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Money for nothing



This story in the Economist does a good job of capturing the broad outlines of a crisis that’s been building in higher education for a generation now: that is, ever since colleges and universities realized they could expand their financial operations via tuition paid by federally-guaranteed loans, that could be issued with little or no consideration given to whether those who took out the loans would be able to pay them back.

The government employs all sorts of accounting strategies to keep the real default rate on student loans looking lower than it actually is, including generous deferment options, very long delinquency periods before loans are declared in default, and Income-Based Repayment, which for most people who employ it is likely to result in default in all but name. Even so, with the current putative delinquency rate already over 10%, and sure to climb much higher as various deferment options stretching back to 2008 expire, this trillion-dollar mountain of debt is becoming a front-burner political issue (the Occupy Wall Street protests are surely playing a role in the issue’s sudden prominence).

Last week the Obama administration announced it was moving up various changes in IBR previously slated to take effect in 2014 to next year (the most significant is that the period of government-financed peonage will be reduced from 25 to 20 years). And Ron Paul is highlighting the extent to which funding higher education through student loans ensures massive inefficiencies in the market for that service.

Now obviously it goes without saying that Ron Paul is crazy. (Interestingly, people who do any serious questioning of a status quo from which the economic elites benefit always turn out to be “crazy.”). But consider the effect that limiting federal educational loans to a maximum of say $10,000 per year for tuition would have on, to pick an example at random, law school tuition. Is it possible to provide a “quality” legal education for $10,000 per year?

Given that 30 years ago many private law schools were charging no more than this in 2011 dollars doing so at present would not seem to require any innovations on par with the invention of the microprocessor or the 99-cent gordita. Indeed, given the staggering advances in information technology over the last 30 years, it ought to be far cheaper to provide the same quality of legal education that was being provided for $10,000 in 1981 for much less, or to provide a higher quality of education for the same price law degrees were being sold at the dawn of the Age of Reagan.

Anyway, if public money for tuition were limited to $10,000 per year, does anyone seriously doubt that dozens and dozens of law schools would soon discover that it was possible to operate with precisely that annual tuition? Instead, these schools are charging four and five times that, for the simple reason that they’re being allowed to, courtesy of the U.S. taxpayer. (Another outcome of this change is that USNWR would suddenly discover that it doesn’t make sense to reward law schools for achieving the maximum possible financial inefficiency, which they do now by using expenditure per student as a proxy for quality).

Indeed, it would make far more sense, in terms of both financial efficiency and economic justice, to simply give law students $10,000 per year of government money to spend on their education, than it does to allow them to borrow $70,000 per year, as many now do, in high interest non-dischargeable government loans.

Again, law school costs as much as it does only because of a system of debt financing that allows those costs to be decoupled almost completely from any rational calculation regarding its benefits. It’s true that law students borrow absurd amounts of money to go to law school because law schools publish phony placement and salary statistics that make those borrowing decisions seem far less reckless than they are. But we shouldn’t underestimate the extent to which the government’s remarkable willingness to allow law schools to charge literally whatever they want at the (eventual) expense of the American taxpayer also plays a role in signaling to those students that borrowing $200,000 in high-interest non-dischargeable debt to go to a non-elite law school is not as insane a decision as it would otherwise appear to be.

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  • ajay

    Here’s a question about the educational bubble: who’s benefitting?
    If you have a property bubble then the benefits go to speculative builders, estate agents, and existing property owners. If you have an educational bubble, you’ve got lots of students paying over the odds for education, and the money’s going to… where? Inflated salaries for lecturers? New buildings? Conspicuous consumption (big expensive conferences, etc)?

    • RhZ

      Well, for one, the banks are getting risk-free interest on monies loaned. If the student pays, the bank gets profit. If the student defaults, the government covers the bank’s losses.

      Nice, huh?

      • ajay

        Good point, but what I’m curious to know is: where is this money going? Universities are taking in far more money per student per year now than they were 20 years ago, even allowing for inflation. What are they spending it on? Is Mal right about it going on housing?

        • Bighank53

          Well, if it’s a state school, their state subsidies have been steadily shrinking. Big schools somehow manage to find funding for the football program every year (talk about socializing risk and privatizing profit!) and everyone has a lot more administrators than they did thirty years ago. Everyone–from students to recruiters to professors–likes nice shiny labs filled with shiny computers…which will be obsoleted in two years.

        • Paul Campos

          (1) Fancy amenities, many of them of a purely consumerist type, i.e., recreation buildings that are essentially swank health clubs to attract rich kids.

          (2) Exploding administrative staffs.

          (3) At more competitive schools, salaries for “superstar” professors, or in some cases entire areas (salaries for law professors have doubled for no good reason over the past 30 years).

          • mark f
          • RhZ

            In my decent-sized state school, constant building of new structures and re-configuring of the campus.

            • Anon for This

              Agreed. Every time I revisit my alma mater there are about 10 new buildings. Yet it somehow took them FOUR YEARS to renovate the library, during which time the entire liberal arts collection was stored in a warehouse off campus (you e-mailed them the books you wanted and then went and picked them up). Also, several of our professors, mostly doctors and economists, and of course our President, were among the 20 highest paid employees in the state. And lots of swank amenities for students (interestingly, in Britain I had to pay for the university sports facilities, but had access to a free council-run pool and gym right across the street from my house). And our tuition was among the lowest of all the large state research universities — God only knows what the other place are spending it on.

        • steve

          Ridiculous focus on student-to-professor ratios. (Rankings driven)

          Focus on profs teaching classes and not instructors.

    • Tom Allen

      Inflated salaries for administrators, yeah, pretty much. Have you compared a university president’s salary to a professor’s to a teaching assistant’s? (That is, if your local university pays its teaching assistants with money rather than credits, or tuition deduction, or something.)

      • At my large state university the inflated salaries for administrators come from so-called “Foundation money”. The president, for example, gets a base salary from the university, and money on top of that (and a car and a nice house) from the private alumni supported foundation. This creates some interesting issues about university governance which are neither here nor there for this discussion, but also leaves open the question about where the tuition dough goes.

        • Malaclypse

          Yes, but wouldn’t those alumni donations have gone into a general fund endowment a generation ago?

  • Actually I do not think the government should be making educational loans at all. Higher education should be considered a social good necessary to the country’s infrastructure. As such the cost to students to attend should be free. This used to be very nearly the case in the US on the state level. The massive increase in salaries for administrators, coaches, and other non-faculty have driven up costs.

    • Malaclypse

      I think that is only partly true. When I went to a state school in the 1980s, dorms were cinderblock buildings, with two people sharing a 12X12 room that had no amenities beyond heat and electricity. Now, dorms are luxury housing. That cost a lot to build.

      That, and on the revenue side, we gutted direct state aid in favor of loan guarantees. I think the state of PA paid something like 75% of my costs, and I paid full tuition (a whopping $3,600 a year).

      • c u n d gulag

        I went to a private college, graduating in 1981 after 5 years, and because I got a NY State Regent’s Scholarship, which the school matched, I walked out of there with only a few grand in debt.

        That was just about the time, the Reagan De-Evolution was just starting, that the price of college started to skyrocket.
        Only a couple of years after I graduated, the cost of a state college was more expensive per credit hour than my private one when I left.
        And of course that went through the roof as well.
        Over the decades, my private college, which had been for mostly lower to lower-middle class families when I was there, has now risen in cost to almost Ivy League level. Ridiculous!

        My cousin got his Law Degree from Seton Hall about 6-7 years ago, and he probably paid more for books over the course of getting his degrees, than I did for all of college.
        Luckily, he found a job as a patent attorney that he likes and pays ok, but nowhere near what his corporate lawyer buddies are making – at least those that still have jobs.

        When my generation walked away from graduation, our debt was minimal enough so that we could take non-traditional career choices, or pursue things we loved like acting, writing, or being musicians, artists, etc.

        Not today’s graduates.

        They have to keep their noses to the grindstone for decades.

        That’s if their noses can even find a job!

    • Ohio Mom

      Before the mid-1970s, the City University system in New York *was* free to those who passed the entrance exam. My older cousin, who commuted from her parents’ apartment, was an English major who jokes she never even had to buy a textbook: if the class was reading, say, Moby Dick, she’d just take it out of the public library.

      Just about everyone in my parents’ generation, that I knew growing up, was a child of immigrants propelled into the professional middle-class by the City colleges.

      Here in my adopted city, Cincinnati, the university was also started as a city school and was also free once upon a time. Now, like New York City’s colleges, it is part of the state system and has ever-increasing tuition and fees.

      • c u n d gulag

        Yeah, my Uncle got a 2 year degree from City College, and is now comfortably retired.

        It’s a shame, because if folks knew how many people of quality graduated from CCNY in its heyday – writers, poets, artists, musicians, thinkers, philosophers, politicians, engineers, mathematicians, chemists, doctors, etc., they might want to go back to that system.

        But, those days are long gone, I’m afraid.

  • N.C.

    I would think that tuition wouldn’t decrease, or if it did, it’d decrease only slightly; schools would instead direct students to private lenders.

    • Paul Campos

      No private lender is going to loan somebody $200,000 in unsecured debt to go to all but a handful of law schools if that debt isn’t guaranteed against default by the government.

      • superking

        But there are people whose parents can afford to pay for them to go to law school regardless of the amount that it costs. You might eventually see a reduction in tuition costs, but it is likely that law school would become effectively restricted to the wealthy for a few years.

        I think a lot of people would choose to not go to law school, and that is probably a good thing. But if someone wants to be a lawyer, has the ability to get into an elite school, and is excluded because they don’t have any cash, that is a problem from my perspective.

        On the flip side, if the government starts limiting its loans to $10,000 in tuition and the schools actually reduce their tuition, you would theoreticlly see a boom in law school applications since it would be cheaper to escape the debt.

        I really do wonder what the mechanism is by which law school would become cheaper given that there has to be some stickiness to its price. Law prof salaries are inflated, and I would assume that other salaries and administrative costs are also inflated. How do we bring those down quickly so that the schools can function on reduced revenues?

        If we set that aside, though, the issue for lawyers is that practicing law is generally not as remunerative as it is made out to be, and there is consequently a disconnect between the upfront costs that students must finance and the benefits they receive on the back-end through increased salaries. For the 15% or so that get big law jobs, they can pay off their loans rather quickly, but everyone else gets stuck with their loans for a long time. How do we recalibrate costs appropriately?

        • L2P

          That group of people is really small.

          Remember that law school is AFTER undergrad. I went to UCLA. More than half my class came from Ivy schools or similar private colleges. Nowadays, that’s a 6 figure debt load. So those parents have ALREADY posted a 6-figure debt load for undergrad, and now are posting another 6-figure debt load for law school? Do you think there’s 20,000 families a year that can shoulder that, AND qualify for the loans, AND are going to see it as a good investment? I don’t see it.

          If you’re talking about second-tier schools, where more of the students will come from state schools with less debt, how many parents are going to get a third mortgage to send their kid to Pepperdine? They are going to look very carefully at this. Their retirements are on the line.

          Without unlimited student loans, I don’t think law schools stay in business.

          • superking

            As it happens, I know people whose parents are currently paying for their law school education and are not taking on loans. That’s what made me think of it. There are certainly outliers, but there are still areas of the country where it is relatively cheap to get a decent legal education. I’m originally from Missouri, and although I didn’t go to Mizzou for law school, we can use it as an example. In state tuition if about $16,000 per year according to US News. Out of state is $32,000. So, the number of people that would apply to is certainly small, but not zero.

            I do wonder though a) what process actually brings down tuition for law schools, and b) how quickly does that happen?

            • RhZ

              Yeah, you hit most of the difficult issues in the post above. How does that actually happen?

              The number of wealthy people you are talking about is too small to serve all the nation’s law schools. So therefore there is either size contraction or school contraction.

              Another issue is that the ABA can’t completely restrict the number of law schools because of anti-monopoly laws. Although perhaps the ABA is to blame for the expansion in the number of accredited schools nationwide, another area where incentives may run the wrong way.

              And you can basically double that 16,000 per year when you factor in cost of living for at least 2 of the 3 years in determining total debt.

    • RhZ

      Hmm, I don’t know if that would work so well, without the government there to back up the private lenders…

  • Anon for This

    I’ve been closely following this whole “law school scam” debate for a while now, but I’m still a little perplexed about why the focus is SOLELY on law school. I realize that law schools are somewhat more expensive than other forms of post-graduate education, and that many people get into them with the expectation of a very high salary. But I know plenty of people who are paying $40,000 a year or more in tuition for social science masters degrees with which, even if they are lucky and get a job in their field, they are unlikely to ever make much more than big-city schoolteachers. I myself have some $80,000 in debt, and I had a scholarship for undergrad and did my master’s cheaply overseas at 1/4 the price of a comparable program back home. Even if I do get a job in my field soon it seems unlikely at this point that I’ll ever fully pay off those loans (a large chunk of which are private loans cosigned by my parents when I was 17, which are even more pernicious than the federal ones).

    Interestingly, I’m currently temping in the office of a high-level administrator at a fairly expensive state university, and the way they spend money is like nothing I’ve ever seen in a normal business — thousands of dollars a month on fancy stationery, color printing, gifts for VIPs, galas, conferences. Every day we get leftovers from a lunch which has been catered for some meeting or other. It does appear that most of this spending actually results in more funding, in the form of donations, but it still seems like a ridiculously inefficient way to finance and educational enterprise.

    Meanwhile, my girlfriend studies virtually for free at a Paris university which doesn’t have enough chairs, can barely get students registered for classes, and where the windows don’t close, but which has also been home to numerous world-renowned scholars. My own post-grad education in Britain was somewhere in between — far cheaper than any American university, even at the overseas rate (3x what EU nationals pay, which all of my friends already considered too expensive) with decent facilities and perks like funding for field research, free coffee, and regular parties (with booze!). This can, in turn, be compared to a friend of mine in a similar field who hands over $40k/yr in government-backed loans to a highly-ranked D.C. university which not only doesn’t finance or even require field research, but has the gall to charge him 9c for copies!

    So yes, it seems it’s absolutely possible to deliver a good education for FAR less than what we’re spending now. I doubt Americans would go for the French model of free education with massive dropout rates in rundown, overcrowded facilities, but once again — as in so many other areas, from healthcare to public transit — it seems we’ve managed to design our government spending in the most boneheaded and inefficient way possible, and saddled average people with all the downsides.

    • Paul Campos

      Thanks, this kind of cross-system perspective is very helpful.

      To answer your initial question my focus has been on law schools because that’s the side of the business I know first-hand.

      A particularly galling response I get from legal academics to the criticisms I’m making is that law school really isn’t a much bigger ripoff than a lot of other higher ed rackets. This is apparently their idea of a defense!

      • I think law school is a good starting point for this discussion because the discrepancy between expectation and reality is so stark– and because that gap does not exist in many if not most of the comparable professional fields. Engineers get jobs. Doctors get jobs. The debt that is incurred to attend medical school is a social problem, but examples of people with medical degrees going broke because of debt service are rare. Anybody who goes to B-school without having done the math deserves what they get.

        That’s not how it goes with lawyers. Time was that a law degree was a ticket to a reasonable upper-middle class living, but that train pulled out of the station a long time ago. Unfortunately news of this hasn’t trickled down to the undergraduate population quite yet.

        • Anon for This

          And what about those of us with “non professional” postgraduate degrees? An MA in, say, international affairs from a good school (because, as with law, decent jobs in policy and international development mainly go to those from “name brand” programs) can cost nearly as much as a mid-range law degree.

          For example, one of the big costs here is internships: the main reason I personally have so much debt is that I spent all of my undergraduate years doing unpaid internships or studying abroad, rather than working, and so had to borrow money for living expenses (my tuition was cheap, and mostly paid for). Then, the deferments I took for Peace Corps just put me slightly deeper in debt, and did not even affect my private loans.

          Like many wannabe lawyers, I got into my field to do socially useful work, but with little expectation of large financial rewards. However, it is beginning to look increasingly unlikely that I’ll even be able to eke out a subsistence in the medium, let alone the exceedingly modest middle class existence I was hoping for. And DC is filled with people in my exact situation, deferring our loans, relationships, and futures while waiting on that “dream job” — except our dream jobs pay maybe 40 grand a year! I mean, look at how hard it is to get into the Foreign Service, where after a grueling 1-3 year application/clearance process and some time on a waiting list you MIGHT be offered $45k job reviewing visa applications in Chad.

          Should we also be telling undergraduates that social work, think tanks, policy analysis, government service, and foreign aid are now fields reserved only for those of independent means? And which is worse, the law student who expects to be rich and finds out he is in for a life of debt and struggle, or the person who EXPECTS a life of debt and struggle and finds out he is in for… I don’t even know what?

          In short, maybe you should stick to Paul’s answer: you focus on law school because that’s what you know. The problem is endemic to all of higher education, and this post is a step in the right direction of acknowledging that fact.

          • Anon for This

            (Sorry, I didn’t really want to make this about my story, but you have to understand it does rankle a little bit when I constantly read about how screwed over law school students are because they “expected to get rich.” I expected to be POOR and am still somehow getting screwed over!)

            • Paul Campos

              Keep in mind that there are a lot of law grads in a situation similar to your own: People who went to law school with no intention of doing anything but some kind of public interest job that would pay a modest salary, but that would allow them to do something they had a passion for, and which in theory would be paid for either by scholarships or by law school repayment programs.

              It turned out that, with changes in the market for government-subsidized legal services, these kinds of public interest jobs became even harder to get than the highest paying big firm jobs. To make things worse, a lot of these students lost their scholarships because of deceptive practices on the part of the schools that granted them initially, while those students who were banking on LRAP programs to help cover their debt discovered they couldn’t get the kinds of jobs that would make them eligible for those programs.

          • Fair enough– I don’t know how it goes for a degree like yours. Would it be fair to say that you had a pretty clear sense of how competitive the field was before you went into it? I really have no sense of it, but I do know that there are a set of beliefs and assumptions (which are mostly very unrealistic) about the career paths for law grads.

            I think that’s the point. At some point your undergraduate adviser probably told you that an international affairs MA was a longshot. Undergrad advisers don’t tell students the same thing when they say they want to go to law school because the number of students that go to law school every year is frequently a departmental selling point.

    • Curmudgeon

      American public spending programs are very efficient. It’s just that they’re designed to funnel money to the already wealthy and any provision of services to the officially intended beneficiaries is purely a side effect.

  • wiley

    My surrogate daughter just came of age, got her first job, and soon will be looking for her first apartment with her BFF and write some. When she was five I taught her how to write a grocery list, and how to use a checklist. When she was six, I taught her how to read out loud to adults, and to make a checklist. When she was seven, I taught her how to use an unabridged dictionary, how to follow instructions, and how to write instructions. Her school tried to put her in a gifted program, but that was bullshit. She wasn’t any more gifted than the next child, she just had a good tutor.

    She hasn’t graduated high school because her grandparents didn’t learn how to deal with her, so she failed classes, skipped school, and didn’t bother doing her homework just to piss them off. No one can say her campaign was not a success. She hasn’t graduated yet, though her LSAT (is that the acronym for the test one takes before the official SAT?) was through the roof.

    When she was a young child, I assumed we were grooming her for college, but now we’re telling her not to waste her time. She could probably get her GED in half an hour. I’m going to recommend that she take classes at a community college if she’s move to do so, or take informal classes in something that interests her, or teach herself a skill, craft, or art and work toward mastery.

    It would be stupid for her to even attempt to go to college right now. She needs to learn some life skills like how to handle money, how to run a household, how to network, how to negotiate, how to get along with others, how to live with others, how to make a budget, how to make wise purchases, how to take care of her body as if she were as mortal as she truly is, how to balance work and play, how to improve her linguistic skills, how to make a buck go a long way, how to evaluate the value and worth of objects, how to make long and short term plans, how to present herself to prospective employers and customers, how to dress appropriately, how to budget her time, how to maintain appropriate boundaries, how to prevent pregnancy and STDs…etc.

    Just before I dropped out of college for the last time, I listened to two young students who were getting a horticulture degree with a focus on golf courses discussing job hunting approaches and prospects. One was saying to the other that he should not be worrying about trying to express what he can do for a company, he should be asking the company what they can do for him. I feel better about the prospects of a young woman who is going to have to take the GED if she wants a high school diploma; than I do about the prospects of someone with a bachelor’s degree, an overweening feeling of entitlement, and “self-esteem” that amounts to having unconditional positive regard for oneself and expecting that same regard from others.

    • RhZ

      Yeah, sounds like she needs to go through some mind-numbing boredom at work to teach her to keep her focus…but I thought that was what college was supposed to be for…

      LSAT, by the way, is the law school entrance exam. I am not sure what acronym the pre-SAT is called.

      • mark f


        • RhZ

          They decided to get trixsie with that one, did they?

      • Hogan

        College is for teaching you how to deal with faceless indifferent bureaucracies to get the necessities of life, like housing and regular food and required courses. Then you’re ready to work at a big corporation, use (and be used by) your health insurance, pay taxes and parking tickets, get a mortgage and a divorce, etc. Welcome to the middle class. Sign here, here, here, and initial here.

    • Murc

      I’m going to recommend that she take classes at a community college if she’s move to do so

      If you don’t qualify for scholarships and suchly, or don’t have very well-heeled parents, you are really dumb to do anything BUT this.

      Go to a community college. During your intro courses you’ll be surrounded by… well. It won’t be pretty. Get an associates degree and pay maybe six grand for it. Max out your number of transferable credits are something like a hundred and fifty bucks a credit hour.

      Then transfer to a four-year. While everyone else is paying seven hundred bucks a credit hour for their electives, you’ll take your core courses, grab your bachelors, and get the fuck out.

      • BonnyAnne

        I stand 100% behind the advice, Murc, but I feel I should argue against the idea that what students are surrounded by in intro classes at the local CC is “not pretty.”

        I took all my pre-nursing and RN courses at a community college. In every single pre-req (including ones that had nothing to do specifically with nursing school, like statistics, English, math, and global studies) I was surrounded by sharp, clever, and hard-working people, generally holding own a part/full time job and raising a family. There were slackers and morons, yes, but it was a far greater percentage of dedicated students who really wanted to be in school than I ever saw during either of my undergrad degrees. IMHO a much better experience in many ways than getting my bachelor’s at Prestigious StateU.

        Better funding, expanded coursework, and better instructor salaries for community colleges would help tremendously with the issue of expensive university educations.

        • wiley

          No shit. After my initial college experience at the University of Texas, I was really looking forward to finishing up with the Community College classes (required by the V.A. office that was paying for it) so that I could go to OSU. I hated it. It was the most shallow anti-intellectual environment I’ve been in in ages. “Did you read all that?! What? All 17 pages that we had three days to read? I met a few cool young people, but the academics aren’t running the school.

          I’m going to go for an Organic Master’s Gardener Program, and find my own way to do what I want. I don’t need a lot of money,

          I had a few really good profs at OSU, but I had more at CC, and they weren’t pandering to the solipsism of teenagers and their parents.

  • ajay

    if public money for tuition were limited to $10,000 per year, does anyone seriously doubt that dozens and dozens of law schools would soon discover that it was possible to operate with precisely that annual tuition?

    This was very much the case in the UK until pretty recently. The fees (for tuition, at least) were paid by the state, and were fixed at the same low level across every institution: one level for non-lab subjects, another slightly higher for lab subjects, another higher still for medicine. They’re still capped (though no longer paid by the state), but the universities are shrieking to be allowed to raise them at will, and they’ll probably get away with it.

    • guthrie

      From what I’ve read, salary for university management is also much higher than it used to be in the UK. As for where else the money has gone, I don’t know, but I have a suspicion that it has been spent on nicer offices for the managers and more staff for them.

  • ajay

    I should add that a lot of UK universities have been putting up new buildings, but they’ve been doing it to attract the summer conference trade, and have therefore (generally) been making money doing it.

  • Bart Pitts

    Now obviously it goes without saying that Ron Paul is crazy. (Interestingly, people who do any serious questioning of a status quo from which the economic elites benefit always turn out to be “crazy.”

    Don’t downplay Ron Paul’s crazy. It goes well beyond “serious question of the status quo”.

    • ajay

      people who do any serious questioning of a status quo from which the economic elites benefit always turn out to be “crazy.”

      Yeah, and you know who else always turns out to be crazy?

  • Tim

    But if we only charged students market prices for their education, how could we afford to spend tens of millions on unnecessary construction, remodeling, and building replacement every semester?

    How could we afford to have two or three administrators for every educator, each paid five or six times what the educators are paid?

    How could we pay our Chancellors several million dollars a year to schmooze!?

    This is just an unfair suggestion. You would be taking jobs away from people who don’t do much of anything anyway!

  • Dirk Gently

    I do think we’re forgetting how much a lot of this cost was also driven by consumerist mentalities among parents: more expensive schools were thought to be “better” and more esteemed, and therefore there was a race to the top in terms of jacking up tuition rates in order to adhere to that appearance. I remember this distinctly as a graduate of the mid-90’s: first you saw it in second tier private schools, then the state schools followed suit.

    In terms of accounting for market irregularities, I think a hefty dose of at least two things has to happen:

    1. Upper limits on borrowing, as Paul suggests.

    2. Transparency about graduation and placement rates, particularly in graduate school. In fact, this should be REQUIRED by law (dunno how you necessarily go about requiring graduates’ self-reporting, but go with me here). If parents and students are treating higher education as a commodity, they should have a much better idea of its value. VALUE is a key missing component here, and if millions of middle class families follow the route of trade schools and community colleges, perhaps those market pressures will force universities to start slashing prices.

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