Registered Member #2392 Joined: Wed Feb 09 2011, 07:23PM : Posts: 1920
If the government gets out of the college loan business, rates and in turn, costs of a college education would drop -- and fast. Why? Competition. With the government controlling student loans, inflation is a given as are rate increases. And where is it written that a college education is a right? Or needed by many people.
And if you really want to motivate graduates to enter the work force, they should arrange their own loans and pay them off by themselves. Watch all those degrees in oddball majors dry up and blow away. The marketplace will quickly determine them to be worthless even with a 4.4+ GPA. (grade inflation is yet another topic)
Time for mom and day to hit the beach and let their kids learn to fly.
Registered Member #2392 Joined: Wed Feb 09 2011, 07:23PM : Posts: 1920
Why They Seem to Rise Together: Federal Aid and College Tuition
It's called "the Bennett Hypothesis," and it explains--or tries to explain--why the cost of college lies so tantalizingly out of reach for so many. In 1987, then Secretary of Education William J. Bennett launched a quarter century of debate by saying, in effect, "Federal aid doesn't help; colleges and universities just cream off the extra money by raising tuition." Now Andrew Gillen, research director of CCAP--the Center for College Affordability and Productivity--has tweaked the data and produced a sophisticated "2.0" version of the hypothesis. It's filled with heavy math, game theory and terms like "inelastic fairly vertical curves." You probably won't read it. We know. But it's important. So here are some smart people who have read it, and have something to say: Peter Wood, Hans Bader, Richard Vedder, George Leef and Herbert London.
Andrew Gillen masterfully demonstrates that Bill Bennett is right--federal financial aid programs lead to higher tuition. The implications of this and related financial aid effects are profound:
1. The intended income transfers from taxpayers (and, increasingly bondholders) to students have been largely diverted to college coffers; swelling payrolls and leading to armies of new university bureaucrats, million-dollar college presidents, an academic arms race and other pathologies;
2. This, in turn, has thwarted university productivity growth and helps explain why higher education is vastly more expensive than in most other major developed countries;
3. The goal of helping low-income students has not been met, and a lower percent of recent college graduates come from less affluent students than was true in 1970 when Pell Grants did not exist;
4. To the extent that these aid programs have increased enrollments (read Gillen), they have added to the growing disconnect between labor-market realities and student job expectations, creating armies of college graduates who are bartenders, taxi drivers, etc.
5. Enrollment increases, in turn, have contributed to a dumbing down of higher education and to declining standards.
What to do? The federal government needs to wind down its financial aid commitment. Restrict eligibility for aid to truly low-income students. Impose performance criteria for aid recipients: mediocre students will lose aid. Make the college absorb some of the risk for loan defaults--a lesson we should have learned from the financial crisis. Give Pell Grants as vouchers directly to students, not schools. Reinstate private lending options. Unveil new human capital contract approaches that reduce debt reliance. Downsize and reinvent federal programs and allow market discipline to operate more. (more)
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Kat- no they just want our money and they aren't really concerned about what happens past that!! :-) Read their story/history- definitely a company based on selfish choices...
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