Sunday, August 21, 2011

Colleges charge big tuition because they can

Jonathan H. Adler writes on The Education Bubble:
This chart looks like a mistake, but it’s correct. Student loan debt has grown by 511% over this period. In the first quarter of 1999, just $90 billion in student loans were outstanding. As of the second quarter of 2011, that balance had ballooned to $550 billion.
Textbook prices are also up:
“According to a study (pdf) conducted by the Bureau of Labor Statistics, textbook prices have increased FOUR TIMES the rate of inflation of other finished goods for the period of 1990-2009,”
And tuition is up because:
The reason tuition has been on such a steady upward march can be found in the most basic lesson of an entry-level econ class: supply and demand.

Tuition goes up because it can -- because there currently are no market forces or legislative controls to curtail it.
This is a bubble because it is unsustainable. The public has been brainwashed into believing that colleges are worthwhile, regardless of the cost. The knowledge learned at college is readily available elsewhere. You could spend a couple of years reading Wikipedia and learn a lot more than the typical college graduate. Eventually, students will refuse to take the debt, and find alternatives.

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