Student Loans Largely Increase College Costs. Duh.


This particular consequence is so obvious that it almost didn’t need to be studied, from the Federal Reserve Bank of New York:

We find that institutions [of higher learning] more exposed to changes in the subsidized federal loan program increased their tuition disproportionately around these policy changes, with a sizable pass-through effect on tuition of about 65 percent. We also find that Pell Grant aid and the unsubsidized federal loan program have pass-through effects on tuition, although these are economically and statistically not as strong.

As the Week elaborates:

The resultant tuition hikes can be substantial: The researchers found that each additional dollar of Pell Grant or subsidized student loan money translates to a tuition jump of 55 or 65 cents, respectively. Of course, the higher tuition also applies to students who don’t receive federal aid, making college less affordable across the board.

From the progressive government perspective, this strategy is win-win.  The government turns a generation into debt slaves, and collegiate indoctrination mills — leading the way, among other things, in dismantling religious belief as a competitor to statism, vilifying the foundations of Western freedom, and keeping racial strife as a living, breathing issue in a country in which it could long ago have become purely a matter of history — get an infusion of money to hire more bureaucrats.

The only people who suffer are those who must attempt to make enough money with their increasingly useless degrees to cover their increasingly breathtaking debt and those who would prefer to maintain the United States as a land of freedom, intellectual diversity, and productivity.

(Via Instapundit.)

  • Mike678

    True–but the schools did great things with these extra funds. We have safe zones, women’s centers, excellent athletic facilities and we pay professors like Ms. Warren really high salaries. Education is less relevant, but the bells and whistles are better!

  • msteven

    As my children are close to the college age, I agree that certainly higher education is big business not unlike oil, food or other for-profit service indistries. And as MIke678 said, it is less relevant or the value has decreased while cost has increased well past most other ‘industries’. My only disagrrement is you assertion of this helping anti-religious belief and other progressive views. While, higher edication has moved with the culture and many colleges are in the progressive-elitist camps, its not like Catholic, Christian or conservative-leaning higher-education institutions are not raising costa – they are.

    Education is a professional racket – a profit-making business. It’s capitolism with major government funding. And big business is going along by requiring college degrees for just about any job. It’s a scam regardless of the ideology of the institution.

  • Warrington Faust

    The was an interesting article a few months back, it named 9-10 Private Massachusetts colleges expected to disappear in the next few years. The problem is they cannot get paying students. The “discount rate” is killing them. The “rate” is the percentage of tuition deducted from full pay students as grants to students who cannot afford the tuition. For colleges with large endowments, this means they are buying students at the expense of tuition increase. For instance in a college with $40,000 tuition and a 40% “discount rate” from each 40K received from a paying student, 16K is deducted and given to another student. So the effective tuition is 24K. So, it could be said that you borrow 40K for tuition, the college receives your money and takes 16K of it and gives it as a “grant” to a “deserving student”, but you continue to pay interest on the full amount for years. So, aren’t you you borrowing money to loan to another student?

    A 40% discount rate is now low.

  • ShannonEntropy

    Justin :
    The only people who suffer are those who must attempt to make enough money with their increasingly useless degrees to cover their increasingly breathtaking debt

    msteven :
    And big business is going along by requiring college degrees for just about any job. It’s a scam regardless of the ideology of the institution.

    You guys can thank our Courts for making a college degree necessary to get almost any minimum-wage job these days … from a barista at Starbucks® to folding shirts at The Gap® =►

  • D. S. Crockett

    To point, some hospitals in RI are now requiring bachelor degrees in nursing they say for accreditation purposes. An RN along with a BS in sociology need not apply.

    • ShannonEntropy

      Not really a good example of my point, Davy

      For at least the last 20 yrs virtually every hospital in the country has required its nurses to have a BSN — bachelor of science in nursing — degree

      LPNs — licensed practical nurses, the equivalent of a nursing associate’s degree — are a dying breed and mainly employed in ‘SNFs’ [[ Skilled Nursing Facilities, the 21st Century term for “nursing homes” ]]]

      • D. S. Crockett

        Shannon: Not responding to your point but to the point of the article. RN stands for Registered Nurse in case you didn’t know.

        • ShannonEntropy

          “RN” is an obsolete abbreviation and has been for some years now

          A hospital nurse’s name tag in 2015 will read “Jane Doe, BSN”

          … or “MSN” if she or he — a substantial proportion of nurses these days are men — if they have a master’s degree in nursing

          • D. S. Crockett

            So far, RI awards the designation RN to those who graduate from a nursing program and who pass the state boards to earn such a designation. Thus, fully licensed as a nurse per state law. BSN is being pushed by the education elites which is why I made this comment to begin with. See the counter to the BSN argument as follows:

          • ShannonEntropy

            “Credential inflation” — which is the point underlying both of our comments — is one of the reasons tuition can go up faster than inflation … fueled also by student debt facilitated by making student loans easier to get — Justin’s point

            I was on the faculty of Brown for 24 yrs and altho I dealt mostly with grad or post-doc students, occasionally an undergrad or their parent would note this increasing trend for menial low-paying jobs to require a bachelor’s degree and ask WTF ??

            No way was I about to tell them it was our Liberal courts’ fault — see my post supra — so I would tell them, also truthfully, that a college degree tells the employer that you can show up when required; read and write at least at a jr high school level; and complete assigned tasks

            Those are valuable skills no matter what job is being filled … but believe me, your new boss doesn’t give a rat’s patootie about your knowledge of art history

          • Warrington Faust

            I have posted before that, about 20 years ago, the Comm. of Education in MA made a speech in which he noted “When we decided everyone should graduate from high school, we implicitly agreed to lower the standards”. I think businesses have caught on.
            I accompanied my daughter when she interviewed at Brown. I was the only parent in a suit and tie. Having down time we toured some new construction which was still “iron”. My daughter was impressed when the then President of Brown rushed out to greet me and then invited us into his office. Turned out, because I was wearing a suit, he thought I was the contractor he was expecting.

            She declined Brown because of a welcoming speech that began with “We know why you are here. We are halfway between Harvard and Yale”.

          • ShannonEntropy

            I used to tell Brown students about my fictional “half-brother”, Professor Emeritus Dahmer Cappallini, who holds the Josiah S Carberry chair in Linguistics, Semiotics, and Psychoceramics — the latter being the study of cracked pots

            His survey course — Semiotics 101 — has no syllabus, no required reading, no papers due, and no exams. And everyone gets an ‘A’ cuz as he puts it … “ALL Brown students are exceptional so they *deserve* an ‘A’ ”

            At least a half-dozen times a student would come to me later complaing they couldn’t find that course in the course catalog; and the good professor had no entry on

            And you say kids aren’t that bright these days ??

          • Mike678

            Bright but gullible. Which is why they often “drink the Kool-aid” and don’t bother thinking.

          • msteven

            How sad – and I with kids looking at colleges. It is true in some cases – you get what you pay for. Which in this case is a high GPA from’ an elite/prestigious’ university’.

          • ShannonEntropy

            ‘Semiotics 101′ may be a fictious course; but I got my inspiration for all the ‘NOs’ in the course description cuz Brown has NO CURRICULUM

            … a legacy of current Rhode General treasurer Seth Magaziner’s dad & top Clinton adviser Ira Magaziner ’69

            Because of this “advance” in higher education, a Brown student can actually ‘design’ a major like semiotics … and get a degree in it taking nothing for four years but courses from the School’s Dept of Modern Culture & Media

            … which, unlike the Dept of Psychoceramics, is very painfully real

            Get a load of the courses they offer =►


            (( My fave is MCM1201Z “On Being Bored” which advises how “interested students” should register ))

            Parents: Your Quarter-millon-bucks-in-tuition At Work !!

          • msteven

            Thanks for the info – the lesson to me is that if is you work really hard in high school, get good grades, test scores, blah blah then that is your reward for college. And you get better jobs with higher pay because you went to Brown. Sad. Reality.