Going Broke

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					Going Broke

David Wood once said, “College is the best time of your life. When else
are your parents going to spend several thousand dollars a year just for
you to go to a strange town and get drunk every night?” The costs of
college are escalating at an all time high, which is why Richard Vedder
went out and looked for a reason as to why this is and what, if any,
solutions to this ongoing problem could be. Vedder talks about four main
reasons why tuition continues to rise: third party providers and the
amount of funding and spending that goes on, there is no market
discipline when it comes to universities, price competition, and also
government regulation. However, in order to combat these rising prices,
Vedder came up with a number of solutions that could be used to control
the cost of tuition, despite some problems with these ideas, his idea of
using a voucher system is the best solution that he presents.
Vedder explains that universities in general believe that they can raise
the price of tuition because due to the increasing amount of government
aid to education, most notably student loans, the families haven’t been
too concerned with the rising cost of education. He claims that there is
a vicious circle in regards to university financing. In the first year,
the tuition would be increased and to deal with the political pressure
that comes with it, Congress makes student loans more accessible and
affordable. As a result of this, the demand for education becomes greater
and as such, the colleges are then able to raise prices again which would
result in more political pressure and thus, more affordable loans. In
order to deal with this growing problem, Vedder believes that the best
way to do that would be to simply stop allowing these third parties to
give more money when the tuition increases. By doing this, it would make
the student more aware of the price of tuition, thus not as likely to
enroll at a university with a relatively high cost of tuition. This would
in turn cause the demand of those high priced colleges to go way down,
which would force them to rethink their elevated level of tuition in
order to get more students to attend their school. Another alternative
would be that of the voucher system. Instead of providing funds directly
to universities, the government would instead give vouchers to the
prospective student to be used at any institution that the student
chooses. This would not only give the student much more freedom in
finding the perfect school, but it would also stabilize the cost of
tuition because the school wouldn’t be getting any extra funding from the
government.
Another reason for the rising costs of education is the lack of market
discipline. Universities tend to spend whatever money they have on
anything that will reduce productivity or efficiency according to Vedder.
He says that by increasing their budget, instead of decreasing it, it
shows a sense of greater power and wealth which in turn makes their
university more attractive to potential applicants and donors. Vedder
compares American businesses to universities by saying, “American firms
restructured and downsized to become leaner and meaner, to increase their
competitiveness in national and especially international markets…Contrast
that to universities, which have done no appreciable downsizing because
they feel no market pressure to do so” (Vedder 27). He then gives an
example of how when Ohio University’s revenue was unexpectedly low, they
were forced to downsize in the manner of eliminating two provost and one
vice-presidential position with no noticeable negative effect. Vedder
believes that instead of wasting money on unnecessary positions within
the university, which raise the costs of tuition, it would make more
sense to use that money to reduce tuition. To go along with this is his
idea on tenure. While he recognizes the value of it, he also believes
that professors could become lazy in their work since they might only be
working to get to the required amount of teaching years for the tenure to
kick in. Another problem with tenure is it makes it much more difficult
to properly allocate resources in specific education fields based on the
current popularity of a particular subject. His idea isn’t to do away
with it but to make it optional to the faculty and if they choose to
accept it then they would be rewarded with lower wages.
Government regulation is another factor that leads to the rising costs of
tuition. Due to environmental laws, affirmative action, as well as
“prevailing wages” has led to an increase in tuition to compensate for
these other costs. If the government was more relaxed in regulating some
of the stricter initiatives, the costs of tuition might be reduced. Also
due to other laws such as Title IX, which forces equality between male
and female athletics, universities aren’t always allowed to capitalize on
every money making sport, which in most cases is a male sport. As a
result of the affirmative action, Vedder would get rid of the admission
programs that were entirely based on race; this would help solve the
retention problems at some schools because instead of having students
choosing schools for the wrong reason, they would attend a school that
fit them the best.
As stated before, the best solution that Vedder presents is that of the
voucher system. This not only guarantees the student to pick a college
based on his own personal preferences not on what school offers him the
most money, but it also reduces tuition increases that normally come
about as a result of governmental subsidies. One possible downfall that
could come of this is whether or not every college or university could
use the vouchers and if there are some deemed not appropriate because of
academic or some other standards, for example McIntosh College in Dover,
New Hampshire, what exactly is the distinction between an appropriate
college and one that isn’t?

				
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posted:8/17/2011
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Description: Vedder explains that universities in general believe that they can raise the price of tuition because due to the increasing amount of government aid to education, most notably student loans, the families haven’t been too concerned with the rising cost of education.