Could someone explain to me why the cost of tuition for Colleges are so high? I can’t find any good articles on it. Peter Schiff has a good video on how Government programs make tuition more expensive, however some of his points hold no water. Schiff is just not good with rhetoric.
" Ten minutes of anecdotes presented with an obvious agenda. The price of college education during the time of the industrial era is irrelevant, since educations weren’t quite as much in demand. Furthermore, he’s focusing on Yale, as if anything but Ivy League is useless.
What has changed, he asks? Then he lists a bunch of factors (like department of education and student loans) and totally skips out the most obvious factor, demand. Demand drives priecs up and demand today is massively higher than it was back then.
Then there’s the logical fallacy of “it should be cheaper to educate today”, which to some extent it is except computers and high tech tools of particular branches obviously serve to drive up costs. He mentions economies of scale, but the only source of data he’s mentioned is Yale, which is a luxury product anyway.
All in all, he’s not presenting a very solid case."
A college education is a limited resource like any other. If you arbitrarily throw more money in that market (i.e. via government backed student loans), prices will most likely increase, and the market will be distorted. The demand (in dollars, not desire) has been increasing more than the supply in education provided by colleges and professors.
I’d venture a guess that the vast majority of institutions are state-funded in the first place. Whenever the government gets its hands in an industry, eventually it drives out all private competition.
Tuition costs are high for the same reason housing prices rose over the past decade. Cheap credit artificially drove up the demand for school. As you probably have noticed college graduates are a dime a dozen now. Literally anyone can get a school loan.
Unlike real-estate however education is not represented by any type of tangible good. It’s prices will continue to rise so long as credit is made cheap and available to the masses.
Fundamentally speaking however the cost of education is directly tied to the cost of credit.
Now lets take this a step further. In other industries we had mal-investment and mis allocation of resources. Could the same be said for education? How many degree’s are handed out that actually teach students how to produce something. How many engineer’s do we produce in this country anymore? According to the job market engineers are in massive shortage, so much that major firms across the country are having to look across seas and literally pay for foreigners to come to work here. It used to be that firms outsourced their labor across seas, now the shortage of expertise is so bad that they are paying for their immigration to the States, visa’s and all.