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Saturday, November 05, 2011

Is it the cost? or the value?

Some people are complaining about the high cost of public higher education. In truth the cost of higher education has risen quicker then the cost of healthcare. While some people may want to blame that on the state for possibly not paying in as much as they have in years past (the state pay about 40% of the cost not including what higher ed gets from lottery scholarships) but if you look at the picture from a distance you will see that the overall cost should not rise that fast no matter what the state does even if we put in 0% there is no state caused reason the cost should increase over the rate of inflation.

We are looking at the wrong side of the equation.

I think the big question is value. People are leaving college with huge debt. They are entering a job market that is not valuing that degree to the point that they can pay off their debt at a rate that the workers find reasonable.

It is pretty clear they knew the cost going in. They signed the loan papers. No one held a gun to their head. What they wanted was a payoff for their investment. Like the stock market, if you buy a stock that does not pay off in the end who do you blame? The bank who lent you the money to buy the stock? The market or the company that under performs?

1 comment:

  1. Or put another way, it now costs more to attend TN colleges WITH the lottery money than it did before the lottery began. I graduated 19 years ago. The same (TN state) school tuition is over 100% higher now. The starting salaries sure aren't. No question there is less value.

    Federal government interference on the student loan side is going to kill them (which is us, the taxpayer). When I don't have to pay more than 10% of my gross income and no longer than 10 years (plus other exceptions), who cares what the debt load is? It is Fannie Mae for college - and will have the same results.


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