So, last February the pinhead-in-Chief proposed a student loan forgiveness scheme. And, in response, I wrote yet another piece as to why giving away money to random children is bad for the children, the colleges, and the general populace ….. I’ll excerpt from it in a minute.
Today, we see this …..
Increasing federal student aid leads colleges to raise tuitions, offsetting the benefit to students, according to new research published by economists with the Federal Reserve Bank of New York.
The new analysis finds that the majority of an increase in subsidized student loans or grants translates to higher tuitions, and that at least in the short run, added loans do not boost enrollment.
“[W]hile one would expect a student aid expansion to benefit recipients, the subsidized loan expansion could have been to their detriment, on net, because of the sizable and offsetting tuition effect,” write David Lucca and Karen Shen of the New York Fed and Taylor Nadauld of Brigham Young University.
The study is evidence in favor of the so-called “Bennett Hypothesis,” formulated by Reagan Department of Education Secretary William Bennett, that increases in government student aid allow universities to “blithely” increase tuition without losing students. It is one of the few such data points in the ongoing debate over federal policy and the $1.1 trillion plus in aggregate U.S. student debt that has accumulated as tuitions have soared.
The researchers find specifically that a dollar of added Pell Grants or an added dollar of subsidized direct loans translate to 55 cents and 65 cents in higher tuition, respectively. ….
… Not only did tuitions rise when Congress increased aid availability, but for-profit colleges saw their stocks jump, the researchers found. ….
…. A 2012 paper by George Washington University economist Stephanie Riegg Cellini and Harvard economist Claudia Goldin found that greater student aid mostly translated to tuition hikes at for-profit schools. A 2013 National Bureau of Economic Research working paper by four economists found that added federal student aid could cause some schools to reduce institutional aid.
I don’t understand why there has to be academic research to find what people already intuitively know, or should know, if they had even a decent High School education.
While I haven’t read the study yet, so I don’t know if these things were addressed, but, I would suppose that the rest (a dollar of added Pell Grants or an added dollar of subsidized direct loans translate to 55 cents and 65 cents in higher tuition, respectively) …. that leaves 45 cents and 35 cents from the dollar, respectively …. the rest was split between the rise in book costs, rents, dorm charges, etc …..
To reassert, any increase in student aid doesn’t go to the student, it goes directly to the colleges and the staff. All done on the backs of the US taxpayer.
But, there’s more to it than just this, which is horrible enough. In February, I wrote this …
… Essentially, the colleges have access to the full faith and credit of the US. Colleges, through student grants and loans have access to unlimited capital provided by the US government. All they have to do in order to gain more capital is to raise their costs. ——- what’s going to happen, do you imagine?
So, the Fed researchers are catching on, finally! Nice to know the Fed will eventually study basic economics.
But, as I said, there’s more to the story, here. I wrote this back then and I believe it bears repeating ….
But, even this, doesn’t fully describe the problems we have here. But, it is, in great part, the cause of a greater problem —- that is, the education of people who have no mental capacity to advantage themselves towards the education they’re supposed to have gained.
Because we’ve given the universities and colleges unlimited access to our money, they’ve lowered their standards to accepting …. well, everyone. Your grades in high school are of no relevance as to whether or not you’re accepted towards advanced education. Sure, there are some colleges who would not accept people with very poor grades, but, for every one that doesn’t , there are many more who do. You’re aptitude tests make no difference, either. That is to say, the ACT and/or the SAT scores have no bearing on your PELL grant, or, your student loan, and, I’ve known several people who enrolled in college and never took the silly tests.
In other words, the colleges will take you as long has you have the means (money) to pay for their courses. And, you have the money to pay for the courses, all you have to do is take out a loan ….. backed by the federal government. Imbecile, or a genius, it doesn’t matter, Uncle Sam has your back …… well, towards being debt ridden and possessing a useless education, anyway. But, now, forget about the debt!!!!! The taxpayers got it!!!!
Oh, yeh, as an added benefit, we convince imbeciles they’re worth a lot more than what they really are, and cause some businesses to advocate open borders so we can have illegals doing jobs while our precious imbecilic Johnnys and Janes are borrowing money, that us tax payers will pay back, so they can go to college, to learn about basket weaving, all the while, still being unable to grasp the words of the term paper they hired to get written so they could graduate …….
As stated, I can’t take full credit for the notion that increasing student aid doesn’t do anything but increase the cost of higher education. William Bennett was the first to fully articulate the notion to the press, but, there were millions of other Americans, even back then, who fully understood this notion, just like most Suyts readers knew it without me having to tell them.
But, it is nice to see validation.
Now, if we could just get them to think through to the next step, and understand not only are we not helping the students, but, we’re harming them, this nation, and the quality of higher education itself.
This is why we have all of the absolutely useless courses of study, today. It’s free money for everyone!!! Why do the hard stuff to compete and offer a genuine education when we can offer basket weaving? Oh, sure, colleges still offer the hard classes so people can get real degrees, but, that’s not where the money is at. Those are for the minority of people.
Where is your focus going to be? People of average intelligence outnumber the people of higher intelligence 2-1. Where’s the money? You double your money by focusing on the average rather than the exceptional …..
That is what our student aid is doing for America.
Don’t get me wrong. I believe there should be aid available for the exceptional children of modest means, though, perhaps, the aid could come in a different manner than what it does today. But, there’s absolutely no justification for granting, or even worse, loaning a person with an IQ of <100 towards an advanced education. We know it will come to no fruition, and only impoverish either the child, or the taxpayer.