The Instigator
TheBossToss
Pro (for)
Losing
3 Points
The Contender
Cody_Franklin
Con (against)
Winning
11 Points

Governemt Should Intervene to Lower College Costs

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Post Voting Period
The voting period for this debate has ended.
after 3 votes the winner is...
Cody_Franklin
Voting Style: Open Point System: 7 Point
Started: 8/8/2012 Category: Education
Updated: 5 years ago Status: Post Voting Period
Viewed: 7,604 times Debate No: 25064
Debate Rounds (5)
Comments (21)
Votes (3)

 

TheBossToss

Pro

Rules
Debate is 5 rounds. 1st round is acceptance, definitions, etc. 2nd is for opening arguments. No new arguments in Round 5. 72 hour debate rounds, 1 week voting period.

Pro will argue that the government should intervene to lower college costs. Con will argue that government should not do this. Both sides are allowed to use any kind of justification they so desire, be it political, economic, moral, legal, etc.

Let the debating begin!
Cody_Franklin

Con

I accept.
Debate Round No. 1
TheBossToss

Pro

I wish to thank my opponent for accepting the debate and I hope it will be an interesting discussion. Here, I will attempt to prove that college costs are rising faster than the public can afford, and there is no forseeable decline, which necessitates government intervention. Con will attempt to prove that college costs are acceptable on their current path. Because of this, BoP is shared.

I. Rapid Increase in College Costs and Student Debt

The cost to go to college is becoming insurmountably large in the modern era, and is still increasing. College tuition is inflating almost twice as fast as the rate of baseline inflation in the economy[2]! What this amounts to is college tuition is rising far faster than purchasing power per capita (PPP) is increasing, saddling both students and their families with more debt after college. College costs, historically, have gone up about twice the rate of inflation each year, amount to approximately an 8% tuition inflation rate per annum, while GDP per capita (PPP) historically increases approximately 5% a year. This means that college costs double every nine years[2], while GDP per capita (PPP) has only gone up by approximately 25% since 2003, and this rate has also been historically constant[4]. Family incomes, meanwhile, increase on average by only 1% a year. With this wide disparity in increases, it would be foolish to suggest anything other than that debt among US students will continue to increase, saddling the "new competitors" of our globalized economy with more they will have to worry about, and more they will have to pay for. In fact, the average (this does not account any graduate programs the student might wish to partake in, nor does it take into account debt taken on by the parents of the student) debt after college was over $25,000 in 2010, over 5% higher than the average debt of 2009[3]. Of 1,100 schools surveyed under the Project on Student Debt study, 98 (9%) said that their students were graduating on average with $35,000 of debt[3]. However, as these numbers were voluntarily reported by the collleges themselves, the numbers have the potential to be significantly higher, and they will be significantly higher as college tuition continues to skyrocket and average GDP per capita (PPP) and family income remains growing slow and steadily[5][6].

II. Lack of Free Market Forces Normally Associated with Reducing Costs and Making Services More Affordable

"Top institutions have chosen to maintain and increase quality largely by spending more, not by increasing efficiency, reducing costs, or reallocating funds"[1]. Normally, when business compete to gain a greater share of the market and attract more customers, they try to put out better products and reduce the cost of business, to make their products as cheap and attractive as possible to the consumer. However, as this quotation shows, colleges and universities are not doing this. In their drive to increase quality, they have thrown cost considerations out the window. Frankly, there is no incentive to do this for most colleges. Harvard, Stanford, the University of Chicago, Rice, Johns Hopkins and many, many others will all have students apply to them, as it is becoming increasingly apparent a college education is necessary for survival in today's hypercompetitive economy (this will be further looked into next section). With this guarantee that they will receive business no matter what, the only thing colleges need to do to compete is increase the quality of their facilities. However, while this is all well and good, it costs money, money which is then dumped onto the backs of students in the form of additional tuition. Now, one might argue that this sort of competition is only for schools like the Ivys, and that less-well-known schools would be working on lowering costs to appear more attractive. Not so. On average, Ivy League schools have in increase in tuition per annum lower than the average tuition rate per annum of all colleges[7][8]. In reality, those lesser-known colleges are increasing their quality faster than the well-endowed Ivys to catch up to them, and they do not have the high level of endowments the Ivys are typically associated with. So here we have it; the high-level colleges and universities are incredibly costly already, and smaller schools are fast reaching that level of costliness. There are no free market forces going, "Wait, stop! This is too much!"; those students who wish to pursue a higher-level career cannot choose to not go to college, and as such there is no possibility of not buying the product as it is an absolute necessity. In fact, the free market forces present are driving the cost upwards; when cost is irrelevant as it is to the institutions of higher learning, quality is all that matters, further pushing the price upwards[1]. Meanwhile, the federal government, while it has the potential to be a positive force, has been a negative one. As the government has pressured universities to cut indirect costs rather than making advancements in efficiency, the price of research has skyrocketed, which has been dumped on tuition[1]. All of these factors are contributing to making the cost of higher learning skyrocket at a time when it is necessary more than ever.

III. Necessity of a College Education

costs of college chart
Nowadays more than ever, a college education is a necessity. Beyond the well-cited benefits of even a bachelor's degree (between $250,000 and $500,000[10]) vs a high school diploma, there are vast social benefits, garnered by all of society, that result from students graduating college. When access to higher education was easier, a healthy middle class and US economic dominance resulted, long past the time when Europe and Asia recovered from World War II[11]. However, as student debt has soared, income disparity and a shrinking middle class have been the result[9]. Competition from Europe and Asia has increased, and while much of this can be attributed to growing Chinese economic might, at least some of it must be attributed to a more costly education system. Additionally, college grads are less likely to commit crimes, live longer, healthier lives, and make more informed political decisions, on average[12]. All of these things benefit not only the graduate, but society as a whole. Thus, it is more important now than ever to go to college, but as has been shown, college costs and student debt are increasing rapidly, putting a strain on students, their families, and society as a whole.

IV. Conclusions

With students, on average, coming out of college with $25,000 of debt (an article in the Wall Street Journal recently said that the total amount of education-related debt still circulated has surpassed $1T) and college and university tuition rising faster than family incomes and GDP per capita (PPP), the current education system is becoming too expensive to bear. At a time when a college education is being needed most, it is becoming harder and harder to get. Without normal free market forces available to drive prices down, the federal and state governments must take a hand. I propose state and federal governments act to best lower costs. Their hand should be minimal, but government monetary aid of some sort will be necessary to curtial these rising costs. It is also important to remember that this expenditure would be investment rather than another government program with no return in sight.

Your turn, Mr. Franklin.

Sources will be posted in the comments, as I do not have room here.
Cody_Franklin

Con

R2 Theme:

I'll address Pro's arguments in sectioned line-by-line format.

Tuition Hikes and Debt Burdens

1. Correct, costs are increasing. The question is why? Pro doesn't make the case that we have an unregulated market in education, which is what would be required to make the normative argument that we ought to begin intervening. As I will soon argue, there is already a heavy political interest in increasing access to education.

2. Analogy to the pre-crash housing market: like higher ed, housing was also the subject of political interest. Unsatisfied with the natural rate of homeownership, programs were instituted to expand access to buyers, many of whom would otherwise be unable to afford it. These measures include tax credits, loan subsidies/purchases [1], and low interest rates. Similarly, in higher ed, there are tax credits for being a full-time student, subsidized loan programs, Pell Grants, etc.

The story is the same for both industries--the natural rate of participation isn't "enough" according to a political (non-market) calculation. To remedy this, programs are enacted to incentivize participation. The market operates through signaling--market participants send signals carrying information about what's profitable, where capital should flow, which investments are safe/risky, and so on. This is how the price mechanism works for supply and demand--when production exceeds demand, prices drop in response to the surplus. Participants leave the oversaturated market, investment declines, and prices equilibrate as capital goes elsewhere. When politics interferes with signaling, incentive structures are modified, altering what signals are sent/received. This is how bubbles are created. In housing, cheap capital, low rates on mortgages, the state's participation in the secondary mortgage market, tax credits, etc. created an environment in which capital flowed into the housing industry--subprime lending, construction in excess of real demand--rather than being efficiently allocated based on healthy signals. The result? High default rates, near-collapse of the financial services industry, insolvency, record foreclosures, declining property values, and a lot of debt left to people who had no ability to pay, and no business buying an expensive home.

What about higher ed? With politics having restructured incentives to move capital to ed, we see many of the same signs ignored during the housing boom--record highs in participation [2], low interest rates, massive subsidy/ loan programs, high debt burdens, and cost increases (climbing home values paralleling cyclical tuition hikes). In short, as with housing, incentive distortions shift capital into ed to the exclusion of other investment opportunities. Even people who denied there was a housing bubble admit the problem exists in industies like healthcare, where big subsidy nets lead to "unconstrained demand" [3]. Intervention beget similar conditions in higher ed, where people who otherwise couldn't afford it are able to enter. This is bad for numerous reasons:

A) Students and parents end up with massive debt which, being required to make access to education tenable, is often difficult or impossible to repay, as evidenced by default/delinquency rates [4][5]. For those who do pay off loans, the principal + interest-over-time also tends to diminish the advantage of any increase in income they might see. And this assumes that their degree is productive and marketable (i.e., that it involves useful skills and isn't connected to an industry in which there is a labor surplus).

B) Since subsidies and loans permit [an increasing quantity of] students/applicants to meet tuition, universities can increase the pace at which they inflate tuition until public funding can't keep pace with cost increases. If my story is true, then public financial assistance for borrowers is actually partly responsible for tuition hikes.

C) The relationship between subsidies and pricing--especially the rise in pricing for the non-subsidized--is already well-documented: health care, formal housing, and even in niche markets like rent vouchers for low-income housing [6]. So, not only do subsidy programs endanger the people who use them as the same assistance endangered prime and subprime borrowers in the 2000s; they also raise costs for "prime students" who otherwise would not be required to borrow money. Since tuition increases outpace the savings and inflation rates (also given the Fed's current policy of minimizing interest rates), families who would have been able to save enough to put their kids through college are being ushered into subsidy and loan programs which are themselves responsible for runaway tuition increases, creating a weird feedback loop where cheap, subsidized money leads to cost increases, and cost increases outpace savings and inflation to such an extent that affluent families come to rely on subsidies to make up the difference.

"Market Forces"

None of this is actually an argument for intervention--Pro is only contending that costs are going up, and that universities have no incentive to cut costs. But, given a) his lack of an interpretive framework apart from "research", and b) my story about bubbles, capital allocation, and the cost-subsidy link, which explains the incentive distortions and guarantees of business, this section is ammunition for my thesis. Plus, many of these private universities which bump up tuition tend to have 90-100% financial aid rates [8], often because they're smart about their scholarship/grant funding and getting contributions. Harvard, for instance, gets a lot of private funding, and has basically eliminated loans from its funding program [9], and still give massive funding to 70% of their students [10].

The Value of a Degree

1. Using politics to determine the value of a degree is detrimental--investing the time/money makes degrees a signal of higher productivity, and focusing on maximizing the quantity of education devalues the investment for people to whom it would otherwise be valuable, since it just increases the supply of degrees without worrying about whether that education increases productivity, or whether it's a good investment for everyone (which can't be determined politically).

2. Access to education is higher/easier than ever, so Pro's nostalgia about "easier times" is unwarranted.

3. Degree surplus is evidenced by the high rate of unemployment/jobs which are unrelated to or don't require a degree [7]. Some of the degrees also aren't marketable, e.g., art therapy, music, but, even if they were all high-skill degrees (ex: if we selectively subsidized only engineering, computer science, math), we'd just end up with a surplus of engineers, computer scientists, etc., driving down income level and driving up unemployment in those fields. Subsidizing, which floods the market with degrees, and inhibits their capacity to act as signals to employers (disadvantaging those for whom a degree would be a good investment), is just a way of distorting the price mechanism that determines how much of any good/service, including education, needs to be "produced" (ex: how many degrees the market can handle before oversaturation occurs and the price of labor drops, which degrees are best to invest in), which means that political administration will be less efficient, a priori, than permitting the market to send signals unhindered about where capital--including human capital--ought to go. Politics screwed up housing by directing excessive amounts of capital into that industry, to disastrous results, and it'll screw up education if signals continue to be ignored. Pro's case just assumes "education good", then attempts to maximize how much we get without consideration for how much is socially optimal, or even which degrees are the best to invest in. College is great, but it's not right for everyone, and enticing everyone to sign up will only lead to ruin.

Your turn, Pro.
Debate Round No. 2
TheBossToss

Pro

I apologize to the voters. Con had a far superior argument, and after hours of attempting to come up with counters, none could be found. Excellent job Con, I concede.

Vote Con!
Cody_Franklin

Con

That's very charitable. Thanks.

1. Give me arguments, but give Pro conduct.

2. To Pro--if you wouldn't mind just posting quickly in Rounds 4/5 so that this debate isn't just sitting around, that'd be awesome.
Debate Round No. 3
TheBossToss

Pro

I like cats.
Cody_Franklin

Con

I like cats, too. Not really a dog person.
Debate Round No. 4
TheBossToss

Pro

I have a puppy, but I prefer my cat most of the time. She enjoys eating. A lot.
Debate Round No. 5
21 comments have been posted on this debate. Showing 1 through 10 records.
Posted by addiedd 4 years ago
addiedd
Hmmm, I think some form of intervention would be good so that the education system would be truly meritocratic. High college fees would deter those who are poor from obtaining tertiary education, hence condemning them to the 'poverty cycle'.
Posted by Cody_Franklin 4 years ago
Cody_Franklin
I think you were a little late commenting, TV.
Posted by tvellalott 4 years ago
tvellalott
Curb stompage.
Posted by TheBossToss 5 years ago
TheBossToss
:D

Comment can't be in all caps, so.... gwguewbgwrg
Posted by Cody_Franklin 5 years ago
Cody_Franklin
@ WSA: Fo sho, man.

@ TBT: Lol. Yeah. Like I said in the last round, your graceful concession definitely earned you conduct.
Posted by Wallstreetatheist 5 years ago
Wallstreetatheist
Cody, can I marry your case?
Posted by TheBossToss 5 years ago
TheBossToss
I got three points! HELL YES!!
Posted by Cody_Franklin 5 years ago
Cody_Franklin
K. Whenever you want to respond.
Posted by TheBossToss 5 years ago
TheBossToss
Alright, good good good. Expect a response soonish. And I think next we should set up a debate contending some number >8,000 words should be the new max word count. Not enough space! >.<
3 votes have been placed for this debate. Showing 1 through 3 records.
Vote Placed by Wallstreetatheist 5 years ago
Wallstreetatheist
TheBossTossCody_FranklinTied
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Total points awarded:15 
Reasons for voting decision: ERMAHGERD FERNCER FERST
Vote Placed by Magicr 5 years ago
Magicr
TheBossTossCody_FranklinTied
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Total points awarded:13 
Reasons for voting decision: Concession.
Vote Placed by Ron-Paul 5 years ago
Ron-Paul
TheBossTossCody_FranklinTied
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Total points awarded:13 
Reasons for voting decision: FF.