[beachstartup]

what they taught me in econ 1a:

1. limited supply (even when you count the fake for-profit schools)

2. increased demand (EVERYONE wants to go to college)

3. easy financing which increases 2. (student loans)

results in inflating prices.

not really sure what the mystery here is.

[mark-r]

This is the fallacy in government providing low-cost loans to everyone. Unless the supply of colleges increases, it just ends up increasing demand for the same supply, driving up prices - and producing a boatload of graduates with mortgage-sized student loans. All on the assumption that the degree will give them increased earning power, which is increasingly unlikely in today's economy.

[TronPaul_]

It's not just the fact that they're low-cost loans. They're almost zero-risk loans (you can not declare bankruptcy on student loans), which benefits lenders and encourages schools to increase prices.

[mrxd]

Revenue per student (state appropriations + tuition) has been flat for 30 years. What's changed is the proportion of revenue that comes from tuition.

[ta82828]

The article is about state schools though.

[beachstartup]

uh, what part of my post doesn't apply to state schools?

[ta82828]

They're a government service, and are not - theoretically - supposed to charge market rates.

[adventured]

They still have to compete on everything from providing good enough facilities to paying professors enough to keep or acquire them. If you inflate half the market when it comes to salaries, the other half either has to compete or will lose all of its talent.

If X type of lab becomes standard at non-state schools, then all the state schools must build one too or suffer.