Not sure what your point is. I said California because that’s the state you used in your post… But you’re right, it includes New York so replace CA with CA and NY and my statement still applies. Trump followers are ecstatic to hurt states like CA and NY.
Again, not sure what your point is, but this is not true. The federal government is constitutionally allowed to, and does, impose limitations and mandates on how individual states operate.
I posted YOU, not the feds.
Now I’m really confused. But in case this is the cause for confusion - I’m not a Trump supporter. I’m not against “sanctuary cities.”
Essentially any stay at home parent has a $x,xxx/yr day care job and any home schooling parent has a $xx,xxx/yr private school teaching job. That’s what the parent is saving by staying home and doing it themselves.
Nope. I was thinking of the Single Payer plan moving through the Cali legislature, since you mentioned “healthcare”.
An update on proposed Senate tweaks specific to 401Ks and IRAs:
Nope.
If you remove financial aid it will not make the costs drop. And the financial aid is not the reason costs have gone up.
The #1 reason college costs have gone up over the years is reduced state spending for college.
I agree with Xerty. Anytime the government starts spending money in a certain area, the costs increase. Healthcare and Education are the biggest two that most people see the effects of.
Let’s give an example. Suppose the US Government decided that infrastructure and homelessness were the biggest problems facing our country and decided to spend $1 Trillion on building. In order to incentivize existing construction workers to start building for the government, they raise the prices they pay. Because, why not, it’s not the government’s money anyway. And there’s just not enough unemployed construction workers to meet the new government demand. So to attract talent, the government has to raise the prices they pay.
In 5 years, what will happen to the price of construction work in the regular housing market? Will you be able to get construction work done on your house for the same price (adjusted for inflation) as before the government started interfering with the construction market? Will the price be cheaper? Or will the price be drastically increased?
If the government has artificially increased demand of construction, and the supply of construction workers is relatively the same, because training new workers takes years and there’s only so many people willing to take that job, what impact will that have on the decision of where construction workers choose to be employed? Now that the US Government is paying the bill and paying 30% higher than before the initiative started, will those same workers be willing to take on private construction jobs at personal residences for the same price as before, or will they demand more money?
When we look at the education market, when the US Government gives out easy loans to anyone who wants to go to school to study any topic they want, regardless of future job prospects, how does that impact supply and demand? Demand goes up for college, because demand, in terms of economics, does not simply mean desire for a certain good or service. Demand also requires means to pay for the good or service. I desire a yacht, but I cannot afford one, so the fact that I desire one has zero impact on the economic supply/demand curve for pricing of yachts.
Now that I’ve proven easy government loans increases demand for education, then we have to analyze supply. Is the supply of schools keeping up with demand? Certainly schools keep opening/expanding, but is it enough?
Another economic concept to consider is price elasticity. The price of chicken might be fairly elastic. If it gets too expensive, you’ll buy steak instead. The price of heroin is inelastic. If the price goes up, someone addicted to heroin will still pay the higher price. Elasticity is important because it determines how much price can shift when demand goes up for a good or service.
In terms of education in 2017, the government loan system makes a college education inelastic because the prospective student isn’t paying for it. The price can triple, and the prospective student, who is taking out student loans for the full debt, will still desire that service, and because the government is paying, the student will have the means to pay (via government-based debt), thus the demand stays the same.
Given a good or service with an inelastic price, how do suppliers react? In general, they raise the price. This is why heroin is so expensive, and it’s also why chicken is inexpensive and frequently goes on sale. Universities are the supplier of education as a service, and since the demand is inelastic, they respond by raising the price.
As far as the idea that school is more expensive due to state budget cuts, that only explains increases in state university tuition. Private universities do not get money from the state budget, but their tuition prices have been rising as well. How can that be explained by your model?
Its super easy to get a car loan. I’m sure there are dealers in most cities that will guarantee a loan to virtualy anyone with a pulse. Is this causing the price of cars to balloon out of control?
How much does the government give out in loans? How much has that figure changed over the past 20 years?
NO doubt that government policy impacts education costs in our nation. Mostly because the government is paying most of the cost.
First the private school tuition figures are mostly just an inflated MSRP. Most people don’t pay that. For every $1 they raised costs in the past 20 years they also increased aid by 60 cents.
Second, if anyone wants to complain about the cost of private school then they should consider going to a reasonably priced public school instead.
Also, FYI yes private schools often do get government funding. Much less than public schools, but they do get tax dollars. ~15% of private school revenue comes from government.
The reason why the price of cars don’t balloon out of control is because the loans are nowhere near as easy as student loans. Let’s compare the two, and to be as generous as possible, let’s assume you are correct:
If all of that is true, there’s still major differences between student loans and car loans:
Car Loan: Monthly payments due immediately with no grace period. Student Loan: Payments deferred for 4+ years as long as you’re in school.
Car Loan: If you stop paying, they repossess the car. Student Loan: If you stop paying, you keep the degree.
Car Loan: Requires additional costs external to the loan such as insurance and gasoline, to make the product useful Student Loan: The loan includes all costs associated with the product, including a loan to cover all reasonable living expenses while enrolled in school.
Car Loan: If you find yourself unemployed, or otherwise cannot pay the loan, the car gets repossessed Student Loan: If you’re unemployed/in distress, fill out an online document, loan repayment gets deferred another 6 months.
Imagine we changed the terms of buying a car to match those of student loans:
You can borrow the full price of the car, plus all registration costs, all insurance costs, all gasoline costs, and all toll road costs.
No payments due for 5 years until after you buy the car.
If you become unemployed, you fill out a one page form and no car payments due for another 6 months. You can keep driving the car during that time. If you’re still unemployed after 6 months, fill out the form again and get another 6 months out of it.
You can borrow an unlimited amount up to $60k for even a baseline luxury car.
Imagine that’s how car loans were changed to, and imagine all of the loans were backed by the US Government, so if anyone didn’t meet the loan terms, the car dealership still got paid by the government. What would that do the price of cars?
Which student loans are you talking about? Government based and private?
Government loans certainly don’t pay the full cost of college. The maximums on loans haven’t changed lately. Yet college costs keep going up.
Private loans are a small fraction of the total spending on college and few students get them. 7% of undergrads ant public schools took private loans and that figure is half what it was just a few years ago.
Also, you do actually have to pay back student loans. You sound like its free money.
Student loan availability HAS contributed to the increase in for profit college revenues. The for profit colleges are just crooks exploiting the system and preying on ignorant students. The government shouldn’t be backing those schools nearly as much as they are. It should be much harder to qualify as a college to get the student loan and grant aid eligibility.
Student borrowing and total aid has actually gone down in the past 5 years :
also :
Not really. If you can keep your AGI below $18k (perhaps by maxing out 401k, IRA and HSA), then your income-based repayment terms are $0. After 20 years, your loan is forgiven by the government.
If you are every unemployed, you can get deferment for 1.5 years. If you ever just feel like not paying them, you can get 3 years worth of another kind of delayed payments.
If you’re making $50k a year and maxing out retirement accounts, you can go the full 20 years until forgiveness and pay back nothing.
Yah not many of us have the plan of remaining poor most of our lives to dodge a loan.
Making $50k a year is the median income in most of the country and you can max out retirement accounts to get you down near $18k AGI. Unless you think the median person in this country is poor.
Not that it matters, since you said you have to pay student loans back, and I’m showing a nice way that you don’t. Earning $50k a year is a nice living in most of the country and you wind up with zero student loan debt owed before it’s forgiven.
Compared to your car loan analogy, you can’t push down the car loan repayment by lowering your income. That’s yet another reason why education costs have skyrocketed by not car costs.
Making $50k a year is not poverty. Living off $18k a year is pretty much poverty (depending on size of household)
Virtually nobody plans to do that nor does that.
The market isn’t driven by what 0.001% of the population might do.
Your argument is that student loans have inflated college.
Yet in the past 5 years student loan borrowing is down. So why have college costs continued to increase? If student loans make college go up then shouldn’t decreased borrowing cause that to reverse or at least stop? Yet it didn’t.
From 2001 to 2011 public research universities saw state and local funding drop from $11k per student to 8k per student. And in the same period net tuition went from $6k to 9k.
State funding dropped $3k and net tuition goes up 3k.
Prozario,
I have run the numbers a couple times now for both Senate bill and House bill…along with current law.
Again, my details (rounding)
AGI $150k
Married/Jointly
2 children
Itemized deductions: $17k (mainly mtg interest, SALT)
4 exemptions ($16k)
Tax bill:
Current law: $20,557
Senate Bill : $16,692
House Bill : $15,900
Tax cut of $3865 or $4657.
The tax credits are the big thing for me…I would go from $0 currently to $3300 under Senate bill, and $3800 under House bill.
I’m personally shocked…really didn’t have any expectation of a cut that would be more than a few bucks. Not a 20% reduction in my total tax burden.
I had similar results when I plugged in the numbers under each proposal. A savings of about $2000 either way vs. current law. We don’t itemize and have 2 kids, but will only be able to claim an exemption for one of them for 2017.