Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
I have a lot of opinions on this subject, but I'll restrain myself to ask the question: "Is government assistance for education encouraging the extreme growth in its costs?"
If yes, how does one better go about providing assistance?
Being a grand father and contributor to two 529, this is on first blush, outrageous.
I say this because this country and OUR government is making billions of dollars every year on student loans. This is obscene. For a people to succeed, they need to have universal education. It should be free. For our government to be profiting on the backs of students trying to get ahead is unbelievable. Note that these students, by definition, are the poorest, otherwise, they wouldn't need the loans. Yeah, how elitist is this?
Nopers, higher education should be FREE to anyone able to be admitted and that can maintain good grades.
What I propose is to apply a surcharge tax to all the S&P 500 corporations of 10% each to fully subsidize higher education. I mean, hey, all we hear is how they big corporations create jobs and are always eager for qualified applicants.
A nice contrast between the Huang analysis/quote and the Ellis quote, as the latter does not appear to understand the proposal. It effectively applies to high earners chiefly; existing moneys are unaffected; it will be a beneficiary tax only, not on parents, and hence low; it occurs upon withdrawal only; and it is coupled with a credit expansion, so has an attempt at means-testing built in. It may not be a good idea in other respects or for other reasons, but to judge it, it's important to understand the details and not the headline. As always.
For a people to succeed, they need to have universal education. It should be free. For our government to be profiting on the backs of students trying to get ahead is unbelievable. Note that these students, by definition, are the poorest, otherwise, they wouldn't need the loans. Yeah, how elitist is this?
Nopers, higher education should be FREE to anyone able to be admitted and that can maintain good grades.
Herein lies the problem. Universities of the sort most people think of when they think of "college" exist primarily to produce research and secondarily to produce researchers. They do not exist to educate undergraduates (I'm excluding the sorts of colleges where Professor Snowball is tenured, which exist far more for undergraduate teaching). You want a place where really smart people can exist and not be hassled by everyday life in order to produce cures for awful diseases, and new technologies to make our lives easier, and art that makes our lives more livable, and theories that improve social structures. The model has always relied on undergraduates as a sort of necessary evil to bring in funding and to cull through for more researcher prospects (think about how many tenured professors or grad students you've ever met who say they chose their profession because they wanted to teach -- I'm willing to bet the number will rapidly approach zero). It's an historical anomaly coming out of World War II that created the push for universities to be a sort of vocational training grounds. Universities really aren't set up to do that, and do a pretty poor job of it anyways (how many of you learned everything about your job *on the job*?).
In any case, if you make tertiary education free, you risk undermining the research aspect of American universities, which, as a whole, represent the single greatest collection of knowledge ever known to mankind (and it isn't close, even to other modern countries).
One giant reason costs have soared for undergraduates is because it costs a lot of money to conduct good research. A lot of that money used to come from the Federal and state governments, but isn't being provided anymore after tax cuts over the past 20 years. States get left holding the bag when the feds cut funding for mandated programs. Universities are often one of the first place funding gets cut. The cost gets passed on directly to the consumer.
Another reason is simply that we want our universities and colleges to do and provide more and more, particularly to undergrads. And they simply aren't set up to do that without more capital expenditure. If your primary job is to produce widget x, and suddenly you find yourself having to provide for entirety of the welfare and vocational training of intern y, you have to choose how to allocate your money or come up with a whole bunch of new money by raising costs.
All of which is to say, at least I finally get where the 529 adjustment is coming from thanks to the article: The Administration wants to close a tax shelter for wealthier Americans that results in their children having a future advantage and is theoretically not available to middle class and poorer students, who end up either taking loans or not going to college because they perceive they can't afford it. That at least is a reason this was proposed (other than Obama likes taxing people). The problem is that the proposal still looks at colleges and universities as primarily educational endeavors and a ticket to making your life better. While it's true that college graduates make far more over their lives then those without a degree, I've never seen anyone actually study whether that's because those with degrees have innate advantages other than the degree.
What I'd like to hear proposed is a way to move our secondary education system towards a model that teaches more specified learning and vocational skills (and that doesn't have to mean plumbing and car repair. Ask yourself, what does a college know about training people who want to go into business?) When I arrived in the U.K. for grad school, I distinctly remember being shocked at how much better British students were prepared coming out of school than their American counterparts. The level exam system enabled them to already focus on specific subjects they were interested in, and by the time they got to University they were focused on studying one thing only. They didn't need two years of prerequisites because they had them in high school, the time to degree was shorter, and the level of work they were able to do immediately was much higher. As a side note, because tertiary education was free, the University was falling down. It simply couldn't get enough funding from the government to support its very old infrastructure, and couldn't charge students to make up the difference (the college bursar once showed me a report showing how my College was losing L900 a month per student on housing alone because of upkeep). It was also losing top researchers to American couterparts because of facilities and salaries.
It's great to want an education and to make more money. But 529s aren't a major problem. Unprepared students and their parents wanting universities to cater to them is. Change the model which causes that problem. Create more Community Colleges. Let research universities get back to doing what they do best. And if you want to do something about 529s, do something about the fees which make them useless to most savers.
Comments
If you tax it more, you get less of it.
So I guess Obama wants less saving for education....
http://video.cnbc.com/gallery/?video=3000349105
If yes, how does one better go about providing assistance?
Regards,
ted
Being a grand father and contributor to two 529, this is on first blush, outrageous.
I say this because this country and OUR government is making billions of dollars every year on student loans. This is obscene. For a people to succeed, they need to have universal education. It should be free. For our government to be profiting on the backs of students trying to get ahead is unbelievable. Note that these students, by definition, are the poorest, otherwise, they wouldn't need the loans. Yeah, how elitist is this?
Nopers, higher education should be FREE to anyone able to be admitted and that can maintain good grades.
What I propose is to apply a surcharge tax to all the S&P 500 corporations of 10% each to fully subsidize higher education. I mean, hey, all we hear is how they big corporations create jobs and are always eager for qualified applicants.
Time to pony up.
and so it goes,
peace,
ronp
In any case, if you make tertiary education free, you risk undermining the research aspect of American universities, which, as a whole, represent the single greatest collection of knowledge ever known to mankind (and it isn't close, even to other modern countries).
One giant reason costs have soared for undergraduates is because it costs a lot of money to conduct good research. A lot of that money used to come from the Federal and state governments, but isn't being provided anymore after tax cuts over the past 20 years. States get left holding the bag when the feds cut funding for mandated programs. Universities are often one of the first place funding gets cut. The cost gets passed on directly to the consumer.
Another reason is simply that we want our universities and colleges to do and provide more and more, particularly to undergrads. And they simply aren't set up to do that without more capital expenditure. If your primary job is to produce widget x, and suddenly you find yourself having to provide for entirety of the welfare and vocational training of intern y, you have to choose how to allocate your money or come up with a whole bunch of new money by raising costs.
All of which is to say, at least I finally get where the 529 adjustment is coming from thanks to the article: The Administration wants to close a tax shelter for wealthier Americans that results in their children having a future advantage and is theoretically not available to middle class and poorer students, who end up either taking loans or not going to college because they perceive they can't afford it. That at least is a reason this was proposed (other than Obama likes taxing people). The problem is that the proposal still looks at colleges and universities as primarily educational endeavors and a ticket to making your life better. While it's true that college graduates make far more over their lives then those without a degree, I've never seen anyone actually study whether that's because those with degrees have innate advantages other than the degree.
What I'd like to hear proposed is a way to move our secondary education system towards a model that teaches more specified learning and vocational skills (and that doesn't have to mean plumbing and car repair. Ask yourself, what does a college know about training people who want to go into business?) When I arrived in the U.K. for grad school, I distinctly remember being shocked at how much better British students were prepared coming out of school than their American counterparts. The level exam system enabled them to already focus on specific subjects they were interested in, and by the time they got to University they were focused on studying one thing only. They didn't need two years of prerequisites because they had them in high school, the time to degree was shorter, and the level of work they were able to do immediately was much higher. As a side note, because tertiary education was free, the University was falling down. It simply couldn't get enough funding from the government to support its very old infrastructure, and couldn't charge students to make up the difference (the college bursar once showed me a report showing how my College was losing L900 a month per student on housing alone because of upkeep). It was also losing top researchers to American couterparts because of facilities and salaries.
It's great to want an education and to make more money. But 529s aren't a major problem. Unprepared students and their parents wanting universities to cater to them is. Change the model which causes that problem. Create more Community Colleges. Let research universities get back to doing what they do best. And if you want to do something about 529s, do something about the fees which make them useless to most savers.