equally into supply and demand at the same time. It's not exact so I'm not sure what ratio would keep stability. It would have to be tested on a case by case basis. But if supply expanded at the rate demand increased prices should remain roughly level. It's a little like one person squirting water into a glass at the same time someone else sucks it up. It would be hard to synchronize and very easy to imbalance.

Of course

[Charliemopps]

Any extra money available to a particular market will be absorbed by that market. The question is, what does that market do with the extra money? Are they hiring more professors? Accepting more students? In my particular college town they are rebuilding campus buildings over and over again using the latest it architectural design and "Green" engineering.

It seems the governments purported goals would be served better if they paid the university directly to hire more professors and offer more scholarships on their own. Unfortunately the governments real goal is to engender the good will of the soon-to-be upper class graduates, and continue the idea that they can not live without their benevolent government.

Re:LoL

[MobileTatsu-NJG]

What's rent like over there?

Re:Everybody wants high-paying jobs.

[Githaron]

I don't get why the government give aid to all majors indiscriminately. If they are going to be giving out students aid with our tax dollars, they should at least give out aid based on projected job demand. By doing so, they are reducing the number of students who graduate with no job prospects while encouraging students to fill market needs. It might also be wise to offer aid based on personality tests in order to encourage students to go into a field where they are most likely going to be useful and hopefully enjoy. This all assumes that the government should be giving out student aid. I am not so sure.

Re:Everybody wants high-paying jobs.

[Hognoxious]

The poor would scream bloody murder. Compassion would motivate us to start with the student loans again, the end result being largely the same except that the workforce is smarter, poorer, and more depressed (exactly like what we have now).

Or you could give money to poor, but talented, students.

Re:LoL

[Luckyo]

In other parts of the world, being rich sucks a whole lot more then it does in the West. Because when there's a shitload of poor people with no prospects for a future, kidnapping a moneybag, aka rich person or his relative becomes a very attractive proposition.

But yeah, let's draw direct comparisons to places that have fundamental differences AND let you live off much less because everything also costs a whole lot less... Yeah. Stupid.

Randomly applied theories

[MrTester]

No no no.
I mean, yes its true that if there were excess money in the system, the system would suck that excess up. Thats true in ANY system.
But everyone acts as if that automatically explains where we are today.
If the total National spending on education was $5 (not millions or billions, just the $5 I have in my wallet), the above would still be a true statement, but wouldnt imply that at this moment we are spending too much.

Im so tired of this. Just because a theory is (or could be) true does not automatically mean that is the theory that is defining the current situation.

The Reality

[SuperKendall]

Similarly, your daughter wants to be a geologist. But the best geology program is (I'm making this up) North Dakota State. You don't have the option of moving your family to North Dakota to score in-state tuition

But you DO have the option of getting private grants or scholarships for particular fields of interest.

The problem with federal loans is they float ALL boats. Anyone getting a federal grant can go anywhere, so it increases how much students pay everywhere.

Lets get back to a system where the "best and brightest" really are the ones getting more aid than someone just exploring the idea of going to college without a good reason for being there, and everyone is paying less for tuition.

Re:The Reality

[c_jonescc]

If only it were the best and the brightest, instead of a system catering to those that can afford SAT prep.

Re:LoL

[Nimey]

Explain to me why we should compare ourselves to third-world shitholes instead of other first-world secular democracies.

Other than the fact that conservatives would rather us be a shithole because their taxes would be lower.

Not "Student Aid" in General, but Gov't LOANS!

[eepok]

My qualifications: 5 years at a public university, 100% on a combination of student aid, graduated 2005, worked in higher education outreach for quite a while, still working at a public university.

There are a few different kinds of Student Financial Aid:
(1) Scholarships -- a competitive grant awarded to a student for comparatively high score in testing, GPA, essay entry, speech, or a combination thereof.

(2) Grants -- a need-based or participation-based award given without competition. Need-based grants typically have minimum high school performance standards and maximum income per-person household limits. A participation-based grant (like the GI Bill) is based on a fulfilled commitment of service.

(3) Loans -- an amount of money that needs to be paid back. The best are the Federal loans that do not accrue interest while the student is still in school and repayment can be deferred reduced when income is short. Avoid private education loans like the plague if at all possible. Loans, unlike scholarships and grants are pretty easy to get an are considered unlimited.

Knowing the above, it's not general "Student Aid" that contributes to bloat on the university level, it's unlimited access to Federal Student Loans.

I went into my college career in 2000, expecting to pay a total of $14,700 for the whole year. The cost included tuition/fees, transportation expenses, room and board, books, and other expenses. It was fully paid for my scholarships and grants (I was poor and good in school... a jackpot). Tuition and Fees were deducted from the account and I was given a third of my award quarterly. It was my responsibility to use my money wisely.

Between 2000 and 2005, the cost of the very same education ballooned from $14.7k to $25k per year. I paid for my 5th and half of my 4th year entirely with federal loans. Undergrads on the same campus should expect to pay around $35k for this year.

How did prices go so high? Well, there are new buildings on campus, a new Student Union to pay for, dormitory expansions, new faculty and existing faculty getting regular raises, and administration employees making hundreds of thousands of dollars each to manage what is, effectively, a city of 40,000 people 5 days a week. I don't think a mayor of a 40,000 should make so much, but our chancellor makes over $300k/year easily.

In that time, also, there have been major cuts to state higher education funding and other shortfalls in income. There have been bad investments, I'm sure.

So how is it paid for? Well, students and parents alike have been convinced that all kids need a research university education if they are going to make more than $35k per year in an air-conditioned office, so most think they have no choice.

The demand is there. The unlimited access to credit is there. But there is no incentive to keep costs low.

I think that it should be federal law that no one working at a university making more than $75k per year should be allowed to get a raise for 3 years after the last student tuition/fee increase.

Student Aid is not "Federal Funding" red herring

[Anonymous Coward]

We're mainly talking about the government-backed loans that everyone is eligible for.
All you have to do is sign on the line and the school gets $5-10k per year (depending on your year) extra from "you", and the banks make interest on guaranteed (government backs them) loans.

What's that? You're telling me every one of those people whose full time job it is to bring in money for the school, are incompetent? Right...

Re:LoL

[shutdown -p now]

In other parts of the world, food is cheaper, and housing is much cheaper. It's pointless to compare wages dollar for dollar, you need to look at purchasing parity.

And, yeah, that's lower, too, but do you really want people on minimum wage to live in cardboard boxes as they do over there?

forced meal plans and forced room and board drive

[Joe_Dragon]

forced meal plans and forced room and board drive up cost as well.

With room a board you mostly pay more then renting on your own to shear a room and shear a bathroom with a full floor.

Also some of the meal plans are a ripoff and other times they come on use of lose it cash cards that time out and force some people to buy just of junk and candy just to not lose the cash on them.

Maybe it's time for shouter times in schools

[Joe_Dragon]

Maybe it's time for shouter times in schools.

By cutting out lots of fluff and filler you can maybe cut down on the number of classes and the time in school.

also there are lot's things that can be done in 1-3 years or less.

The tech field needs more apprenticeship and less

[Joe_Dragon]

The tech field needs more apprenticeship and less time in college / classes.

Just look at all of the people with CS who don't have the skills to do IT jobs.

Now we can take the community colleges and tech schools and add a apprenticeship to them.

college does not work as a one size fit's all

[Joe_Dragon]

college does not work as a one size fit's all and that give you people who can are both over skilled and under skilled. Also for some jobs 4 years is over kill.

Also as you go higher up the class loads become more about the the world of academic.

Read Academically Adrift

Re:How about.... a badges systems

[Joe_Dragon]

badges earned online

http://chronicle.com/article/Badges-Earned-Online-Pose/130241/

Re:The tech field needs more apprenticeship and le

[GodfatherofSoul]

BS, I've been in the workforce for 15 years in IT and I just returned to college for a CS degree. The idea that you can pick up a well rounded education on the job needs to be buried. On the job, you're learning what your employer needs you to know. And, if you haven't been exposed to theory, instructed in some math disciplines, and given a basic understanding on the foundations of IT tech, you're always going to have gaping holes in your knowledge or you're going to find yourself rebuilding the wheel because you had no idea was a state engine was (ask me about that one!).

What I've learned coming back to school is how much I didn't know I didn't know!

Make University Free

[sociocapitalist]

I live in France now, though I am American by birth. The system here works very well.

University level education is almost completely free for students here. There are a certain number of places for any given program and students take competitive exams which determine their chances of getting into the program and school that they want. Students take this very seriously and work extremely hard in what we would call high school. The better they do, the more likely they are to get where they want to get to.

The society benefits because the population is highly educated in fields which are needed, with very few having the slashdot invented degree in 'underwater basketweaving'. The students benefit because they come out of school with the means to earn a living without having so much debt crippling them that they cannot get ahead of it.

Of course the far right Americans will cry 'socialism' and 'unfair taxes' but hey, you get what you ask for.

some theory and math is ok but full CS still misse

[Joe_Dragon]

some theory and math is OK but full CS still misses the mark and 4 years of it is way to much. But even then it's still more on the coding side and less on the tech / admin side.

Also the parts of the well rounded education need to go like art history, hobby stuff (as a full price college class), some of the higher edu, college level biology, other college level classes.

community colleges have the math and tech schools have the basic understanding on the foundations of IT tech.

Reagan cut Pell grants, so I dropped out

[polycopter]

"did cuts... hurt the education of ... lower income students?" well, a single anecdotal example: I was in college when Pell grants were cut, and when faced with the prospect of a higher debt upon graduation, I chose instead to drop out of college. True story. I wonder if, over the course of the ensuing years in which the government collected less from me in income taxes than it otherwise might have, the difference could have paid for the Pell grant that I might have received. In retrospect, my decision was probably unwise, but oh well.

Re:LoL

[metrix007]

Please don't confuse western minimum wage with American minimum wage. Every other western country has decent minimum wage laws.

Re:LoL

[stdarg]

Rich people in a third world country are like feudal lords. People don't kidnap them -- the people who do kidnapping work FOR the rich guy. They have little armies. They do what they want with no repercussions for the most part. You want to rape some cute village girl? Go for it, the parents can't retaliate by kidnapping you, though you might want to have the parents shot just in case, the police are in your pocket, the national government doesn't care. Oh, also make up some rumors about the parents working for the CIA, Mossad, or some other despicable foreign intelligence agency and you might be the local hero.

Other than that, yeah I agree those kinds of comparisons don't do much good!

We don't need no steenking education

[whitroth]

When I worked in the DP dept at Philly Community College in the early eighties, I, personally, was responsible for the tape exchange with the US federal government for the Pell Grants. I can therefor speak authoritatively, and tell you that 90% of the students were there on Pell Grants.

That's a *communtity* college. Not an Expensive, Big Name private college.

These days, with the massive cuts in Pell Grants in inflation-adjusted dollars, it's harder and harder to get to *anything*.

But Murdoch, of course, the rich foreign-born immigrant doesn't want a large and educated working class.

  I mean, the last time that happened was the sixties and seventies, and look what happened then: uppity kids, women, workers, and ethnics. Didn't know when do defer to their betters, and wanted to keep a fair share of the wealth of the country.

Things are *so* much better, with folks like the Walmart heirs, whose top six own more wealth than the *entire* bottom 30% of the country, and there are so many jobs.....

                    mark

The sky is also blue

[howe.chris]

I am in grad school now. We broach this subject every couple of months. Basic supply and demand. All of the "extra" money is creating more demand. Positive shift in demand leads to an increase in price (http://en.wikipedia.org/wiki/Supply_and_demand).

Everyone knows it and we talk about it not being sustainable. So what happens when everyone outside of academia realizes it is not sustainable? People are graduating with tons of debt and everything else. If you "fix" this does it also increase the money supply because suddenly a lot more people have more money in their pocket, which leads to more spending, which leads to higher prices, increases inflation....

No win scenario unless you are the banks.

Re:LoL

[Luckyo]

We're talking about different kind of rich. You're talking ~0.01%, I'm talking about the "upper class" that serves these in high income roles. These are usually some 2-5% of population in poor countries.

Kidnappings are generally directed at this part of populace, because they're fairly easy targets, but typically wealthy enough to be able to afford hundreds of thousands and in some cases millions of USD in ransom money. This is well seen in economies that are not terribly bad but well below Western standards, such as many Latin American countries, Russia and so on.

at least one third college is worthless

[fredthomsen]

I love my alma mater and enjoyed my time there; however, that doesn't take away from the fact that at least one third to one half of the classes I could have done without. All this making well rounded students bullshit is a ploy to get more cash out of you.

Re:LoL

[stdarg]

That makes more sense. I thought most of the kidnapping and extortion was done by organized crime, though, which I would classify as top 5% (the leadership I mean). Kidnappings and murders may be carried out by poor people, but I don't think they are spontaneously done by poor people who are trying to get rich. They are done by rich criminals looking to stay rich / get richer.

In the really backwards countries like the ones I'm thinking of, the top 5% is dominated by people either in or connected to the army or the civil government. (Particularly I'm thinking of Pakistan, which I read about quite a bit.) While it's true that the elite are attacked occasionally, it's very different from what you're talking about. The ones who are attacked are attacked by people in the same social class (or higher) and usually for religious and political reasons, not to scam money. Every so often, for instance, there will be a spate of murders targeting Shia doctors. It is done by certain religious political parties since the majority population is Sunni and very bigoted. The poor people carry out the murders, but the political leaders order them -- with no consequences.

The group that is most targeted by poor people, without coercion from someone in authority, would probably be tourists who are not rich enough to have security details.

Re:LoL

[Luckyo]

The tourists are actually one of the least targeted groups in kidnappings, because there is a collective interest of very powerful tourist industry that no such kidnappings occur.

Consider the Kenya example, where disabled woman got kidnapped for ransom by somali (no local kenyan would dare to touch a tourist). Kenya went full military on the kidnappers down to chasing them into Somalia across borders later executing a very difficult and expensive excursion into south Somalia to destroy bases where kidnappers might be trained. Al-Shahab is still recovering from that strike since. And now when my parents visited Kenya as tourists about a year after the incident, they spoke of heavy army presence on the beaches guarding the tourist sites now.