Tuesday, December 9, 2014

Astonishing Movement on Tuition Deregulation


"Dishonest scales are an abomination to the Lord,
But a just weight is His delight."
Proverbs 11:1

Suddenly, there's real momentum to repeal one of the more noxious pieces of legislation in recent memory:
In 2003, the Texas Legislature voted to deregulate tuition and allow universities to set their own tuition rates free from legislative oversight. At the time, supporters of the move argued that deregulation would drive students to consider which university offered the best educational value for their dollar and force schools to compete on the basis of quality and affordability. While the underlying concept of deregulation makes sense in more traditional free markets, proponents of the law in Texas failed to take a key factor into account: the explosion of readily accessible student loan debt.

Student loans now represent the nation's second largest source of debt, surpassing credit card debt and second only to mortgages. Federal student loan disbursements in Texas have nearly doubled over the past decade, and the average student borrower in Texas now graduates with over $24,000 of student loan debt. Since these loans are so difficult to discharge in bankruptcy, they’ve become one of the safest investments a lender can make.

Student loan companies are well aware of the insatiable demand for their product and, absent the hazard of losing money on a bad investment, are motivated to issue as much debt as a student is capable of assuming.

These easily accessible student loans can disassociate students from the true cost of their education and prevent them from appropriately scrutinizing the realistic value of that education. When you couple a limitless demand for higher education with a limitless supply of money to finance that education, you're no longer dealing with a free-market system.

....

The unintended consequences of tuition deregulation continue to shortchange Texas students. By providing public universities the flexibility to set their own rates, the Texas Legislature has essentially given them a perverse incentive to increase tuition and fees as the simplest means of expanding their own operating budgets. In the fall of 2003, a resident undergraduate attending class full time paid $1,934 per semester in tuition and fees. A decade later, the same student owed an average of $3,951 per semester. Since 2003, tuition and fees at Texas public universities have more than doubled, and designated tuition (the portion of tuition set directly by the universities) has increased an astounding 222 percent. Are we really expected to believe that the value of an undergraduate degree is worth twice what it was only a decade ago?
Texas Monthly has more:
In Schwertner’s analysis, rising tuition costs aren’t the only ill effect of tuition deregulation; also salient are rising debt burdens among student borrowers. The latter trend is salient, and deserves attention, because student debt is so often a burden for the borrower. And, as Schwertner argues, easy access to student loans helps explain why deregulation is a dangerous approach to higher education. In a traditional free market system, consumer decisions are driven by a number of factors, including prices. Heavily promoted (and sometimes subsidized) education loans distort those signals, especially when the borrowers are 18 year olds raised to believe that a college education is crucial to their success.
We'll take it!!!

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