Should Wall Street pay off student debt

[Dill]

(07-03-2019, 09:44 AM)Aquapod770 Wrote: Yes I have. 

https://www.jamesgmartin.center/wp-content/uploads/2017/12/Bennett_Hypothesis_Paper_Final-1.pdf

Keep in mind that correlation doesn't equal causation. Which unfortunately is the problem with a lot of observational research. Both things can be a factor in rising higher education costs, but to ignore evidence of either is purposely ignorant. And yes, the effect is seen more in for-profit schools, as is to be expected. I'm going to let you in on a little secret. Even administrators at "non-profit" schools do their best to raise profits. 

State funding for public education has been cut. Largely in the last decade. Funding fell by about 7 billion since 2008, and certainly has contributed to increased tuition prices. As you can see on the graph in page 2 of my link the problem started well before that. Cuts to state funding have only exacerbated the problem, not been the direct cause. 

Good link and a good post, Aqua. Sorry I am a little late responding. 

A couple of quick points: 

1. Cuts in state funding began back in the 60s, with CA under Reagan leading the way. Remember they had NO TUITION and then gradually introduced it to reduce taxes. That was a STATED goal, and it was expected that TUITION would make up the difference, especially at the level of junior colleges. Other states followed this model, especially in the '80s when Reagan became president. The tactic of voting in tax cuts one year, which would force budget cuts one or two years later, spread from state to state, also, in the public's mind, diminishing responsibility for the cuts when they had to be made "by law." There is no correlation between these cuts and government insured loans that I can see,  but there is a direct correlation between them and rising tuition.  In state after state we can find decade long studies which describe the match between funding cuts and rising tuition.  Here, for example, you can see how the rising tuition clearly made up the state-funding deficit in Kentucky from 1999-2015.
https://kypolicy.org/house-budget-make-college-affordable-kentuckians/.  There is a similar graph for national trends: https://budgetandpolicy.org/schmudget/cuts-to-higher-education-lead-to-increases-in-tuition/

2. I read your link pretty closely over the weekend. It has a wonderful bibliography too, in one sense. But in another sense not, by which I mean it mostly ignores the funding-tuition correlation, focusing primarily on the Bennett hypothesis. Did you follow Robinson's argument? If find it curious that, with her Martin Center colleagues, she does so much work to legitimate one factor of cost increase while ignoring the more direct one. The centerpiece of her case seems to be the Cellini and Goldin paper on FOR-profit institutions, in which the relation between loans and tuition price is not under serious dispute. Next in importance seems to be McPherson and Shapiro (1991). But that book, I think, uncovers yet another, and more serious problem, namely what happens when colleges have to "compete" for students by updating accommodations and attractions (like spas and gyms). That too, I would say, is driven by increasing reliance on market forces which follow disinvestment. That seven studies out of 27 found no correlation, and many others found little, or limited, seems not a tremendous obstacle for the BH, in her view. And she proposes responsible seeming recommendations about how to handle loans and grants going forward--nothing about tuition increases, though.

Some important research seems to be missing as well, e.g. Douglas Webber's "State Divestment and Tuition at Public Institutions (2017), which estimates the "pass through" rate of budget cuts at public institutions--the ration of tuition increase to every thousand dollars of state cuts. https://www.sciencedirect.com/science/article/pii/S0272775717303618.

Also there is Mitchel, Leachman and Masterson's "A Lost Decade in Higher Education Funding: State Cuts Have Driven up Tuition and Reduced Quality" published by Center on Budget and Policy Priorities. https://www.cbpp.org/sites/default/files/atoms/files/2017_higher_ed_8-22-17_final.pdf

Assuming you are still interested in this issue, what do you make of this lack of reference to the most prominent alternative (though not necessarily exclusive) explanation for rising tuition?