Rising College Tuition - Student Loans

[jmjj215]

Does anyone know of any studies/research done that might answer the following?

What, if any effect, has government subsidized student loans had on the price of higher-education tuition?

I'd be intersted to know. I personally think it's one of the reasons tutition is rising so quickly - people aren't as price sensitive because they aren't spending their own money (I'll argue until the cows come home that if you're spending borrowed money it's not the same as spending blood/sweat-money you've worked for). Because of this lack of price-sensitivity, schools have been able to raise tuition w/o seeing demand slip. Anyway, just thoughts from a college student.

[terry1156]

There is a big difference in what a college costs and what students actually pay. That is not to say that it's cheap, but prices quoted are often misleading. <A HREF="http://money.cnn.com/2005/04/28/pf/college/cost/index.htm">Money.com</A> has a good article on this. It doesn't address your goverment question exactly, but may be of interest.

[jmjj215]

That's a pretty interesting article Terry - thanks for the link.

It is interesting that the schools may raise their tuition to give a look of being a better school, then turn right back around and award that difference to the students in the form of need/merit-based scholarships.

I'm still on the hunt, however, for some research discussing the effect of federal loans on the cost, even if it were only relative (b/c of this false price inflation mentioned in the article).

This was something else interesting:

Schools award need-based using a calculation known as the expected family contribution (EFC), which is the amount they think a family can pay each year. Buck recommends parents estimate their EFC during their kids' junior year of high school, which they can do for free at Thomson Peterson's and other sites.

This EFC has always kind of irked me a bit - on a personal level. My father makes a good living as an attorney but he has always made it clear that we needed to provide our higher education (whether you agree or disagree with that is another topic). So a school will evaluate my expected family contribution - not the actual. Wish there were some way to get around that. They don't seem to care when you say that you actually don't receive any assistance from parents.

I guess I'm glad to be graduating in a year

[terry1156]

Were you looking for something like this? <A HREF="http://www.fee.org/vnews.php?nid=4420">Subsidized Education</A>

[jmjj215]

Exactly! I totally agree with the article.

One aspect it doesn't address that I've been thinking about w/ government subsidized higher education is the following:

When a student receives a loan/grant, they are not as frugal - in almost every case I have personally seen (observing friends and colleagues at my school). I really do believe that college is a great thing for everyone - but I do not believe that everyone should go to college. The article touched on that a bit:

A side effect of this policy is that it attracts more poorly qualified and less motivated students who value higher education less than others who are willing to pay the full price. Colleges have to devote more resources to remedial programs, and students in these programs have a greater dropout rate.

So besides attracting less-motivated students, I believe that even the motivated students are crippled (perhaps a less-harsh word would be more appropriate here) by the help. They do not learn from the school of hard knocks if you will. They don't grow accustomed to really scraping by - and I think there's a lot to learn there for me and most everyone else. Adversity builds strength of character the vast majority of the time. When people are just "given" their education (or most anything else) they (1) don't appreciate it as much (2) don't work as hard at it and (3) grow accustomed to a lifestyle they have not yet earned and/or don't deserve. They end up with a sense of entitlement - and that is what is crippling.

This article was great Terry. Thanks again. I guess I have two gripes about the subsidization: (1) it increases tuition costs and (2) it robs students of valuable life-lessons.

I'd be curious to hear other forum members' viewpoints!