that will burst because:
1) The perceived value of taking out tens of thousands in loans is diminished as high school age students (and their parents) see family and friend college graduates come back home because there are no jobs.
2) The first thing to happen will be a switch by prospective college students from thinking that junior colleges are for less academically gifted students to the realization that the cost of a four year institution far outweighs its value. Adding to this sea change are the very recently revealed studies that show almost zero learning in the first rwo years and the dirty little secret that it is easier to transfer into “prestige” universities in the junior year (because so many students drop out in the first two years).

But I managed to slog through until I came to: “Pell Grants must limit what colleges are allowed to charge recipients…”

Wait! What! Have I suddenly been transported to Kos or Huffpo??

There are more people in college because of Pell grants than there would otherwise be. Whether that’s the best use of the money is another matter. And not just (as glorybee points out above) because of the lack of jobs for which the Pell grants are supposed to prepare the students.

For instance, if you simply put that money in trust in the name of the student (a real trust fund, not the IOU version) at some modest interest rate, 50 years later the retiring student would have a tidy sum, possibly more than the increase in earnings they achieve as a result of going to college. There are all kinds of nuances there, of course, but it’s an open question, popular wisdom notwithstanding.

But the real thing you get more of as a result of Pell grants is not students, but tuition. The more subsidy, the more the colleges and universities (who are the agents administering the grants) can charge.

Yes, Pell Grants and other government programs are pushing the cost of college well above its actual value. That’s a clear truth to any conservative who’s had a taste of economics. From start to finish, though, your post is a stream of unfounded assertions. Furthermore, I have no idea what the path is supposed to be from your lede to your conclusion.

Your first sentence claims that “subsidization increases demand” is a fallacy. That’s a shocking assertion and I was interested in your defense of it, but as far as I can tell you never attempted to.

Instead, your conclusion is that government interference should be offset by more government interference: “Pell Grants must limit what colleges are allowed to charge recipients, or they will only fuel an endless tuition-inflation problem that will make college completely unaffordable to anyone not on the Federal dole.” Put simply, that’s crazy talk not worthy of RedState’s front page.

http://archive.redstate.com/blogs/kyleh/2006/nov/20/student_funding_ideas

Part of the problem with government subsidized education is that there is no connection to performance.

A very small subset of college students receive Pell Grants, and thus their impacts on costs are marginal. The real impact on costs is the availability of student loans, which are truly the endless pit of subsidization for college pricing and are also becoming a real trap for anyone who takes them, as wage levels stagnate, the payoff from the loans diminishes and the impact on your ability to save/invest/consume is greatly reduced for years after college.

As a conservative I understand that using other people’s money to go to college is not living by my principles. Or rather, using people’s money when those people have no oversight over my education. My parents have graciously offered me a college education, and I have taken them up on it.

Furthermore, the pell grant system is frequently abused at my institution, though by the students rather than by the school. I know someone who has been using the pell grant to stay in school so she has health coverage until her husband can graduate. I have also heard of people using monies from the pell grant beyond their tuition to pay off cars or take a vacation. How much such compares to problems with other universities I do not know.

reason employers are requiring college degrees for the simplest of jobs, is so they are assured that their employees have at least the equivalent of a high school education – sadly that is not always the case. Working in HR, I read the resumes of many, many applicants with 4 year degrees who cannot spell correctly, use proper grammar, or put together a coherent resume. In this country, we have put such an emphasis on acquiring a college degree that a) college degrees are becoming meaningless and b) because there are so many new graduates, they are going to work for a lot less money than a 4 year degree previously commanded. Huge sums of money are being spent by people in the pursuit of Master’s degrees or doctorates that never pay off.
What happend to trade school? Now, plumbers, electricians, and HVAC people just to name a few, make a lot more than someone with a generic college degree.
Why is it that the greatest country in the world is rapdily becoming the dumbest and the poorest?

You sorry rascal, I could just skin you alive right now…figuratively not literally of course. LOL!!!

When the bottom fell out of manufacturing in my neck of the woods, I just sort of drifted around for a while, rather naively believing that it would miraculously come back to life.

It didn’t happen. Eventually, I went to back to school…on a Pell Grant, mind you. I could have applied for every form of welfare known to mankind, but I didn’t. This one thing, going back to school, I did do for a degree which I will finish in December.

What you have stated in this diary is true, RMJ. The market mechanisms involved in the situation do encourage colleges to increase tuition costs dramatically and even recklessly. It is a bubble that will burst, and fairly soon. And it can lead students to have unrealistic expectations about finding a job when they graduate. So when it comes to defining whether or not those costs are justifiable…the truth is that they probably aren’t in the majority of cases.

You know, rarely ever do students think to say thank you to taxpayers for an opportunity such as the one I have. So let me say thanks to each of you right now. I’ll try to make sure that it is was worth the investment of your hard-earned dollars in my case.

***Sigh*** Well, I still have studying to do before I call it a night.

My fourth child is applying for college and just got accepted to 9 out of 11 schools he applied to.

Now you might say congratulations on having such a brilliant child. While I love my son, this isn’t the case. What has happened is that like with all the other kids we have we knew the kids grades (B+) and his scores on the SAT etc. Good solid scores but nothing special, and applied to 11 colleges so that he would have a chance of hopefully getting into ONE. But the bubble has already burst. We don’t qualify for any financial aid because both my wife and I work and are paid enough combined to take us out of consideration and that is really what is happening. If you are a “full pay” you are desperately needed by every private college in the second tier of American Colleges, since it is by over charging the “full pay” parents that they are able to “discount” the so called scholarships to the average financial aid recipients. And what is happening in this third year of recession? No one can get a home equity line to borrow against to send their kid to college, Financial assets are largely still depressed, home prices are down across the board so all the phoney baloney “analysis” that the colleges used to do to keep this ridiculously high tuition bubble going are already bankrupt.

In case you haven’t got 4 kids all going or have already gone to private colleges you may not realize that the majority of second tier private colleges( and by second tier I mean all except the top Ivy League and Standford types) are charging $52,000/year or more for their “educations”. So it is no wonder that the scam is collapsing.

Our problem is now explaining to a nice but far from highly gifted son that he really isn’t a genius and that he is just a beneficiary of a collapsing fraud once again created and perpetrated by our Government. Aren’t unintended consequences wonderful?

Let’s give these idiots in Washington even more of our money so they can destroy even more of our society.

The majority of parents and students may not realize what is happening to them at private colleges when they get a “scholarship”. What the real cost of sending a kid to college for a college is not clear but what is clear is that it is a lot less on one level then what they claim. The so called full sticker price rack rate that is on the tuition page of all the colleges is what they think the market will bear. Now obviously what the market will bear is a hoped for number. College being touted by everyone in society as the greatest thing since sliced bread the number of potential applicants is close to unlimited or at least was as long as the US was riding a wave of housing price inflation and stock market bubbles.

So, the point I want to make is that in the fall of every college application year the schools have what they call “Early Admission” or Early action or a few new variations. This round of acceptances has one goal. That is to capture as many potential students who are dumb enough to pay the full all in “rack rate” of tuition that the overcharging they can then lock in can be used for the main round of applicants in the following spring can be offerred scholarships to attract those kids who keep the school’s reputations us in all the areas needed to be stroked. I hope this is helpful. Basically of the $52,000 /year the full pays kick in to the pot $15,000 -$20,000 goes to pay for some other kids scholarship.
Just thought some of you might be interested in why this particular market is so distorted.

When you try to be too witty with obscure references I quickley lose interest and move on to other articles – usually getting through only about 1/3 of your post. zzzzzzzzzzzzzzzzzzz

“What we have here is a failure to communicate”
Reading this article was like getting on a roller-coaster in the middle of the ride blindfolded.
Obviously the result of an over priced education. It seems the more money waste on institutional education, gives us a dumber America.
Maybe farming should have been studied. Digesting this article was like eating processed foods with zero nutritional valve.

I was let go at a Real Estate company, filed unemployment and told I qualified for going back to school (over forty, female, displaced homemaker in the state of MN). So off I went. Jan-Dec of 2005 I crammed a two yr program into one year. Got my IT Degree. I now am a traveling consultant and pay a lot of taxes.
That is the good news.
Yes I had a Pell Grant and the state paid my tuition.
What it didn’t pay was my books, (Over $2000 for one year’s worth), my living expenses (gas money to and from school alone…), computer and parts, etc.
I still ended up with $18,000 in loans. I know that is small change compared to some of these young people today (I have heard into the multi hundred thousands…)
I feel like I did what the system was designed to do: went back to school, graduated, got a good job. I had to pass testing, keep a 3.0 or better (I maintained a 4.0 with 28 credits my last semester), file enough paperwork to line an elephant cage and maintain a family of three teenagers and the home. I love what I do now. AND I pay taxes.
By the way, did I mention the taxes?
I used my one year of unemployment and the offer of the schooling.
But then I got off the dole and started paying my loan back, and the taxes. Speaking of which, April 15th is almost here….ekes.
Thanks Eric for your information and your zeal for Patriotism and our Country.
Signed, AirForce Wife, Army Mom daughter Aunt Niece, pro NRA, pro LIFE
…….try going back to college with that belief system these days, now there is another whole topic of discrimination…….