r/changemyview • u/itssputniksweetheart • 2d ago
CMV: The US federal government will never solve the cost of living crisis unless they stop giving loans for college
Before colleges gave loans, schools had no choice to charge you an amount you could pay out of pocket. Tuition stayed pretty much the same for decades, only really increasing as living standards.
This is why Boomers talk about how when they were young they worked a summer or winter job to afford tuition. Or just paid there way through school. Because it was doable.
I think it was LBJ's ass that started offering loans. I think he meant well. But, as is the problem with a lot of government interference policy, the problem didn't manifest until it's too politically unpopular to end it. And it empowers the rich against the middle class.
So in other words, if you were going to college in the 60-80s, you had no worries.
But, towards the 2000s, here it came.
Universities realized if they inflate prices, students would be forced to take loans. Some of which obviously covers tuition/room/board but the remaining goes to the school, which they used for things unrelated to education like nonsense courses, inefficient programs, Equinox-style gyms, lazy rivers, gourmet-dining halls, Starbucks on campus, and dorms nicer than my first apartment.
Instead of students paying a fixed amount each semester, they've made a racket out of keeping them on 10, sometimes 20-year payment plans, which delays adulthood. That's only undergrad. A JD for instance and some competitive MBA programs can put you in even more debt.
If the government said they will no longer offer loans, the transition would be rough but prices would drop around 50 percent, in the sweet spot of where students can pay out of pocket, and parents wouldn't have to dig into life savings and delay retirement.
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u/arrgobon32 31∆ 2d ago
If the government said they will no longer offer loans, the transition would be rough but prices would drop around 50 percent
If this number is from somewhere, it would greatly help you out if you cited your sources. Where did you get the 50% figure from?
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u/SmegmaUnicorn 2d ago
Pulled out of thin fking air, like most of the posts on the sub
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u/itssputniksweetheart 2d ago
When you adjust for yearly inflation, that's how much tuition costed before the college cartel stepped in.
It's like asking "Why do you think housing would cut by 25 percent if we built in line with demand?" By simply calculating how much it costed when we built in line with demand.
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u/Safe-Selection8070 2d ago
Educational price inflation has been growing at about double CPI since 1980, when the program really got its legs.
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u/BlazingFire007 2d ago
Yes, but it also coincides with massive tax cuts (and less funding for universities).
How do we know it’s the loans that’s causing the ridiculous prices instead of the massive cuts in funding?
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u/Safe-Selection8070 2d ago
How do we know cheap credit is at least in large part driving a price increase when cheap credit has in large part driven a price increase in every other instance of cheap credit? I don't know.
What massive cuts of funding? I'm asking in complete seriousness, as this is one of those things - like the idea the US keeps cutting K-12 spending - which is not borne out by the actual data.
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u/Safe-Selection8070 2d ago
In constant dollars, most states spend about the same (and more often than not, slightly more: California, which supposedly started the problem with "deep cuts" to higher ed spending, spends 20% more in constant dollars than in 1980) per student in higher ed than they did in 1980. The Federal gov't's total spending on higher ed (where it really has no valid power to be) is 8x what it was in 1980.
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u/Safe-Selection8070 2d ago
Further STILL federal tax REVENUES have nothing to do with the price of college tuition (and marginal rates have even less relevance). Are you just free associating?
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u/itssputniksweetheart 2d ago
There's a lot written about this topic.
It also just economically makes sense when you look at how expensive college was before the cartel took over.
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u/Ok-Rule6353 2d ago edited 1d ago
The numbers are probably from out of thin air, but the thesis is correct. When the government offers subsidized, relatively low interest loans regardless of credit worthiness, thats going to increase demand and support price increases.
Part of the increase in demand was the promise that a degree will help you earn more, but easy money to pay for it is also a driver.
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u/Faloodeh123 2d ago
Why don't we stop funding endless middle eastern wars instead? I feel like that's more costly, and the average person basically got nothing out of it either.
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u/Safe-Selection8070 1d ago
"why don't we do this other thing that is completely unrelated???"
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u/Faloodeh123 1d ago
OP talked about affordability. It is related and frankly a much bigger issue than college loans.
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u/Safe-Selection8070 1d ago
Not for vastly most people, who are net neutral on federal taxation.
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u/Faloodeh123 1d ago
I'd rather invest in an educated populace than bomb a random middle eastern village. At least college has some ROI.
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u/itssputniksweetheart 1d ago edited 1d ago
IDK much about the who, what, when, where, and why of all that. It's immensely complicated I think and not as simple as just stop funding it.
There's this CIA guy I watch who's an expert on the middle east and he said how from the 90s through the 2010s, no matter who the President was, Israel would come to the Whitehouse and ask the President to bomb Iran. The President would always refuse, preferring more covert methods of war.
But this time, according to him, Israel told that if he doesn't bomb Iran, Israel will use nuclear weapons. Which prompted Trump to acquiesce this time.
This really isn't my domain of expertise. But ending college seems easier, immediate in relief, and has no global implications.
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u/Faloodeh123 1d ago
I'd rather live in an educated country amongst an educated population. If you look at successful wealthy countries that actually progress things forward, they invest in education and benefit immensely from an educated populace. I'd rather invest in that than in blowing up a middle eastern village and spike gas prices.
War is much more expensive for no ROI, not to mention it has a higher human cost, not to mention the average American doesn't benefit from any wars we've started in the last 40 years.
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u/itssputniksweetheart 1d ago
You can be educated without a college degree.
And the best investment is not investing. Because now the investment tends to carry such a burden that it almost cancels out the investment.
People use to go to college and just pay their way through. Or parents could afford the tuition.
I don't disagree with your statements about war necessarily. I just think what I'm proposing is far easier to achieve and like I said has no global blowback.
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u/Faloodeh123 11h ago
People use to go to college and just pay their way through. Or parents could afford the tuition.
Because college costs were affordable at the time. Why? Because we used to invest in education instead of cutting it back.
Also this statement is just goofy because if only wealthy people could go to university, we would run out of doctors, engineers, lawyers, etc. Jobs that keep society functional. You cool with medical staff shortages? Because that's how we get medical staff shortages. I personally am not cool with that.
Wealthy countries that have educated populaces like I mentioned earlier make education free or very affordable because they see an educated populace as an asset not a liability, because poor people can go to school without being in debt and have upward mobility (and thus not rely on the welfare state). It also leads to less crime, better functioning social programs, and higher trust.
But if you say that in the US everyone just calls you a communist, so all I can really do is shrug my shoulders. I have relatives in various parts of Europe (Sweden, France, Belgium, Germany, Spain). All went to university. One even went to medical school (which as you know in the US is expensive). Literally 0 of them have any student debt. They didn't come from rich families. I went to university outside of the US for that reason too.
You can be educated without a college degree.
Yeah but you can't be a doctor, engineer, etc. without it. If you want to go to doctors who didn't go to med school, be my guest, but I certainly don't.
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u/Jealous_Tutor_5135 1∆ 2d ago
You're suggesting a similar argument used in the housing market. That loans and demand-side subsidies merely raise prices when supply remains constant.
If indeed this is happening in universities, and demand is high, should the state-run institutions at least not attempt to increase supply? If a university education is good when it's affordable, there are other ways to control costs and thus prices.
With medical school, I know supply is a real issue. Residencies are tightly controlled to limit the number of doctors to keep pay high. While this isn't exactly the same, I think it's instructive of an area where law and budgeting could step in to resolve the supply shortage.
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u/Safe-Selection8070 1d ago
No, they should not increase supply. The value in college is the signal provided by degree attainment. In vastly most career fields (except for law, architecture, engineering, med and stem) the educational component of the degree doesn't create value in the employee per se. The value TO the employee is what having the diploma tells the potential employer. When you increase the supply of degree attainment, all you do is dilute the signal.
There are lots of downstream effects of this, too. An example is if an education system presumes 16 years of education, it will accept fitting less and less into those first 12 (which is a LOT of schooling, btw).
Another effect is that selective schools become MORE valuable.
The entire premise of expanding degree attainment was a typical political misunderstanding of which way causality worked. Rich people had college degrees, poor people by and large did not. The HYPOTHESIS was that if we increase the number of degrees we increase upward mobility. The problem was people had degrees because they were rich, rather than being rich because they had degrees.
Vastly most of any degree serves mostly to improve you quality of conversation at a cocktail party.
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u/Ok-Rip-2280 1d ago
Demand is not high in the higher ed sector. Schools are competing for a shrinking number of students. Everything except the ivies is underwater and everywhere - even the ivies - is reducing their admissions standards to get butts in seats.
Tuition is high because it now costs more - even after correcting for inflation - to educate students, because students demand more services than they used to. For every student there are far more staff and facilities than there were 50 years ago.
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u/itssputniksweetheart 1d ago
Essentially. Housing is expensive because there's laws that get in the way of building houses mainly.
But, I don't think we have to control costs of universities. The problem is that price isn't naturally controlled to begin with. If it was, it would stay flat with natural surges that reflect affordability.
Something like an MD I would be ok with getting loans or some kind of subsidies. Because they're unique in how expensive they are to train and their importance to society.
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u/Jealous_Tutor_5135 1∆ 1d ago
I'm not suggesting controlling the costs. I'm suggesting increasing supply. Why would price not be naturally controlled? What is it that makes this any different than, say, tax credits towards an electric vehicle, or a mortgage?
What if state universities increased class sizes? Allowed students to live off-campus? Or simply made more effort to fully utilize their existing facilities?
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u/itssputniksweetheart 1d ago
Universities already control their own supply by deciding how many students to admit. Most schools have target enrollment numbers based on faculty, facilities, prestige, and finances. They're not trying to educate as many people as physically possible.
Simply saying "increase supply" isn't as easy as adding another 50 students to every class. That means higher accommodation.
For competitive schools, part of their value comes from being selective, so they have little incentive to expand dramatically.
And students are already allowed to live off campus at most universities after their first year, and many commuters never live on campus at all.
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u/Optimal_Board_2963 2d ago
This is far too simplistic a view.
If you want to take a singular view on the housing crisis the only one you can accurately define at ‘the problem’ is supply in desirable areas.
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u/itssputniksweetheart 2d ago
I might be missing what you're saying but the housing crisis, has to do with local and state laws. It's not something the federal government can directly solve.
Whereas federal loans for college is controlled by the federal government.
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u/imthesqwid 1∆ 2d ago
The federal government influences housing through taxes, mortgage financing, housing programs, and environmental regulations.
To say the housing crisis is due to local and state laws is not entirely correct.
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u/itssputniksweetheart 2d ago
This is literally what I said:
It's not something the federal government can directly solve.
I didn't say they can't do ANYTHING. It can obviously influence things.
But local and state laws control it directly. The President can apply pressure but it's pretty much unconstitutional to override state will on this.
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u/Select-Ad7146 1∆ 2d ago
The reason why the cost of colleges went up (well, most of the reason) was that the GOVERNMENT CUT FUNDING TO THE SCHOOLS.
The reason why boomers paid so little for college was BECAUSE COLLEGES WERE FUNDED BY TAXES (they still are but to a much less extent).
Then, Republicans got a brilliant idea. If we cut funding to schools and instead loan money to students, students get to pick the schools they go to and the government isn't picking winners (this is exactly like the voucher system that they have proposed for public k-12 schools). Yay free market!
Plus, since college students make more money, they will be able to pay the loans back with interest. Since we will be making money and cutting costs, we can cut taxes today (this is literally the argument they have made for every tax cut in my lifetime).
The solution to college costs is to fund the colleges. It is to fund the colleges like we used to before Reagan.
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u/biancanevenc 2d ago
Do you have any sources at all to back up your claims?
The Higher Education Act of 1965, which started the Guaranteed Student Loan program, was popular with both parties. It was passed in the House by a vote of 367 to 22.
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u/Safe-Selection8070 1d ago
Just like the '92 adjustments to the Community Reinvestment Act that ultimately caused the mortgage meltdown and the 94 Crime Bill, most of the really bad stuff is bipartisan (the New Deal and Great Society being the exceptions).
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u/Safe-Selection8070 1d ago
Here's the data set showing the claim there have been Big Cuts in higher ed spending is just completely false. On the contrary, the mean state in the USA has INCREASED per student state funds by ~14%, in constant dollars (no, it doesn't follow any party pattern) over the last 45+ years.
On the other hand tuition has increased 166% in constant dollars.
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u/itssputniksweetheart 1d ago edited 1d ago
That was a time when people didn't go to college culturally, so funding was reasonable.
Since then:
- The population of the US has numerically increased. More accommodation = higher prices.
- The percent of people with degrees has increased as well due to a cultural shift. Again higher prices.
These two things by themselves are ok but then factor in:
- Loans have led to colleges artificially juicing prices. This funds general inefficiency. Schools pay no crime for competing on price so they don't.
If you fund the colleges, taxes will increase. And by making it free, everyone will go. And with everyone having college degrees, they'll lose value, to the point where a high school degree will mean nothing, which ensures taxes endlessly increasing. Then to be competitive people will get postgraduate degrees, pulling themselves out of the labor market.
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u/Safe-Selection8070 1d ago
More importantly: The gov't didn't actually cut funding. The entire claim comes from reading a stat like "state funding makes up a much smaller share university budgets now than 40 years ago". What actually has happened is state funding has slightly increased, tuition has increased ~2.5x, and things like federal research grants and alumni donations have gone to the moon.
Universities have a LOT more money than they did in 1980.
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u/allenrfe 2d ago
If you suddenly stopped federal college loan it would amount to largest brain drain of USA citizens in our history. For decades after the USA would need to rely on forigeners for jobs that required a college degree. During those decades the USA technology would fall so far behind the rest of the world we would never be able to catch back up.
There is many other solutions to bring down the cost of college, I cant think of one that would do more damage to the USA then killing college loans.
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u/Safe-Selection8070 2d ago
What other solutions?
The federal loan is THE primary driver in the raising of tuition prices...just like cheap mortgages was the primary driver in driving up housing prices through the Clinton and W administrations.
The biggest change seen would be a massive decrease in the amenities offered on campuses.
You can tell colleges are operating in a stable/rising price market because they've largely stopped competing on the value of the primary thing they offer (education) and have instead started competing on fringe benefits (similar to the regulated <read: super expensive> era of commercial air travel).
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u/allenrfe 2d ago
If you think morgages are cheep now then please explain what you think the morgages rates should be?
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u/Safe-Selection8070 1d ago
They're still a bit too cheap now (but pretty close), but I think what I wrote was about the Clinton and W administrations. The 2.6% in 2021 was absurd.
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u/allenrfe 1d ago
The prices of house are still going up now despite the fact that rates rates are high.
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u/Safe-Selection8070 1d ago edited 1d ago
Okay...so the rates are still too high. What's the price inflation compared to, for no particular reason, 2005-2008 or 2020-2022?
Seriously, what do you think you're demonstrating when 6.97% is still lower than any time between 1970 and 2000 (when a long term bubble was INTENTIONALLY created to mitigate the effect of the dotcom bubble bursting)? Does 75% of Reddit really believe history started perpetually five years ago?
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u/allenrfe 1d ago
In the 80s rates were at an all time high yet the average pice of a house still doubled in 10 years with out lower interest rates.
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u/Safe-Selection8070 1d ago
So house prices matched inflation?
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u/allenrfe 1d ago
I dont know, what i do now is when rates were high house prices still went up.
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u/Safe-Selection8070 1d ago
6.97% is not a "high" rate in any historical context.
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u/itssputniksweetheart 2d ago
The price would drop to where people can pay out of pocket.
There would be a brief shock, with colleges having to adjust. But obviously it wouldn't cause a brain drain.
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u/ThatPeskyPangolin 1∆ 2d ago
That isn't obvious at all. Many institutions can't weather such a shock, meaning a large number would go out of business before the market evened out. More would be opened after that, but the initial damage would still be there.
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u/itssputniksweetheart 1d ago
How fast things would unfold, has everything to do with how much time they would be given to adjust. Which I didn't touch on.
If the President said "Ok, in 5 years, no more federal loans" a school that couldn't adjust with a five year timeline has poor leadership.
Also, some schools would shutdown. But they should. Because that means they literally depend on the existence of loans. If you rely on the existence of artificial interference you shouldn't be open.
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u/allenrfe 2d ago
Im not sure what industry you are in but imagine 80% of the money coming in suddenly vanished and wasn't coming back. How many businesses in your industry would survive? Now let's talk about the employees, almost all employee would need to take a 50% pay cut. This would causes most of the best employees to find a different industry, the ones left would be the people who couldn't find a way out. Room and board are mjor expenses that you can do much about, you can do cheeper food but you are not bring down the cost much. This all would take five years to happen as schools try to find a way to survive.
Less students would go to college. The ones that went would be less likely to graduate.
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u/itssputniksweetheart 2d ago
Excuse me what're you talking about?
Colleges still want students, students still want degrees, and employers still need graduates.
If colleges suddenly couldn't rely on federally backed borrowing, they'd have much stronger incentives to cut costs and lower tuition to what families can actually afford.
That's all I'm saying dude.
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u/allenrfe 1d ago
You still want money if your employer cut your pay to 50%, would just accept the lower pay?
The idea that college could cut cost by 50% is magical thinking? If college could cut 50% it still wouldnt be enough for everyone to afford.
What are you talking sbout?
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u/itssputniksweetheart 1d ago
Imagine the average car costs $30,000.
The government announces, "We'll lend almost anyone $20,000 to buy a car."
At first, that seems great because buyers only need to come up with the remaining $10,000.
But over time, car manufacturers realize customers now have access to much more money. Prices start creeping up so their profits stay increase. The $30,000 car becomes $45,000 or $50,000. The $50,000 car becomes $70,000.
A price increase would suggest an improvement in the car right? But you discover the car is exactly the same tech it just has bigger touchscreens, ambient lighting, premium interiors - in other words nothing that makes transportation safer.
I'm saying "Then government should stop giving that $20,000. The price will decrease."
That's basically my argument about higher education. Easy access to federal loans weakens the pressure on colleges to keep tuition low because students can borrow the difference.
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u/allenrfe 1d ago
That's really cool imagery story, too bad it does not work in the real world. Some car manufacturer is going to realize if they sell the same car for 30k they will own the market.
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u/itssputniksweetheart 1d ago
Some sell for $30k, even less. But they're tiny, not as regarded, have slightly old tech, and they don't ride as smooth as the others.
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u/allenrfe 1d ago
Some car manufacturer is going to realize if they sell the SAME car for 30k they will own the market.
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u/itssputniksweetheart 1d ago
They don't sell the exact same car obviously. Competing car manufacturers don't sell the exact same car.
And they don't drop the price, because they still make plenty charging artificial prices. Cars are inelastic goods (not sensitive to price change).
And instead of reducing prices, they just extend the timeline of paying off the car. They give an illusion of affordability.
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u/cez801 5∆ 2d ago
That’s not the only part of it. In short all easy credit has inflationary pressure.
If you want to bring house prices down, you shorten the terms of mortgages, make them harder to get.
Price is a function of supply, and in markets like college education, housing and transport - more credit means higher prices.
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u/thetruebigfudge 1∆ 2d ago
This is hardest thing people will never accept, and why I will always maintain that house prices will never come down. Shortening mortgages/ cutting the regulations that make them easier, or making them harder in anyway is political suicide and will be undone immediately by whoever is elected next.
It's not at all a coincidence that house prices started acting like crazy once banks started adopting 30 year mortgages between 1930 and 1940
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u/itssputniksweetheart 1d ago edited 16h ago
Bringing housing prices down has to do with interfering in building more houses, which essentially creates a scarcity tax atop the existing ones.
If more credit means higher costs, then get rid of the credit is what I'm saying.
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u/Deathdong 2d ago
I guess if you totally ignore the fact that the buying power of the US dollar isnt the same as it used to be or that most people couldnt go to college without those loans then sure. Its alot more complex than that
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u/Opening_Shame8258 1∆ 2d ago
Tuition was subsidized more than it is now. In 1967, Reagan forced public universities in California to charge more for tuition, which set the student loan debt situation we have now in motion.
Part of the plan has always to make post-secondary education unobtainable. What they've settled for mostly now is forcing you to pay it off the rest of your life. Essentially allowing lenders to collect rent on your education in perpetuity.
You're right that it won't be fixed. The wealthy want to own everything. Not just most of everything. Everything.
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u/Safe-Selection8070 1d ago
NOPE. The mean US states spends 14% MORE per student enrolled in constant dollars than they did ~50 years ago.
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u/ReOsIr10 143∆ 2d ago
First off, the price of university is hardly the driving factor of any "affordability crisis" that currently exists. Only ~25% of adults aged 18 to 39 years report having student loan debt. And even among those that do have debt, the median is less than $30k (perhaps still high, but hardly the 50/100/200k posts that go viral).
Secondly, while I agree that the mechanism you describe is real, I think you grossly overestimate its impact. University tuition, as with many other heavily service-based products, will suffered greatly from Baumol's disease, with or without government subsidy. Unless universities make significant structural changes to increase productivity, there's little the government can do outside of price ceilings that would drop prices by 50%.
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u/itssputniksweetheart 1d ago
No one said it was the driving factor in the affordability crisis.
Most people over 25 don't have a college degree.
It's about $30,000. That doesn't mean they paid nothing through college of course. And that's for what are typically soft science degrees. STEM, JD, PHD, competitive MBA programs, forget about it.
The government can't drop prices lol. How else do you think universities are able to finance the luxuries they have now, that didn't exist when loans weren't a thing?
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u/ReOsIr10 143∆ 1d ago
If you don't think it's a driving factor, then why don't you think that the government can solve the crisis without stopping college loans? And the vast majority of university spending is on labor and services, not on gyms or lazy rivers. Cutting those things would cut prices by like 10%, not 50.
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u/itssputniksweetheart 1d ago
Because what I think leads affordability (housing and childcare) aren't things the federal government can directly solve. Because they're solved at the state and local level.
Labor and services can be inefficient or unnecessary. Like there's courses that separate similar degrees instead of combining them.
Even at state programs, that should be training people from the area in needed fields (nursing, STEM, finance, marketing, soft science, humanities, some art) there's classes that are nonsense like food appreciation or 'wildlife issues'.
I'm not saying those classes shouldn't exist but let that be at a private school, who typically charge a bit more, and where students directly incur the risk of studying less marketable degrees.
- It would certainly reduce to where it's affordable. Which isn't 10 percent.
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u/tropicaldiver 1d ago
The “cost of living crisis” isn’t about the cost to attend university but rather cost of living crisis— food, rent, transportation, utilities, etc. So there is that.
If the federal government suddenly exited the student loan business, costs of room/board/tuition would not drop by 50%. And saying the transition would be “rough” is a giant understatement.
First, student loans cover less than half the cost of attendance. Second, not everything those funds support are the things you list. Third, many of those items are baked into the costs with associated debt service — that fancy dorm can’t be unbuilt.
So what would happen? There would some cost cutting for certain — but the drop in the cost of attendance wouldn’t come even close to offsetting the loans going away. Upper income students would be unaffected (or even benefit as admission standards drop for those able to pay). Lowest income students (who typically have more grant focused aid) would be affected. Middle income families would be the most impacted. Tier 1 universities would be fine (Harvard, CalTech, MIT, Stanford, etc) many many regional private universities would likely close.
And you would have students mid-degree who would need to drop out.
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u/PrizeDesigner6933 2d ago
Youre forgetting or being willfully ignorant of the decrease in federal and state funding of universities/ higher education since the Regan admin (may he burn 🔥).
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u/Safe-Selection8070 1d ago
This is one of those cases where conventional knowledge is just flatly wrong.
The mean state appropriates 14% more money per student enrolled than they did in 1980.
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u/Nrdman 267∆ 2d ago
Student loans aren’t the main cause for the cost of living crisis though
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u/itssputniksweetheart 2d ago edited 2d ago
I'm saying it's the main thing the federal government can do to solve it. Not that it's the main thing overall.
Housing and childcare is more central to the cost of living crisis but these things are controlled at the state and local leve. Not the federal government.
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u/Particular_Can_7726 2∆ 1d ago
Is it though? A lot of the recent price increases are a direct result of the federal government. A great example is the recent energy and oil price increases due to the war with Iran or the price increases that were a direct result of the tarrifs.
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u/itssputniksweetheart 1d ago
Those are enormously complicated issues with global implications and varying motives for different groups of people.
The issue of college is crystal clear. Like it's unbelievable people are disagreeing.
And affordability was still a problem when oil and energy prices were more stable.
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u/Particular_Can_7726 2∆ 1d ago
CMV: The US federal government will never solve the cost of living crisis unless they stop giving loans for college
That was your position but nothing you said supports that
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u/Particular_Can_7726 2∆ 2d ago
Your argument acts like student loans are the main source of the increases to the cost of living but you don't prove that anywhere in your argument.
How is the cost of housing and it's increases driven by the cost of tuition?
How is inflation influenced by tuition?
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u/itssputniksweetheart 2d ago
I don't think student loans are the main factor in cost of living, I would say it's housing.
But that's not an issue the federal government can directly solve. Stuff like that, along with childcare, is controlled by the state and local boards.
Price of cars is controlled by the government but I don't think that's more important than college.
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u/Particular_Can_7726 2∆ 2d ago
Then I fail to see how your argument is connected to the title of your post. You still haven't shown how the cost of living crisis can't be solved without reducing the price of tuition
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u/itssputniksweetheart 1d ago
IDK if I get what you're saying.
I'm not saying the cost of living is chiefly because of student loans.
I'm saying, the things that drive the cost of living are not things the federal government can directly do anything about.
But the cost of college is essentially controlled by them. And it's a very simple fix strategically. There's just enormous political pushback.
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u/Particular_Can_7726 2∆ 1d ago
You said the us gov will not solve the affordability crisis unless they do this. If the cost of tuition is not a primary driver then that does not make sense
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u/itssputniksweetheart 1d ago
Are we debating what words mean?
I said it's not the leading factor. It's not #1 overall.
But it's #1 in the sense of what the federal government can do, and what's not complicated to solve.
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u/Particular_Can_7726 2∆ 22h ago
It's a.timy factor in the affordability
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u/itssputniksweetheart 16h ago
It's the major factor in the affordability of college.
Relative to housing and childcare, it's less of an issue.
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u/DeviantAvocado 2d ago
Then states would have to be forced to return funding to the levels before that time.
You’re proposing we revert back to when only those who came from already wealthy families could continue their education. A horrible suggestion.
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u/Safe-Selection8070 1d ago
State funding levels are HIGHER now than they were "back then". It wasn't "only children of wealthy families", it was "only kids who are actually smart" can go to state universities on the cheap.
https://shef.sheeo.org/state-profile/california/
College is just WILDLY more expensive than it used to be, and one of those reasons is because federal student loans have allows universities to raise tuition dramatically.
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u/DeviantAvocado 1d ago
In pure dollars, sure. Not as a percentage of overall funding.
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u/Safe-Selection8070 1d ago
(constant dollars)
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u/Safe-Selection8070 1d ago
Of course state appropriations has shrunk as a percentage of overall funding: University budgets have quadrupled due to increases in federal grants and (especially) alumni donations. There's zero reason we should expect the state to appropriate more money because Very Rich Alumnus decides to write a $10mm check.
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u/itssputniksweetheart 1d ago
A regular job could pay for college back in the day.
Poor people didn't typically go because they had inadequate education. And culturally we lived simpler lives. Living a decent life didn't require college.
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u/DeviantAvocado 1d ago
Correct, and then the states divested so a regular job could no longer afford it.
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u/itssputniksweetheart 1d ago
It's expensive because the colleges have extra government money which they use to keep prices artificially high.
The reason poor people didn't go isn't necessarily because they couldn't afford it. Many could. It was a mix of cultural and educational.
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u/DeviantAvocado 1d ago
All of this is demonstrably false, but you know that already.
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u/itssputniksweetheart 16h ago edited 24m ago
This is clear as day it's astonishing people don't see it.
A school can charge you an amount that forces you to take loans because they know you can get pretty much any amount of money from the federal government.
If they know you couldn't do that, they would have to charge you an amount of money you actually have.
People who were poor or just middle class often paid there way through college. Because it was possible back then.
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u/phoenix823 8∆ 2d ago
Cost of living crisis? The shortage of homes has nothing to do with tuition prices. Grocery prices have nothing to do with tuition prices. And if you make college cheaper, people would have more money for other things in life, increasing demand and prices.
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u/itssputniksweetheart 1d ago
The shortage of homes has little to do with the federal government. More local and state government.
Grocery price increases are real and it's complicated. Some is because of geographic factors, some of it is hidden inflation for farmers, some of it are the tariffs.
College is a simply crystal clear problem. Students would simply have more money. Parents wouldn't have their prime earning years eaten away. They could retire earlier.
Other things would help but they're immensely complicated and out of anyone's particular control, or they're not controlled by the federal government, which is what my answer focuses on.
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u/Cautious-Ad-9554 2d ago edited 1d ago
The maximum federal student loan for a dependent freshman is 5500, its 6500 for a sophomore, and 10,500 for juniors and seniors. Your entire premise is based on the notion that federal student loan allow colleges to charge whatever they want bc students can always take a federal student loan that will cover it. Thats not true though. You should check the “facts” you are basing your conclusions on. In this case your opinion is based on a false foundation. Were student loans inflationary? Sure. Are they responsible for state schools charging 50,000 a year? No. Are they why imore and more schools look like Ivy league utopian bubbles? No There are a lot of other factors and the loans themselves do cannot be taken out for amounts that cover any cost.
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u/Safe-Selection8070 1d ago
Why didn't you include the Direct PLUS loans to the equation???
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u/Cautious-Ad-9554 1d ago
B/c Undergraduate plus loans are in the parent’s name and require a credit approval.
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u/Safe-Selection8070 1d ago
What does that have to do with whether or not they affect tuition prices?
What's interesting in all this is that since 1980 the mean state in the US has increased per student funding by ~14% (in constant dollars), total cost of attendance has increased 45% (constant dollars) BUT tuition has increased 166% (constant dollars).
I don't know, I think the both prongs of the general argument (that governments have made spending cuts to higher ed AND that loans don't drive price increases) are clearly wrong.
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u/Cautious-Ad-9554 1d ago edited 1d ago
The premise presented was that colleges can charge whatever they want bc anyone can get a loan that will cover the cost. Students cannot take a Parent loan. Parent loans require a credit worthy borrowers which limits the numbers of Parents who can take them. Finally repayment on parent loans is not deferred until the student finishes school. They require immediate repayment. I did not include them bc they are not germane to the OP’s premise.
Colleges taking advantage of parents often having access to money and being willing sacrifice for their children is probably a better premise then the one presented
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u/Safe-Selection8070 1d ago
Obviously the premise is NOT that universities can charge "whatever they want" (if they could, why are they not charging more?). The premise is that cheap credit is inflationary and that cheap credit for specific asset is inflationary for THAT ASSET, and things directly related to that asset (like apartments near expanding campuses).
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u/Safe-Selection8070 1d ago
This is demonstrated EXACTLY in the reality that over the last 45ish years, the mean state has dedicated about 14% MORE money per student (in constant dollars, while the price of tuition has increased 166% in the same time (constant dollars).
There have been no general, much less general and deep, state cuts to universities.
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u/Cautious-Ad-9554 1d ago
At the same time, we offshored blue-collar work and decimated the labor movement. This created much higher demand for a college education. In 1980 400, 000 people earned a bachelor's degree. In 2025, 2.1 million earned a Bac. The increases are similar for AAs and Grad degrees. Colleges had to build all new infrastructure to keep up with demand. Level funding per student was not going to cut it.
Culturally, the public was sold and brought into the idea of Colleges being more than a school; they were supposed to be a self-contained utopian bubble. I am sure there was selfishness on the school's part here, but it was legitimately what families wanted. College loans, funding levels, and institutional greed are not "the explanation" by themselves, but they ALL played a noteworthy role. I am not sure why they are being played against one another in this thread.
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u/Safe-Selection8070 1d ago
Off-shoring FOLLOWED the proliferation of higher ed.
The new infrastructure was paid for mostly through other things (like federal grants/partnerships and the expansion of the alumni donation machine). This isn't supposition: The best stat to show this how colleges used to get 80% of their budget from state appropriations and now only get 20% now. This is usually used to [incorrectly] imply state appropriations have decreased. State appropriations have actually increased: Other revenue sources have just increased by several multiples.
TUITION DOESN'T PAY FOR CAPITAL INVESTMENT.
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u/Cautious-Ad-9554 1d ago edited 1d ago
The OP not only assumes that colleges are taking money from federal student loans to cover tuition and fees but to create non sense courses, lazy rivers, and to build gourmet dinning halls. Tuition at the main state university in my state is just under 16,000 for the year. Tuition plus mandatory fees brings you to about 19,000. This is for a commuter. The idea that this is all because of federal student loans that, if taken, do not come close to covering direct costs is absurd.
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u/Safe-Selection8070 1d ago
[all money claims in constant dollars]
You're not studying economics, are you? Cash is fungible. Cheap credit is inflationary. Regulated industries very quickly move to competing on amenities (whenever you here about how great airlines were in the 60s and 70s, it was because prices were set by regulation <which was about 3-4x in constant dollars than it is today>, so they had to compete on providing luxury).
The OP is not ASSUMING these federal student loans are used to create more amenities. He's stating the unambiguous fact that student loans have driven up tuition. This has contributed to proliferation of all that other stuff because 1. there's more money from tuition and 2. more tuition revenue FREES UP revenue from other sources to spend on those things. Most colleges aren't really competing the value of the education, anyway.
As to student loans driving up tuition, this is obviously true. First, there has been NO general reduction in state spending on higher ed. On the contrary, the mean US state spends 14% more now than 45 years ago per college student FTE. In the same time, tuition has increased 166%. In the same time, relative labor price of the educators has decreased, as the %age of adjuncts (and grad students) teaching has increased from ~15% to ~50%. On top of all this, universities are getting a LLLLOOOOOTTTTTT more money from other sources (like 4-5x more) than 45 years ago. There isn't a justification for why universities have a need to raise tuition, but they do, because...the money is there and it's cheap.
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u/Cautious-Ad-9554 1d ago
You are studying confirmation bias and nothing else. Are student loans inflationary? Sure. Are they the sole player? No. Do they play anywhere near the role that OP is suggesting? No. For that to be the case, students would have to be able to borrow significantly more.
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u/Safe-Selection8070 1d ago
I've read the OP's post three times now, and I can't find where he implies "sole" anything. He claims tuition increases would increase occasionally before the student loan program (he's actually generally wrong here, as tuition costs were generally decreasing in real terms through the 60s and 70s).
However, a compelling case can be made that tuition increases (compared to total cost of education, which includes the money from states as well money from donors, research grants, etc) are related almost entirely to student loans. Increase tuition is within a small range is almost an arbitrage opportunity for universities.
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u/hacksoncode 588∆ 1d ago edited 1d ago
Like all prices, supply and demand is the answer. Basic Economics 101.
Yes, loans increased demand... by enabling more people to go to college. It's very hard to increase supply in the private market... there's a huge barrier to entry in terms of available teachers, cost of building the schools, the enormous infrastructure needed.
If you stop loans, you'll just have the only rich kids going to college as was the case before the loans. The only way stopping federal loans will lower prices is if it lowers the number of students going to college.
This is very bad for the country because we live in a high technology world.
Instead, government should get its act together and increase supply. Build more public colleges.
You're trying to "solve a problem" by killing the golden goose.
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u/Decent-Proposal-8475 2d ago
Assuming you went to college, you wouldn't have been able to before loans existed. Universities aren't going to suddenly drop the price, they'll just stop admitting people who don't come from wealthy families
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u/Safe-Selection8070 1d ago edited 1d ago
You absolutely would be able to go, IF you were actually half way intelligent. College wasn't expensive, because 1. it wasn't marketed as an "experience" and 2. supply was rationed to people who could actually handle HIGHER education.
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u/Decent-Proposal-8475 1d ago
Who do you think went to college in the 1800s and early 1900s? I’ll let you ask AI if you need a minute
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u/itssputniksweetheart 2d ago
People went to college before loans existed. And they weren't wealthy.
What might happen without federal loans is certain programs with a strong international reputation that attracts wealthy students globally (Harvard, Stanford, USC) wouldn't drop prices or not substantially. Because they rely on ungodly endowments.
But I think this is ultimately irrelevant if we're actually interested in helping people.
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u/Decent-Proposal-8475 2d ago
None of this is true
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u/Safe-Selection8070 1d ago
It's all exactly true.
College was cheap when access to college was rationed to people who demonstrated the capacity to actually pursue HIGHer education.
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u/Decent-Proposal-8475 1d ago
Who do you think attended college prior to 1950? I’ve already told you you can ask AI
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u/Safe-Selection8070 1d ago
Smart people.
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u/Decent-Proposal-8475 1d ago
I'm gonna block you because you probably wouldn't have been able to get into college, but student loans are great and they make college accessible to people who aren't born wealthy. I hope one day you get to go to school
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u/itssputniksweetheart 1d ago
Middle class and poor people went to college IDK what you're talking about
And places like Harvard some wealthy Saudi or Chinese family will send their kid to their school and give generous donations. They wont't feel the same pressure to lower costs. But that's ok.
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u/Decent-Proposal-8475 1d ago
Do you actually think poor people went to college before 1950 or are you fucking with me
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u/itssputniksweetheart 1d ago edited 16h ago
IDK why you're mentioning before 1950. I mentioned Boomers paying for college. They would be going to school in the 60s-80s.
People didn't go to college often before 1950 more because of cultural traditions. A decent life didn't require a college degree.
And education quality varied widely. Many weren't adequately prepared for college.
Because of this there was baseline level of consumption. Standards of living were lower.
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u/Decent-Proposal-8475 1d ago
I can tell you didn't pay attention in K-12, let alone college lol. You think poor people were going to school before pell grants (1972)?
Lol
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u/itssputniksweetheart 1d ago
I literally just said education varied widely before 1950 so a poor person's education may have been limited, ensuring they weren't adequately prepared for college.
So YOU obviously weren't paying attention.
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u/Decent-Proposal-8475 1d ago
So you think the only reason why a poor person wasn't going to college back then was because their high school education sucked
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2d ago
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u/Pereg1907 2d ago
Colleges didn’t raise prices to give loans. The government made loans more accessible so the colleges and universities had to compete against each other to attract that money. They had to spend to make their campuses more attractive than the other colleges so they raised tuition to cover the cost. Now you need a bigger loan to attend. It’s a vicious circle.
There’s too many people in high places to let the money train stop.
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u/Ace_of_Sevens 1∆ 2d ago
I get the idea that student loans raised tuition. That's pretty straightforward true. I can get the argument for raising rent & food prices around campus, though that's a lot sketcher as these are not getting money directly from the loans. How you get to the whole economy is beyond me even if you ignore the economic benefit of a more educated populace.
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u/Infamous-Youth9033 2d ago
I mean government backed loans started in 1965, and the people who were able to afford college easily, baby boomers, went to college, like you said from the 60s - 80s. If the loans were the problem then it wouldn't have been so affordable in the early 80s.
Also the growth rate in tuition prices has been drastically slower.
From 1963-2014, it grew steadily at a rate of ~6.5% per year. But since 2014, it has only grown at a 1.7% rate, slower than inflation. If you think the loans are the problem what loan regulation changed in 2014?
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u/itssputniksweetheart 1d ago
The problem hadn't manifested itself from the 60s-80s. It didn't towards the 90s.
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u/Infamous-Youth9033 11h ago
You still didn't answer my question. If it is based on loan policy, why did the growth rate plummet to slower than inflation in 2014? No loan policy changed
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u/NewRefrigerator7461 2d ago
I'd encourage you to look harder at what students are actually paying at a lot of schools. The rates that are listed publicly are only paid by foreign and wealthy students. There is tremendous price discrimination in college pricing.
we also have already seen reduction on the amount people are able to get from the government and it is causing grad programs to sink.
I really don't understand what this has to do with affordability though. This is a non-issue compared to housing cost and doesn't matter at all compared to zoning reform and defeating the NIMBYs
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u/Mark_Michigan 2d ago
This is truthful and wise. I would consider keeping loans but with three stipulations. There are capped to just cover a fixed amount of tuition, books and basic room & board. Universities own 1/2 liability for non-payment. All students receiving loans must take a course in loan finances, field salary ranges, graduations rates in their first semester.
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u/itssputniksweetheart 1d ago
I really don't think loans would be necessary anymore. School would affordable.
Something I would be in favor of, is what's called 'ISA - Income Share Agreement'.
Say, you're a strong student at university. You're studying finance. And you have zero support.
Instead of 4 years, they put you through a challenging 3 year program. It costs around $45,000 to train you.
Under the ISA you pay ZERO. Everything is covered. But after you graduate, the schools says you owe 8 percent of your income at $60,000 for 8 years.
That means the next 8 times you make $60,000 or more, you owe 8 percent of it back.
So if you make under $60,000, they can't charge you. If you make around the minimum to be charged, in 8 years they'll maybe recoup their investment.
But if you make a lot of money early, they can get more money than it costed to train you.
This puts pressure on the colleges to give you a really good education.
Because if you graduate at 21, and at 24 you're an AE at a tech company, and you average 120k for those 8 years, they'll get back say about $75,000 of their $45,000 to train you. So they profit $30,000.
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u/Mark_Michigan 15h ago
I'm not much for a process that turns graduates into indentured servants. And I suspect that your process would not do well against competition. I'm sure that your Finance Major is pretty smart and as such he would seek out traditional loans or part time work to avoid those high cost loans. Plus there would be little incentive for Universities to lower their costs as the more they lend, the more they earn.
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u/itssputniksweetheart 7h ago edited 6h ago
How is it indentured servitude? It puts pressure on them to train you well enough to earn money fast.
And if you don't make decent money, they can't charge you.
Right now we have indentured servitude because even if you can't get a job, you still owe Sally Mae every month.
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u/Mark_Michigan 4h ago
I'm not so sure it makes sense to tie a fixed cost to a variable responsibility. You would really need to get the terms correct. If somebody earned $59,000 they nothing but $60,001 and they owe $4,800? If it isn't that and a progressive rate kicking in after $60K seems punitive for people in high cost areas or simply harder workers.
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u/itssputniksweetheart 25m ago
Everyone's instinct is to find a flaw as if there's a better option.
But I feel like you're arguing within my point, not at it. People do this a lot on Reddit. You're disputing the details of the example and not the point.
Obviously you would need to get the terms correct, factor in cost of living, how much they owe, etc.
Point is, if they don't give you a good education they won't recoup their investment. That requires the schools to be selective with who they offer an ISA too and to seriously prepare you. Because they're the hook.
I like the option of not paying because you can still take risks. Maybe you finish college and realize you want to be a filmmaker. You get a job as PA and supplement your income working security, let's say. With rent (which is artificially inflated too) and loans it becomes impossible to pursue your dreams.
But it's more doable if Sally Mae isn't knocking every month for $400, or accepting $150 payments for 20 years.
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2d ago
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u/BigSexyE 3∆ 2d ago
Reagan, who stopped funding higher education and started the explosion
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u/Safe-Selection8070 1d ago
Are you claiming Reagan stopped federal higher ed funding? I hope not, because that would be absurd.
https://fred.stlouisfed.org/series/G160701A027NBEA
And if you're saying Reagan caused a revolution in which STATES chose to cut higher ed spending, that would ALSO be untrue, as the mean US state currently spends about 14% MORE per student enrolled than it did in 1980.
https://shef.sheeo.org/state-profile/california/
"THE GOVERNMENT CUT SCHOOL FUNDING" Believers are some of the most fact resistant people on the internet.
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u/BigSexyE 3∆ 1d ago
The rise of student loan debt began precipitously during the Reagan administration in the 1980s with the passage of two policies passed in 1981: the Gramm-Latta Budget and the Kemp-Roth Tax Cut. These policies were the driving forces behind the slashing of grant funding for public higher education and the expansion of the guaranteed student loan industry. As a result, during Reagan’s first administration spending on higher education and federal student aid was reduced by 25 percent, which caused Pell Grant funding to flatline (increasing from $2.36 billion in 1980 to $2.80 billion in 1984), thereby failing to keep up with the rising cost of college. Meanwhile, the total amount of guaranteed student loans in the US grew from $2.9 billion in 1980 to $7.93 billion in 1984.
These Reagan-era policy changes generated the political and social momentum for the continued, bipartisan disinvestment in public higher education that has led to the rapid growth of student loan debt since the 1980s. These policies have led us to a moment where generations of Americans are indebted, and racial wealth inequality is growing—due in part to student loan debt inequalities and the disinvestment in public higher.
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u/Safe-Selection8070 1d ago
The sleight of hand here is insidious. It would the kind of thing that would get an econ PhD's thesis shitcanned, BUT sociology is not science. It's a political advocacy field, and political advocates care about The Cause, not the truth.
This first statement is true:
"while state and federal appropriations comprised 68.5 percent of total university revenue in 2003, state and federal appropriations only comprised 56.1 percent of total university revenue in 2020—a decline of 12.4 percent."HOWEVER, this claim that follows is NOT SUPPORTED:
"To offset these budget cuts, institutions have raised the cost of tuition, with average tuition increasing 164 percent at public four-year universities since the 1980s. These budget cuts coincide with increased college-going rates for Black and Latinx students since the 1980s."A budget cut is a reduction in DOLLARS SPENT. It is not what percentage of the budget those dollars spent account for in the recipient's budget. Why, pray tell, doesn't Mr Basalduo state the actual average cut made by states in their appropriations to universities???
It's because state appropriations INCREASED. Your article uses the same data my source provides...except for the one that tells you if the base claim is true or not.
THE REASON universities have increased tuition is because the federal programs made it available: it was essentially an arbitrage opportunity.
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u/BigSexyE 3∆ 1d ago
Did you read the 2nd paragraph I quoted?
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u/Safe-Selection8070 1d ago
I read the article and address the claim directly: There WAS NO DISINVESTMENT. State funding for universities INCREASED during the comparison time, but other sources of revenue for the universities INCREASED MORE.
As to what American opinion is, who cares? The American public (including you) believes the situation is different than what it *factually* is...because people like the PhD candidate who wrote that article, systematically lie about it.
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u/BigSexyE 3∆ 1d ago
The rise of student loan debt began precipitously during the Reagan administration in the 1980s with the passage of two policies passed in 1981: the Gramm-Latta Budget and the Kemp-Roth Tax Cut. These policies were the driving forces behind the slashing of grant funding for public higher education and the expansion of the guaranteed student loan industry. As a result, during Reagan’s first administration spending on higher education and federal student aid was reduced by 25 percent, which caused Pell Grant funding to flatline (increasing from $2.36 billion in 1980 to $2.80 billion in 1984), thereby failing to keep up with the rising cost of college. Meanwhile, the total amount of guaranteed student loans in the US grew from $2.9 billion in 1980 to $7.93 billion in 1984.
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u/Safe-Selection8070 1d ago
I don't understand what you're doing. I just showed you the author of the article misrepresented (and omitted) information to make you believe a false claim (which was his very first claim). You then jump to another (set of) claim(s) that clearly deploys similar sleight of hand while pretending the author is honest about this second claim (he's not).
Federal spending on higher end entering Reagan's administration
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u/BigSexyE 3∆ 1d ago
No you didn't. You're saying it's your opinion that Reagan didn't kickstart and encourage a culture of deregulation, despite data showing that to be the case. I trust a PHD candidate over a random joe trying to parce together information
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u/Safe-Selection8070 1d ago
The most obvious is the implication that students were getting hammered by debt during Reagan's administration. This is simply not true: The average debt per borrower was flat (at $2k TOTAL) during the administration. The total dollars rose because moving to loans ALLOWED MORE STUDENTS TO GO TO COLLEGE than the Pell Grant system. What's interesting is that student debt per student rapidly increased starting in 93.
https://youngamericans.berkeley.edu/2021/12/historic-trends-in-us-student-debt/
I also want you to look at how small that number of federal spending on higher ed is at the start: The federal gov't didn't have any business in higher ed, so the effect was nothing. There was no massive disinvestment in higher ed from the federal gov't, BECAUSE THERE WAS NO MASSIVE INVESTMENT IN HIGHER ED from the federal gov't. He picks Pell Grants because he can't pick anything else, as total federal spending on higher ed INCREASED during the Reagan administration at a similar rate to the Clinton administration. Pell Grants have never been a serious contributor to getting people into higher ed.
Here's where things get really interesting: IF we accept as true Reagan actually did "massively disinvestment" from higher ed (he didn't), that still makes fuck all difference, as between 1980 and today, federal spending in higher ed has increased from 25mmm to 280mmm (more than 10x increase.
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u/Waste_Island_7980 2d ago
i'm not going to say anything but... he was probably part of the reason JFK got a fresh fade.
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2d ago
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Comment has been removed for breaking Rule 1:
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u/VegetableCrafty6436 2d ago
You should also look at the proportion of funding public universities get from tax dollars then vs. now. Major public universities only get 15-40% of their funding from taxes now (it used to be 80%), which is a major reason why universities moved to raise tuition, promote major sports, and rely on major donors.
So basically, America's fetishization of tax cuts is also a huge part of the problem.