Saturday, March 31, 2012
The Cost of Going to College: Students and Parents Feel the Pinch
While many people still believe
that education is one of the best investments one can make in lifetime, you
should never underestimate its price especially in the continued stagnant and sluggish
moving economies that face the US. Many experts say that college tuition costs
continue to skyrocketing at rate that outpaces inflation by a considerable
margin (http://www.ibtimes.com/articles/214426/20110915/unemployment-jobs-economy-college-graduate.htm).
Yet, college graduates almost struggle like everyone else to better off their
lives. Conversely, decades ago, a college education was quite inexpensive and
it was almost an automatic ticket to middle class life style but today dynamics
are not certain given the economic uncertainty.
Alluding to a catchphrase “Planning
for college, planning for debt” many people have even gone beyond questioning whether
going to college worthwhile investment. According to the book “Academically
Adrift: Limited Learning on College Campuses” 45% of college US college
students exhibit no significant gains in learning after two years in college.
This shows that it is equally imperative to further education to make change
but at what cost? For instance, Paul Davidson, in USA Today (http://www.usatoday.com/money/economy/employment/2010-12-06-collegegrads06_ST_N.htm)
reports that unemployment rate for college grads is highest since 1970. The
worrisome problem is the cost of college tuition that continues to go up. In
this regard, let’s discuss the question
at hand whether there is a market failure because of government involvement in
education sector on one hand, or whether the situation of high costs for college
would have been different should education be handled by the free market.
First, based on any other good or
service production theory that require a combination of land, labor and
capitals that are directed at a particular objective, some economists argue
that free market can actually yield more in education at reasonable price than
what is done by government. On the other hand however, government defenders
enlisted various economic arguments related to market failure to dispute the
idea that parents in a free market should ultimately determine what educational
services are offered. Next, without the government intervention some parents
would not bother sending their children to school at all. Also, I find that
without government involvement, in other words providing subsidies such as
financial aid and others, children from poor families would not be able to go
to school. On the same note, free market defenders fight back saying that based
on entrepreneurship theory, education should not be seen as best when it is
left to government; rather the free market is better positioned to efficiently
allocated resources that are underused in many instances and the government is
not up to that task. They continued saying that the government bureaucracy is
seen as the opposite of enterprise. It stifles enterprise and therefore government
domination of education assures that the entrepreneurial innovation and
creativity are accustomed while entrepreneurship has precondition that
encompasses freedom and private property on both the supply and demand sides. http://www.thefreemanonline.org/columns/can-the-free-market-provide-public-education/
Seen in the lenses of the above
contentions, one would wonder whether cost of going to college would be any different.
Arnold Kling may be right when he asserted that he is not sure where the market
failure would be in current education system but he recognizes that the
accreditation monopoly is one market imperfection to which he pointed out. Indeed,
if we look at cost of going to college in the US everyone should be concerned.
In fact, expert think that after the busting of bubble in housing industry,
student loans bubble is about to bust. Dennis Cauchon in US Today reports that
student loans outstanding will exceed one trillion this year (http://www.usatoday.com/money/perfi/college/story/2011-10-19/student-loan-debt/50818676/1).
If economy does not improve to boost hiring college students so that they can
pay off their student loans what would happen or what would the government do -
or again what would have the free market done differently? Surprisingly, Tony
Mecia reported that even the Federal Reserve son who is medical graduate has
accumulated $400,000 in debt! http://www.creditcards.com/credit-card-news/student-loan-debt-time-bomb-1279.php
Needless to say, government involvement
in education is a controversial matter in which it is hard to depict whether
there is a market failure associated with the high cost of student loans. If
everything has gone up in price how education would have been immune?
