Tag Archives: tuition

The Daily View: Elite Colleges Should Abolish Tuition; Apprenticeships

From Unz:Our Elite Colleges Should Abolish Tuition

Although Harvard is widely known as one of America’s oldest and most prestigious colleges, that public image is outdated. Over the last couple of decades, the university has transformed itself into one of the world’s largest hedge-funds, with the huge profits of its aggressively managed $36 billion portfolio shielded from taxes because of the educational…

I agree, but members of a certain political party would prefer make college cheap for those least intellectually qualified to benefit, for the worst of colleges. The tuition at Harvard, for example, while high, is seldom paid in full, and the high-IQ students with their connections quickly get good jobs anyway. Maybe another idea is to make tuition free and then have students pay it back later, with terms much more lenient than a typical student loan. That’s kinda how alma mater donations works. If you can fill Harvard and the other top schools with the best minds in the world who will create the future Googles, Apples, Teslas, and Facebooks, the schools will reap more in donations than they will ever collect in tuition.

But then the problem arises of too many smart people and not enough slots for these elite schools, which is why a better solution is to just do-away with credentialism and use IQ and SAT scores as a proxy for intelligence and competence instead of expensive, time consuming degrees. This is discussed further in the blog archives.

On a somewhat related note, Henry Dampier from http://www.socialmatter.net/ ponders why the apprenticeship system cannot be revived:

Billionaires like Nassim Taleb and Peter Thiel have both advocated something like a return to the apprenticeship system which was ubiquitous up until the early modern era. These suggestions are also often echoed by bloggers and others who know vaguely about what they want, but aren’t quite clear on what the old apprenticeship system was and why it ultimately faded.

This article will attempt to clear out some of the confusion and obfuscation around the issue.

One company that attempted to revive the apprenticeship concept for high tech companies just shut down earlier this month. In the closing letter, the founders cited some failed matches and high expenses for managing the relationships between ‘apprentices’ and mentors. Their ambition was to create a national apprenticeship network, but the model couldn’t scale.

Perhaps a hurdle is the issue of disparate impact. For a tech apprenticeship (or any apprenticeship), teachers want apprentices who can learn quickly, which would require an IQ-like test of some sort to ascertain learning and critical thinking ability, but this opens the window to litigation and other problems. After all, training is at the company’s dime, so companies want the best trainees that they can find who won’t take too much time grasping the necessary knowledge to begin profitable work. Perhaps a notable example is Google, which says they no longer use GPAs for hiring. They obviously have other methods for screening employees. But training is a different matter; Google expects its coders to be proficient in coding upon applying. Testing for necessary skills that are directly applicable for the job removes the disparate impact risk, but then you don’t have an apprenticeship.

Breaking the Tuition Feedback Loop

From Aaron Clarey:

On Reddit, 4chan, the blogospehre, and on Youtube, there are three ‘great debates’ that have been raging since 2013:

SJWs/Gawker vs. Redpill/PUA/MRA/Gamergate, the largest most heated of the three, is an internet version of the age-old left vs. right schism, but the battle is waged on Twitter, Tumblr, Reddit, and blogs instead of traditional media. Pretty much every everyone with a Twitter or Youtube account is in some way engaged, exchanging barbs back and forth.

The second debate is about automation/the rise of robots, and how individuals, society, and the economy will adapt. The debate is divided among those who argue that the ‘Luddite Fallacy’ will remain a fallacy and that economy will always adapt to automation by creating new jobs; others argue that there will be a large unemployed underclass, necessitating radical social programs like a universal basic income.

The third debate is about college, specifically about whether or not it’s worth attending. The debate is dividend between those who argue against going to college and those who say it’s still worthwhile.

The above video concerns the third debate topic, college.

I agree that tax payer money should not be used to fund low-ROI courses, but that doesn’t mean we need to throw the baby out with the bathwater. And the entire situation is quite convoluted, involving employers, the government, lawyers, and students.

We’re in a feedback loop of financial aid leading to higher tuition, and employers requiring degrees, which leads to higher college attendance, which means more loans, and, hence, higher tuition.

The value of the overpriced liberal arts degree is not in the subject itself, but to signal to employers baseline competence. All else being equal, in the eyes of an employer, a person with a History or Philosophy degree is more valuable than someone without a degree. A degree in one of the more ‘rigorous’ liberal arts subjects (History, philosophy, or English, for example) signals above-average literacy, concentration, and critical thinking skills, all of which are valuable for on-site training. A person who is smarter can learn faster, even if the job is unrelated to the degree. So, the degree acts like an IQ or competency test, albeit an overpriced and poorly designed one. The reason why employers use degrees instead easy-to-administer IQ tests is because of the threat of disparate impact litigation, which is very costly and difficult to fight. Typically, only large companies, like Proctor and Gamble, have the resources to fight these lawsuits, and hence can administer these tests.

There are some solutions:

Overturn Griggs v. Duke Power Co. Without fear of litigation, let companies develop their own criteria for screening for competence.

Replace costly diplomas with SAT scores, IQ scores, or an acceptance letter from a prestigious university. Being accepted to Harvard, Caltech, or MIT signals intellect that is in the top 5% of the population.

No more taxpayer subsided financial aid for non-STEM majors and or low-IQ students. This would guarantee a higher ROI for financial aid and hence lower tuition for everyone. Too bad there is zero likelihood of this happening, particularly making financial aid contingent on having a sufficiently high IQ.

The left complains incessantly about tuition, yet on the grounds of political correctness oppose the solutions that would break the cycle. In the liberal world, it’s better that everyone suffer high tuition fees than to face the reality that maybe not everyone is intellectually cut out for higher education. Instead of confronting the reality that some people are smarter than others, make everyone pay more, to avoid this inconvenient truth. And of course, as Aaron says, shrinking the college industrial complex will mean a lot of unemployed liberal professors.

Affordable Housing, Healthcare, & Tuition: Putting Things in Perspective

Vox Day writes:

The SJWs and cuckservatives celebrate diversity, but what they are also celebrating is poverty. America’s living standards have fallen considerably since 1973, but no one realizes it yet because the combination of technological advancement and debt-spending conceals that fact. But it gradually becomes obvious, as Americans become increasingly unable to afford houses or even college educations.

In that last line, Vox is sounding like Bernie Sanders. Maybe the political spectrum is actually a loop – with both extremes meeting on the opposite side, as the ideological left and right move in their respective directions tangentially along the edge of the loop. The far-right and the far-left are both critical of free markets, for example.

It’s easy to complain, but explanations and solutions are harder to come by.

In regard to healthcare and education costs, out-of-pocket costs are falling despite sticker prices rising. From the AEI:

But the chart above shows what might be the two most important reasons for rising healthcare costs over the last 50 years: a) declining out-of-pocket payments for medical expenses, which have fallen from 47 percent of total health spending in 1960 to a record low of only 11.9 percent in 2008, and b) expanding public funding of healthcare, which reached a record high of 47.3 percent in 2008. There’s now been a complete reversal—whereas consumers paid 47 percent of total medical costs in 1960, it’s now the government paying 47 percent of health spending, while consumers pay less than 12 percent out of pocket for healthcare. That reversal is a guaranteed prescription for rising healthcare expenditures.

The Emergency Medical Treatment and Active Labor_Act of 1986, which requires hospitals treat everyone regardless of citizen status or ability to pay, is a contributing factor, costing over $40 billion a year in unpaid hospital visits. That is the ‘universal healthcare’ the left says America is missing.

So while prices are rising, the costs are shifted from consumers and onto tax payers and employers. This is the reality the media and ideologues like Bernie Sanders ignore.

There is so much financial aid, as well as employer healthcare and other subsidies that substantially reduce out-of-pocket costs for healthcare and college, that the sticker price is seldom paid in full. I’ve never heard of anyone who couldn’t go to college simply because they didn’t have the money. However, higher education does need reform at both the student level (for students to stop majoring use low-ROI subjects) and societal (political correctness and lawyers being the driving force behind credentialism, as well as financial aid boosting prices).

From: College Tuition Inflation: Net Out-of-Pocket vs. Published Sticker Prices

The full sticker price is seldom paid. According to the article, only 1/3rd of private university student pay the full sticker price, and the most attractive students get the best aid packages. Tuition is only growing at 2-4% a year, which is anywhere from 0-2% greater than the CPI inflation, after adjusting for a myriad of subsidies, grants, and other financial aid.

Between 2006-07 and 2011-12, average published tuition and fees at public four-year colleges and universities increased by about $1,800 in 2011 dollars, an annual rate of growth of 5.1% beyond inflation. The average net tuition and fees in-state students pay after taking grant aid from all sources and federal education tax credits and deductions into consideration increased by about $170 in 2011 dollars, an annual rate of growth of 1.4% beyond inflation.

Average published tuition and fees at private nonprofit four-year colleges and universities are about $3,730 higher (in 2011 dollars) in 2011-12 than they were in 2006-07, but the average net tuition paid by full-time students in this sector declined by $550 in inflation-adjusted dollars over this five-year period.

Again, the liberals who complain about tuition ignore the role of financial aid and other grants.

Living standards have risen. Look at the technologies available today that didn’t exist decade ago, technologies that offer much more utility than in the past.

Homes prices and rent are expensive in some areas; much less so in others. It all depends on location, although as I earlier, rising rent is possibly forcing young people to live with their parents longer than normal.

The post-2008 tech boom, rich foreigners, scarcity, and private equity are contributing factors for the surge in home & rent prices in regions such Seattle and San Francisco. In the Northern California region, there are cheaper homes further north and east, but the commute is much longer and the homes aren’t as nice. But other regions, particularly the Midwest such as Utah, have seen prices stagnate.

NIMBYism is a contributing factor, as the restrictions and regulations to build new housing can be insurmountable. Before a low-income-housing tax credit (LIHTC) can even be evaluated, the state requires a vote by the legislative body in the county where the development is planned.

From Algezeera: Who gets to live where?: The battle over affordable housing

The credit seems like a straightforward way to help finance new apartments in wealthy neighborhoods that even struggling families can afford. But states are in charge of allocating the credits, and fair-housing advocates say states often undermine the credits’ potential to create integrated neighborhoods by favoring developments in high-poverty, racially homogeneous areas at the expense of developments in “communities of opportunity.” In addition, local opposition often jeopardizes developments in affluent areas, as is the case in Anne Arundel County

Although, I can understand the perspective of home owners who don’t want low-income dwellings in close proximity to their nice neighborhoods.

A recent paper by the New York Fed, The Impact of Building Restrictions on HousingAffordability, discuses whether the affordable housing problem is due to external supply and demand factors or because of construction costs. If home prices do not substantially deviate from construction costs, then efforts to make housing more affordable by boosting housing supply are likely to fail, since the lower-bound (construction costs) has been hit.

From the paper:

To get a better sense of the distribution of housing prices
throughout the United States, we turn to the American
Housing Survey (AHS), but for a quick look at the affordability
issue, it is useful to examine the 2000 U.S. census. The census
indicates that the self-reported median home value is
$120,000.2
Sixty-three percent of single-family detached homes
in America are valued at less than $150,000. Seventy-eight
percent of these homes are valued at less than $200,000. The
American Housing Survey reports that the median size of a
detached owned home is 1,704 square feet. The construction
costs of an average home imply that this home should cost
about $127,500 to build, with a lower quality economy home
costing $102,000 to construct.
Together, these numbers provide us with the first important
lesson from housing markets. The majority of homes in this
country are priced—even in the midst of a so-called housing
affordability crisis—close to construction costs. The value of
land generally seems modest, probably 20 percent or less of the
value of the house. To us, this means that America as a whole
may have a poverty crisis, but its housing prices are basically
being tied down by the cost of new construction.

High prices in some regions could be due to zoning costs inhibiting construction of new homes

Our alternative view is that homes are expensive in high cost
areas primarily because of government regulation, that is,
zoning and other restrictions on building. According to this
view, housing is expensive because of artificial limits on
construction created by the regulation of new housing. It
argues that there is plenty of land in high-cost areas, and in
principle new construction might be able to push the cost of
houses down to physical construction costs

The paper concludes:

Measures of zoning strictness are highly
correlated with high prices. Although all of our evidence is
suggestive, not definitive, it seems to suggest that this form of
government regulation is responsible for high housing costs
where they exist.

For renters, the Fair Housing Act may be another factor. A 2015 Supreme Court decision in Texas Department of Housing v. Inclusive Communities Project held that disparate impact claims are cognizable under the Fair Housing Act, even if there is no intention of discrimination. The United States Department of Housing and Urban Development (HUD) uses the legal theory of “disparate impact” to determine violations of the Fair Housing Act, even in the absence of discriminatory intent.

Frum the Wall St. Journal:

Last week’s Supreme Court decision in Texas Department of Housing v. Inclusive Communities Project also could compound disparities in the name of reducing them. The case concerned federal housing law, but its impact will be felt in countless other areas. The Fair Housing Act of 1968 makes it unlawful “to refuse to sell or rent . . . or otherwise make unavailable or deny a dwelling to any person because of race, color, religion, sex, familial status, or national origin.” As Congress wrote the law, a plaintiff must show that there was intent to discriminate.

The text of a housing law clearly written to punish only intentional discrimination can be rewritten by judges to punish practices that have a disproportionate impact on a favored group, even when there was no intention to discriminate.

Justice Samuel Alito explains in his dissent how disparate-impact analysis backfires:

As Justice Samuel Alito explained in his dissent, proponents of disparate-impact analysis often harm the very low-income minorities they are trying to help. When St. Paul, Minn., tried to crack down on slumlords by ordering the cleanup and repair of rat-infested housing units with inadequate heat and sanitation facilities, it was slapped with a disparate-impact claim under the Fair Housing Act. Even though there was no evidence of discriminatory intent, the improvements increased the cost of rent, which disproportionately impacted minority tenants. “The upshot,” wrote Justice Alito, “was that even St. Paul’s good-faith attempt to ensure minimally acceptable housing for its poorest residents could not ward off a disparate-impact lawsuit.”

Disparate impact litigation is not only a contributing factor to credentialism and the weak labor market, – but also increased rent, since landlords pass the insurance and legal costs to the renter. For example, the threat disparate impact litigation makes it very difficult for renters to negotiate lower prices because if a minority pays the regular price and sees this discrepancy, he has possible grounds to sue.

But like all too many social science problems, there are no definite causes or solutions.