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The coming depression blog | January 20, 2019

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Why is education so expensive in the US?

Education is so expensive for many reasons, but one has to do with the increasingly prestigious university … which means – really nice (expensive) bedrooms, dining rooms, gym, library, etc; famous /prestigious professors, the latest technology, etc. They also cover the cost of those who cannot afford. People in a school pay the money if they CAN, while those who CANNOT pay, may receive financial assistance, and the school has to make up the difference somehow. Then there is also a growing demand – students increasingly apply to college, then colleges may ask for more (and often need, as more students come and need more of school).

It is no more expensive than elsewhere. It’s just that you have to apply for loans, etc., and to attend public universities to get a government funded one. In other countries it looks like they are cheaper, virtually all schools are public schools, and the loan is automatically given to you (for example, in Australia it’s called HECS – when you register check a box if you want to hire a HECS debt, or want to pay for it) and payments are taken from their taxes.

Progress in the American system is to bring it in line with what other countries would do to have public schools financed, for federal funds. And when you check a box to make the government pay the difference which you pay in your tax return.

Do not hold your breath. The current situation suits politicians perfectly. The federal government cannot claim education is a state responsibility, so go see them if you have a problem. In Australia, the federal government began to act to ensure that all states have an elementary education and HS, but they have talked about for decades. Some commentators will only believe, when it happens though. Just like  U.S. system of higher education that fits perfectly to the politicians – they can point fingers at each other rather than agree with it.

Education is an investment. To make money, you have to spend money. The economy is simple, but again, your school probably will not get into this.

One day, we might have to take a loan to fill the gas tank. As soon as prices go up to the point where consumers perceive product is too expensive habits will and gas consumption will become less. The market corrects the actual value of such goods. Education is different. Students might as well be using Monopoly money. According to a study 25% of the loans for four year periods end up in default. Yet our government is pushing them. Higher education is a political talk. Post-secondary education is sliding into the entitlement category instead of being known as a privilege.

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