Inside Financial Services

Hillary’s College-Finance Scheme Will Only Further Drive Up Cost of Higher Ed

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Hillary Clinton comes up with a plan to help students pay for college. From the New York Times:

Under the plan, which was outlined by Clinton advisers on Sunday, about $175 billion in grants would go to states that guarantee that students would not have to take out loans to cover tuition at four-year public colleges and universities. In return for the money, states would have to end budget cuts to increase spending over time on higher education, while also working to slow the growth of tuition, though the plan does not require states to cap it. [Emph. added]

So Hillary is going to make college more affordable by adding a $175 billion federal subsidy for it, and by jawboning states to stop cutting their higher-ed budgets. One gets the sense she doesn’t quite understand how economics works. Over the past 30 or so years, recall, tuition inflation has increased at twice the rate of health-care inflation. Which is to say, it is zooming. Here’s why: a) for reasons that have little to do with academics, a college diploma is now a requirement even for jobs that don’t require much strenuous thinking, and b) over the years, the federal government has larded on one tuition subsidy after another, from low-cost federal loans to Pell Grants, that students can use to buy these now must-have documents. The government is handing out more and more money for consumers to buy something they know they have to have. No wonder tuition is blasting through the roof.

 

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Hillary’s new plan will only exacerbate all this. Who takes seriously the idea, for instance, that one way to control education costs is to get states to not cut back on their higher-ed spending? Overall, the Clinton campaign estimates her plan would cost the federal government $350 billion over ten years, a not-insignifiant amount of money considering that total student-loan debt lately comes to $1.2 trillion. It will almost certainly have the effect of accelerating tuition inflation even further. That’s how subsidies work. It was only recently, after all, that the federal government decided it would get heavily involved in trying to control spiraling costs is another important sector of the economy: health care. The ACA was going to “bend the cost curve,” remember? Five years on, and health care inflation still roars ahead faster than the CPI.

There’s no reason the cost of education should be chronically rising faster than the cost of everything else. It is not especially capital- or R&D-intensive.  The body of knowledge being taught—from physics to Western literature—doesn’t change especially quickly. The main reason college has gotten expensive is that misguided government policies have made it that way. Hillary’s new proposal would only add to the problem.

What do you think? Let me know!

11 Responses to “Hillary’s College-Finance Scheme Will Only Further Drive Up Cost of Higher Ed”

  1. Avatar SWPilgrim

    Hillary, more than anyone, is a product of who, rather than what you know. Another boondoggle with other people’s money. What is the market value of the Eubonics p h d ? SWP

    • Avatar Shekhar

      My wife and I have been very blessed in our lives. We have also lived thorugh very tight times ( I. E., blood donations.) We have always felt the love if others. Many times, we picked up the bill for another at a resturant. Other times we paid for another’s groceries. Another time we put together a baby shower for a lady we never met who left an abusive home. Instead of money, we gave a man in the rain a sleeping bag, a coat, and accessories along with a gift card for a meal at Denny’s. When my wife ad I ran into financial issues, we were blessed by people who remained anonymous with a $500 gift card twice. We always asked why. We had a very hard time accepting. Why us? LovePay it forward It will come back when needed

  2. Avatar Wmps1@verizon.net

    This federal emphasis on getting college degrees is cheapening the value of a bachelor’s. Of what value is a degree in American studies or African-American studies? If society boosted the value it places on skilled tradesmen – plumbers, electricians, masons, etc, perhaps those with marginally valued degrees will shift to a skilled trade and benefit themselves more. If colleges/universities were forced to compete more for students, perhaps they would improve the courses offered as well as lower tuition to attract students. Shifting federal spending for education more toward the crafts would help.

    • Avatar TOofy

      A psychiatrist is a paihycisn who specializes in the diagnosis and treatment of mental disorders. I have a bachelor’s degree in the social services field. For several years, I have worked with children who have been diagnosed with mental disorders. It is upsetting to see children victimize at an early age and even more disturbing to see them as predators as early as 5 years of age, however knowing that I am doing my part to assist them in becoming functioning youths and adults is rewarding. The empathy, confidentiality and maturity of a medical assistant are definitely needed in this area. I enjoy establishing a rapport with these clients and helping them to find adequate coping skills to deal with their disorders, therefore I would like to work for a psychiatrist.I would not like to work for an emergency paihycisn for several reasons. I will explain a few. Patients who come to the emergency center typically have serious injuries or trauma. I would not like to have my mind constantly focused on who is coming thru the door and how sever the prognosis is. Knowing myself, I know that would be my focus and I would not be very productive. Also, in the emergency room the staff has to be prepared for anything, I would prefer an area that focuses on a particular specialty. Most importantly, I do not wish to see excessive amounts of blood loss on a regular basis. Actually, not even a minimal amount of blood loss on a regular basis. Giving my opinion and thoughts about this specialty, I would not be an effective employee.

  3. Avatar OnTheEndOfTheEarth

    The critical driving force behind university tuition is the fact that universities are non-profits who have to comply with IRS code to ensure that “non-tuition” sources of revenue do not exceed a certain de minimus level of total revenue.
    So when universities’ endowments (for instance) pour money into university coffers, universities must raise tuition to keep the percentages in alignment so that they don’t have to pay taxes on their investment income.
    They can get around this tax problem by making attendance, room and board totally free — but they don’t want to risk that strategy for in case endowment income should implode.
    After all, the one measure of success in any bureaucracy is its growth in bureaucrats and free education (paid by endowments) would undermine a lot of bragging rights. This need to also spend (for non-profit status) is what is causing the construction of temples on many campuses.
    If they truly operated as a non-profit, and made little to no money, the tax issue would not exist anyway….and tuition would be a lot cheaper.

    • Avatar Kulpreet

      Since there is so many fields of sapeiclties that I have a choice of, I still really can’t choose one. So I am going base on my personal experiences. My original goal back in high school and maybe even before that, was to work in a Neonatal ICU! I had a brother that passed before he had his first birthday from heart complications, and that year I spent a lot of time at hospitals with my parents. My goal the first couple of years was to work with babies just like him. That was until I had my own children, I would of still loved to have worked in that career field but the heart ache I would most likely endure when one of those babies did not make it home. I could not have handled!On to more positive experiences, I have worked with the elderly and Geriatrics interests me very much. Being surrounded with people that have lived a fulfilled life is so much more rewarding. Even though at times it is the ending stages of their lives, and it is sad when someone does pass. It’s less of a heartache to know that most of the time they are ready to move on. They are still very dependent on you and when you are able to help them with their needs that’s the most rewarding of all, plus you form a special relationship with the patients and their families.

  4. Avatar GILBERT

    Tom: I wish you had added to your chart the average cost of tuition over that time and the CPI. Hit home that the tuition growth is way above the CPI, but I’d bet the rate of debt burden growth well above the tuition to boot.

  5. Avatar Mark From Albuquerque

    There is never any thought from politicians on how to pay for this other than raising taxes. For Hillary Clinton (the lady that said she and Bill were broke in their $50 million mansion) she just snaps her fingers and puts the burden on American taxpayers. I would bet she can’t balance a checkbook and feels it is a rite of passage for her because she is married to Bill (I did not have sexual relations with that woman) Clinton! There is not an endless pot of money but it is obvious that Hillary does not know the value of a dollar. I started working at age 13 bagging groceries because I was taught the value of money. Today I am a millionaire by saving and investing my money for the last 30 years. Here is the elitist Billary that wants to take it away. Tom Brown, keep doing what you do. Educate the American people about money! Thanks!

  6. Avatar Bill in Seattle

    Another reason college costs continue to move higher is that colleges adjust tuition to maximize the dollars they can get from federal grants and assistance programs. Colleges also have fixed costs and if they give out financial assistance they then need to up the tuition in order to have those who do not need assistance cover the cost of those who do. While this does not affect the wealthy it is a real burden on the middle class. I also lament the constant drumbeat of “what college are you going to” by High Schools to their students. they need to broaden the msg to include options about trade and skilled labor as well as military service. College can be very overrated to those who are skilled and talented but not inclined to “book learnin”.

  7. Avatar Septiana

    On October 3, thirty high scoohl students from Mount Si’s Key Club visited the homes of two elderly folks in North Bend. Armed with gloves, garden tools, and determination ..they set out to offer assistance to these homeowners where the labor had simply become too big an obstacle. The students split and stacked firewood, trimmed overgrown bushes and hedges, brought garden beds back to objects of beauty, raked leaves, and filled an enormous trailer with discarded and rotting lumber that was taken to the dump. The best part of this endeavor was the smiles and hugs given by the homeowners to these high scoohl Key Clubbers. That so many showed up at their homes to Pay it Forward was overwhelming and one of the most heart-warming experiences I have seen. Way to go Mount Si Key Club!

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