Guest Post: How Do We Break The Cycle Of Higher Tuition And More Debt?

Tyler Durden's picture

As we have discussed in detail (here, here, and most recently here), many college students face repaying a mountain of debt upon graduating, and many college graduates end up working jobs that don't require a degree. Even worse, 40 percent of college students drop out without earning a degree, but that does not free them from the debt they have accumulated. In this brief clip, Professor Daniel Lin argues - rightly - that government subsidies are to blame for the continually rising costs of higher education. Although such subsidies are supposed to help defray college costs, they are making the situation worse. A policy that worsens the problem it is supposed to fix should be eliminated - even if it is the government's only credit inflating tool left.


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InTheLandOfTheBlind's picture

who could down vote such a good parent?

graneros's picture

The kid who turned down his folks offer to pay his way through trade school in favor of a huge Gov't loan for a degree in discovering your inner self or some such rot.  He down arrowed from his sofa in said parents basement.

shovelhead's picture


I like to hear the response of a plumber who has humped tons of cast iron pipe and scrimped and saved so his kid can tell him he's too good for that kind of menial labor.


Edmon Plume's picture

Without the stupid general requirements, college would be a trade school.  If you're smart enough to be an engineer or doctor or physicist, you're smart enough to not have to waste your time taking useless english and sociology and womyn studies coursework.

On a trade note, there are some great gunsmithing trade schools.  Talk about lots of upside.

MachoMan's picture

The "lawyers" have quite a few pending lawsuits against their respective law schools for fraud, among other things...

oldschool's picture

Unsurprisingly, that got a lot of publicity -- a lot more than the dismissal of all those suits.

Dr. Engali's picture

Yeah but what about the bankers? If we don't have a generation of debt slaves the poor bankers will starve. We don't want that now do we?

A Lunatic's picture

Touch a hot stove you get burned. Take out a bunch of non productive debt, you get burned, it's that simple.

Rainman's picture

The need to physically pick your ass up and go to a physical school site for booklarnin' will be laughed at within 3 decades. The tuition scam will cause it, along with outrageous pay and perks for faculty and administrators. And let's not get started on the even bigger scam.....the public union controlled K-12 skools.

Iam Rich's picture

The title suggests a solution is offered.  There is no "real" proposed solution here, just a statement of the problem.  I'd like to know if it should cost $60,000 (tuition only) for your son/daughter to get an engineering degree from a state university.  If you have three, that's $180,000 but probably much closer to a quarter million all in (tuition/books/fees) and that's living the wild life at the homestead.  May be justified as an engineer or other well paid technical degree.  Otherwise....

Greshams Law's picture

It should not cost $60K for an engineering degree. Doing a bit of research and having a plan solves that problem. My two boys are finishing their first two years at community college, getting their Associates in Engineering, and will transfer to a state university this fall. Cost of first two years: $4K each. The second two years will certainly cost more, but will not exceed $30K each (probably less). Our goal is to maintain the family tradition of getting a job that annually pays three times the cost of a four year degree. My dad did it, I did it, and I expect my sons to do it. I'm making them take some Petroleum Engineering courses even though that's not either's major.

Furthermore, community college is much better for fundamental higher education. Economics, Calculus, Physics, and Chemistry classes are smaller and taught by the actual professor.

I always hear about the "critical thinking" skills gained from a Liberal Arts education, but they can't seem to understand this point.

Iam Rich's picture

I have been looking at the local community college pre-engineering program.  I see it very well done with class structure and layout very similar to what I went through as a fresh/soph many years ago.  Further, the CC classes are taught 1 prof per 30 students including labs (chem/physics).  My only concern is transferrability to the 4-yr state college program, something I am checking in to.  I do see however that you are in the ballpark of $15k per year for the final two years, consistent with what I am seeing for a traditional 4-yr program.  Thanks for your reply.  This type of discussion is actually useful.

Its_the_economy_stupid's picture

OK, I was going to stay out, but now I'm in.

I just finished doing the math 3 days ago, and here it is. The colleges have figured out the community college gig long ago, get ready to bend over.

Let's say your kid wants to major in any of 3 or 4 different Computrer Science BS degrees. Well amybe the state tiuition is $24K (that's average in my state, maybe yours too for tuition room and board, plus extra for books, computer, whatever). And you've got yourself a little Einstein or at least a kid who can score 2000 on the SAT or higher. So now the state schools name him a "Presidential Scholar" and they knock of 25% to start. Now if you bring down $48K of less for a family of 4, they might even match the $6K with another $6k of financial aid. So far, so good.


Now we look at the math: $12 k x 4 years is $48k left over, plus your interest carry and compound for the unsubsidized student loans.


OK, but hey, we could do 2 years of Com Coll for $3k/ per year, then go to state school for the last 2 right? Wrong, on 2 counts. Here's why: The full year Calculus and full year lab science will probably carry to the 4 yr school, but the anything above that will not fly. The liberal arts credits in English, Soc, Psych will probably go but anything over basic Operating Systems, and Introduction courses in the major will be a no-go (how do I know? I've talked to the department heads at the community colleges local to us here in my state, a state which requires acceptance of transfer credits from any Comm Coll instate to any 4 yr college in state that receives any form of state subsidy, which is practically all 4 yr schools) But, it matters not! So, maybe you can get 35-45 credits in under the transfer. Now we're looking at 2 1/2 years of State U. But remember the Presidential scholarship and financial aid? Well adios to that my friends. You see the that is bait for the 4 yr ride. Transfers students? Good freakin' luck! Oh,yeah, the schools talk about merit scholarships for transfer students, but there ain't much there, way less than 50% of the Presidential award  and forget aout financial aid, so now where are your cost calculations? I can tell you where they are. I did them 3 ways to Sunday. It winds up costing the same as the 4 years full room and board State U ride.

These schools have it figured. You cannot outsmart them. THE ONLY CHEAP RIDE IS A CERTIFICATE PROGRAM AT A COMMUNITY COLLEGE. Forget about the sheepskin.

Now you guys can reply nah, nah, it can't be, but I have just lived it. I have talked to the Physics chairs and the Computer Science chairs at these Community Colleges. They have told me how with personal and direct intervention on behalf of their students its a no-go. A 30 year friend is is a Community College president in another county of my state has confirmed the scam to me by phone.

If you are sleeping at night with this dream under your pillow, I suggest opening a dialogue now with these key players. Or you will wind up worse off than if you bite the 4yr school bullet.

And no, I am no troll. Just a Dad with 2 kids trying to make it happen.

Greshams Law's picture

I'm also a dad trying to do right by my kids as did my parents.

I can only speak from my own experience, but community college can be a great deal. In my state, by law, the state colleges must accept up to 66 hours of CC credit. The CC has an office dedicated to future transfer students. All the soft sciences, English, Calculus (3 semesters), Chemistry, Physics, Foreign Language, and baloney electives can be done at CC.

When I went to college, I could not qualify for a scholarship, even though I was a National Merit Semifinalist and scored in the top 1/2% on the ACT. My parents are too middle class and I'm a white, heterosexual, Christian male. However, my sons were born while I was working overseas and graduated from a foreign high school. They both qualified for scholarships at CC which covers nearly all expenses. The older one did not qualify, but so few students apply for engineering scholarships at this CC that he got it on the second round.

There is also a transfer student engineering scholarship they've applied for when trasnferring to the state university this fall. Fingers crossed.

My point is you are on the right track. Keep on it.

More unasked for advice: I have two Computer Science degrees. Nobody cares. What they do care about are my certifications. I am taking CCNP certification courses at the same CC as my kids for $348 each. The same courses cost over $5K each from a technical trainer. If a young person asked me which is better: 4 years of Comp Sci college or 12 months of certification courses for MCSE, Security+, Network+, and CCNA, I would recommend certification. Add in some Java, C++ programming certs, and they'll make more than a degreed graduate. Once hired by a firm, most will foot the cost for the Bachelors. I paid more for the CISSP exam than I did for the course, offered by the local school district Adult Education program. The deals are there if you look.

Of course, I've never had anyone take this advice.


Its_the_economy_stupid's picture

I'm alert, eyes open and paying attention. The investigation will continue. Thanks.

Edmon Plume's picture

Read on for some tips...

If it helps, investigate bordering states to yours for colleges.  Weirdly, you can sometimes take a degree program at a CC in one state, and then transfer to a bordering state's 4-year program and get IN STATE tuition AND/OR get a guarantee that your credits will transfer.  I've seen this happen even when someone's home state won't accept their transfer credits.  Dumb, but true.  It's the public sector version of private competition driving down prices or adding value.

In my opinion, it's cheaper to move your kid to a state that has these agreements, have them wait a year and become residents, then go to the CC there where they are guaranteed a transfer.  It'll save you buckets of money, esp. if you make them get a job and pay their own expenses the first year.  You could make a deal with them that if they do that and be responsible, you'll make it so they don't have to work their senior year, when the courses are the most demanding.

Watch your back and make sure it's policy, not just an academic advisor making a sale.  BTW, the best place to start is not the advising office, but the department chair - he'll know more about any transfer agreements than anyone, probably.

TheLastMan's picture

Education + Government  = Inflated Prices  (course fees) + Malinvestment (Taj Mahal facilities) 

(As per subsidies, loan guarantees, deficit spending, ex-government officals serving as university presidents)

Medical Care + Government = Inflated Prices (medicine + doctors) + Malinvestment (wasted studies, unnecessary testing)

(As per medicare, medicaid, mandated regional insurance policies, deficit spending)

Military needs + Government = Inflated Prices + Malinvestment (idle tanks in the US desert but more on the production line, scores of unneeded, inoperable nukes)

(As per deficit spending, using the US military as the welcome wagon for the global chamber of commerce) 

 It started in the early 60's and took off following August 15 1971.


NeedleDickTheBugFucker's picture

I'm curious why millions of people and their elected representatives constantly rail against "the greedy oil companies" because of high energy prices, but at the same time give a complete pass to the education complex despite the soaring cost of college.  Anyone who dare protest is immediately labled as "anti-education".  TPTB solution to the exorbitant cost of college?  Let's make sure that students can borrow at low rates so they can borrow even more.  Brilliant!  Why profit from only selling a product or service when you can make additional profits from financing the customer's purchase.

AIER did an analysis of the percent changes in selected price indexes of various goods and services from 1990-2010.  College tuition and fees increased cumulatively by 286.4% over that 20-period or a CAGR of 6.99% vs. 2.79% CAGR in the all-index CPI.  This change was the second highest on the list, only behind tobacco products.

jldpc's picture

Sorry sack of shit. The PROBLEM is middle aged white women (divorced, living alone, working and raising children with no backbone) with no sense of reality about Children having to do hard work - the kind who voted for Obama, and Bill Clinton despite his infidelity), who will always vote for the politicians that promise to take care of them and their children, e.g., my kid must go to college, not some useful training school or apprentice program) DESPITE the fact that he will be unemployable forever. About the infidelity, that was the moment that the cultural change was evident. It is cultural and structural, not an ecomomic or financial problem. Guess what? There is no fix in sight. It takes decades to change such matters - look at Europe.

MeBizarro's picture

The only way to 'fix' what you are advocating is get rid of no-fault divore laws on a federal level and outlaw contraception.  The changes of both happening are ~0%

haskelslocal's picture


Yes. Put more money into the system, prices go up.

Show me an asset class that's not being affected by artificial stimulation.


haskelslocal's picture

You sure Savings Accounts are an asset class?

I wasn't aware that fiat was an asset. At least not one worth investing in.

the not so mighty maximiza's picture

the education industrial complex must be fed young meat, not horse meat ether.

batz's picture



Universities are for creating networks of people with similar values.

Smegley Wanxalot's picture


Do what I did:

1) get every course that transfers done at a Junior College

2) plan your semesters/quarters to cram as many credits in them as possible and get out fast.

3) work your ass off for grades and money to pay it, dont F around while learning,

4) take on minimum debt and skimp like an MF to get it paid right after college.

Had my school loans off my back 8 months after my Masters was complete at great schools.  Less than 3 years spent feeding the universities all the way to the graduate degree. Not that I think the education counts for shit but it gets you in the right doors - after that you have to perform.

Greshams Law's picture

I like the cut of your jib.

This is the map to success I've implemented for my sons. Add to this basic technical certifications in software, networking, management, or security and a young graduate could actually be employable.

Starve the beast, use its meat, and don't stick around to bury it. (No alumni membership for me, thank you very much.)

Smegley Wanxalot's picture

LMAO at alumni memberships.  They keep calling, and I keep telling them I died.

You got it though - take only what's needed and useful, do your best, starve the beast.  Good luck to your kids

L_Conquistador's picture

That's a good plan.   Back in the 80s, some of those big, evil corporations offered tuition reimbursemen.  I took that route, working full time getting job skills and going to school at night.  In fact, I did it twice.  After getting my B.S. (in a valuable field), I went to another company, saw their reimbursement program, and got a masters (in a valuable field).  I was a little older than most who start in my profession, but unlike most of colleagues who started out with 6-figure debt, I started with a 6-figure balance in my 401k.

dhengineer's picture

I got my civil engineering bachelors and masters back in 1982 from a state university in the Midwest for less than $18,000.  My first job paid $12.50 an hour for a yearly salary of about $26k.  That was a tuition/pay ratio of about 70 percent.  Said another way, I earned back my tuition within nine months of starting my job.

The same university now charges over $80k for the same two degrees, while new civil engineering graduates are lucky to get paid $20 or $22 an hour to start, for a yearly salary of, say, $45k.  That's a tuition/pay ratio of 1.77.  New graduates now have to work a year and nine months to earn back their tuition.  And that's for a state school.  The graduates of private engineering schools make about the same starting salary but have to pay two or three times the tuition.

Just another example of tuition increases far outrunning the salaries of workers. 

sunnyside's picture

My engineering bachelors from a state university cost my folks a total of about $25K for 4 years 82-86 (tuition, room board, books, fees, etc...) I have one in school right now that is costing me about 8K per semester total and a second one who starts in the fall.  Number 2 has a lot of scholarships lined up because (humblebrag) she's valedictorian, high scores, etc, so that will help, but a BS right now is costing about $65K unassisted.  Number 1 is majoring in social work to be a marriage councelor, and number two will be in the nursing school.  Both have grad school in their plans.


q99x2's picture

I don't get it. Why would anyone not choose to attend college: get paid, get laid, get creative and enjoy life. Dudes a foreign agent paid to tell the US to dumb down its citizenry.

I've got class to attend to tonight. Art History. You know how those art tarts can be. No? Then maybe you should go back to F'n college.

rwe2late's picture


Half truths and lies.

Daniel Lin et al attempt to misdirect blame and justify an austerity assault on the middle and lower classes.

One writer complains:

From 2000 average tuition has gone up by 72 percent yet real earnings are down by 14 percent … The only reason this continues is that easy government funding allows anyone to take on enormous amounts of debt to pursue a college degree.


Are we to believe government funding of college is to blame for joblessness and the stagnation of wages?

The lowball “official” inflation per the BLS CPI calculator from 2000 to 2012 is 33%.

Even by the lowball BLS measure, half of the tuition increase is just keeping up with inflation.

Nor should we forget the disproportionate private sector excessive ( i.e. default-prone) education debt .


Because we should not conflate that private institution debt with bona fide college education.

Many of the private “institutions” eligible for grants and loans are such private schools for hairdressing, truck driving, and high school GED.

What goes unmentioned is how the government has “invested” in warfare and financial corruption to the detriment of the social and physical infrastructure, and to the US ability to have a viable, sustainable economy and social fabric.

Of course, higher education tuitions are going to rise due to inflation, loss of other public funding (e.g. scholarships for bona fide scholars), and for having to deal with the failures of pre-college education, and a misdirected economy.

EVERYTHING, at all levels, from health to housing, from education to environment, suffers so long as the economy is misdirected to prisons, Prohibition II, wars, and financial graft.



Lucius Cornelius Sulla's picture

Most State schools are horribly bureaucratic and inefficient.  They are run for the unions and by the unions with the Federal government supplying huge sums of "R&D" money, much of which has no positive practical return on investment.  Obama's biggest campaign contributers were the State schools in California where public employees need to be taken to the wood shed and then some.  All I can say about your comment is that you must be either in the business or dependent on it.

Shizzmoney's picture

government subsidies are to blame for the continually rising costs of higher education.

As well as excessive University President salaries, and infastructure builds such as a waterfall for the quad, or a new gym, instead of better classrooms.

Clowns on Acid's picture

Tuition increases of course come from a confluence of variables. One just has to break them down. As with most misallocations (artificial demand) .... the socio-political drivers of the "Community Activist" crowd would appear to be determinant.

  • Fed deficit spending - USD debasement - more foreign students
  • Minority quotas - (heavily Fed Gov't and non minority students). This more recently has been a draw for more foreign (non white) students.
  • China's princelings (illuminaries and lesser lights) funded by US trade deficits with China.
  • Brazilians enjoy USD debasement and minority status.
  • Like the CRM Act, which eventually corrupted the credit system, and eventually led to the McMansion and securitization bubble, Universities have competed with each other for the "best" (see above profiles) students by building Mcmansion equivalent campuses, including apartment dormitories the quality of which the students cannot afford when they graduate,
  • This is a very bad bubble not just from the "credit" sidee of things but also socio-politically.
  • Of course ... it will end badly.....for the US taxpayer.  
tony bonn's picture

"...government subsidies are to blame for the continually rising costs of higher education..."

absolutely correct - subsidized, below market rates engender misallocation of resources - just as centrally planned interest rates below market rates, bundled with outsized lies about its benefits, education attracts a host of people who ought not be in schools - and that is no offense to them....

but education is racket - another conspiracy of the military industrial complex to sell you a gold plated rolls royce when a buick would do....i never tire of telling the story of the ad for a call dispatcher paying 15 usd per hour requiring a college degree.....anyone with a degree earning 15 usd per hour just might be a fucktard - and no offense to anyone's work - god blesses anyone who works  at whatever it point is that a huge malinvestment has occurred when the payback is only so modest and the mapping between school learning and job content is so minimal....

in general, most business jobs - though certainly not all - do not require a 4 year degree....they require a certain amount of intelligence which could be measured by an iq test and the ability to learn (jargon). the bigger point is that every job requires knowledge but just might be obtainable without a degree. yet with racketeering, you have to pay protection to the education mob to get a job.

the german banks used to hire the brightest high school kids and educate them at their inhouse schools for banking careers.....generally speaking, differential equations, physics, and art appreciation are not required to succeed in banking.....have you ever seen the ghastly art in some banks - and this is art selected by people who had "art 101"...what a crock.


SmittyinLA's picture

This is an easy fix

 Eliminate student loan guarantees


americanspirit's picture

One way for young Americans (who are not already bi-lingual) to deal with the cost of US tuition is to learn to read and speak another language fluently - Spanish or Chinese, for example - and then apply to a high-rated university in a country where that is the language - Spain perhaps, or China, or Taiwan, or Chile, and so on. Of course you would have to be mature enough to live as a total expatriate for years, but the cost to your parents could be a tiny fraction of what sending you to a mediocre US university would be.

I understand this isn't relevant to 99.9 of young mono-lingual English-speaking Americans but for those who are already bi-lingual it ought to be considered. After all, US education is HIGHLY over-rated and the world is full of excellent universities that cost a small fraction of what a US institution costs, and a degree from an accredited university is just that - anywhere in the world.


Vooter's picture

Start hiring people out of high school...

sunnyside's picture

Many cannot read above a 4th grade level or even do simple math.  Seriously.

Northern Lights's picture

Most who finish a degree at a university still can't do simple math.  Most North American's are "math-averse". Don't like it, don't want to do it and certainly, don't want to take it in university because at university, you're paying for it and if you're failing all your math coarses, you get expelled from the university.

So, a simple way to tackle this issue is to take a "bird-degree" in a soft arts and science degree and get the guaranteed pass.

Only problem with that phylosophy is that when the graduate leaves the school and tries to enter the workforce, he/she find out they're not qualified to do anything because North America is pretty much a "Financial Services Industry" and if you can't do math, you won't find a job.

Only job left is working at McDonalds and the cashier's job there is real easy as instead of numbers on the register-pad, you have pictures or words like "Big Mac", and "Fries-Large" etc etc.



Dareconomics's picture

Healthcare, housing and higher education all suffer from the same dynamic. Hot money from government subsidies fuels inflation in each sector.

DamnMonkies11's picture

Several countries allow you to go to college for free so I dont see why the US is always so behind in these things.

swmnguy's picture

A lot of my family members are faculty members in the education/industrial/financial complex.  I'm the only one for several generations without a college degree, actionally.  I went to college from '82-'85, but I left when I realized I had completely lost interest, and my loan balance was getting frighteningly high.  $3,500, to be exact.  Since I was making about $3.35/hr at the time, that spooked me.

Since then, tuition at the college I went to has gone up by a factor of about 8x.  It's a little hard to track, since they also switched to semesters and fees are completely different, but that's about right.  Faculty pay sure hasn't gone up 8x.  In fact, the pay of your average faculty member has gone down in real-money terms.  Far more positions are part-time, or filled by adjuncts.  Sure, the pay of tenured full professors looks pretty sweet, but there aren't nearly as many of them as there used to be.

What there are more of is administrators and administrative staff.

The colleges have done this to themselves, going back to the GI Bill.  To serve the post-WWII glut of students, they went on a building binge.  Then the Baby Boomers came through, filling every available slot and more.  In the 1970s enrollment started to slump, and a lot of colleges were going to have to close.  That's when they completely sold out for money, instituting all manner of vocational programs.  The college I went to had a big Hotel, Restaurant and Institutional Management program.  Another big one was Accounting, and then there were all sorts of non-professional Technical programs.  None of which had ever been learned through 4-year college programs before.  But it brought in money, and a symbiotic relationship with business was formed, whereby prospective employees would now be expected to purchase their training through Finance debt, and employers could hire supposedly pre-trained employees.

Now of course, since I've seen want-ads for Receptionists requiring a 4-year degree, inflation has set in.  A Bachelor's today is the equivalent of a High-School diploma 40 years ago.  And the cost increases become a vicious cyclical feedback loop.  Making student loan debt non-dischargeable through bankruptcy was a warning sign that the bubble was getting fragile.  Now of course there's more student loan debt than credit card debt.

Just as the early signs of the bursting of the finance bubble in personal credit forced Joe Biden's 2005 bankruptcy bill, the bursting of the home finance bubble set the scene for the ongoing looting of the Treasury we see today, and the looming bursting of the health care finance bubble is paving the way for looting by the insurance industry and the glories of Obamacare, the signs of collapse in education finance are setting us up for...something.  There have always been some employers who would pay student loan debt for the right people, and programs for those who did things like teach elementary school on Indian reservations and the like.  We'll see a lot more of that sort of thing, as the government faces the fact that not even they can get blood from a turnip, and there are a lot of people out there with unpayable and non-dischargeable loan debt. 

They've created the immovable object, and they're having issues with their irresistable force, so something has to give.  The question, as always, is how exactly will the cure be worse than the disease.

MeBizarro's picture

This should be titled 'No $hit Sherlock.'  Instead of talking about specific policy changes that needs to be implemented including mandatory collection and reporting by the gov't on post-graduation metrics to give parents/students legit information and limit asmmetric information problems, we get this crummy video. 

MeBizarro's picture

A George Mason PhD grad.  That explains a lot.  There are some useful grads who do interesting work there but most are mindless 'private sector = good; gov't = bad' puppets.  Just a lot less sophisicated than their UChicago brethren. 

Elias Soprano's picture

cant wait to complete my Bachelor of Arts in Human Sexuality....2 more months BITCHEZZZZZZZZZ

Northern Lights's picture

Congrats! You'll now be qualified to get that cashier's job over at the sex-shop that sells lubes and dildos.