To the People

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Friday, April 24, 2009

The True(r) Cause of College Tuition Inflation

You're missing the point entirely if you think the rapid increase in college tuition is because schools have hired too many diversity and human resource professionals, or built a lot of buildings. Yes, those things cost money, but they aren't the cause, more like the effect of subsidizing colleges and tuition through direct government funding and the student loan market. More people than ever are going to college, because more people than ever have access to the financing to pay for school -- even as the cost has skyrocketed. Gee, doesn't this all sound familiar?

Who knows when this thing collapses, but it surely seems ready to go at any time. Student loan defaults rates for federally backed loans are rising, and while it's tough to get out of student debt, the fact remains that if you can't pay the lender, you can't pay the lender. The market is distorted. Too many degrees. Artificially high prices for the degrees because of too much cheap, easy money available to buy the degrees. In a lot of cases students will not see the promised return on their investment in their chosen degrees. In a sense (or rather in reality) they are/will be underwater on their student debt. Combine that with general irresponsibility in taking on and using the debt (like the couple who bought a home they couldn't afford with little to no money down) and you've got a problem situation for a lot of people, whether they took out the loans or not. Someone will be paying for this in the future and it probably won't be the irresponsible ones.

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