Financing Higher Education & Health Care Reform?

Posted by John Fees on Monday, March 29, 2010 Under: Education Reform
Last week attached to the Health Care bill was a little noticed or discussed reformation of the nations student lending business.    I won't debate the merits of either financing option (federal or private), but the public remains distracted by the main topic which is the rapidly increasing cost to attend college.

Just this weekend, the Boston Globe wrote about "the number of schools in the region that charge upwards of $50,000 annually for tuition, room and board, and mandatory fees is expected to more than double, according to a Globe survey of 20 colleges and universities. Just two years ago, less than a handful of schools cost that much (though many hovered just below the threshold.) Among the latest members of the $50K Club: Harvard, MIT, Wellesley, Brandeis, Brown, Dartmouth, and Holy Cross. They join Tufts, Boston University, Boston College, Smith, Mount Holyoke, and Babson, which all broke the barrier this year."

The only similarity to health care is the failure to let markets work.   Both health care and higher education suffer from the price elasticity that comes from 3rd party payer systems.     In the case of education, as long as there is a way to finance (borrow) to complete your education the costs seem to continually rise.   

One of the posts in response to the article is something that I have also been concerned about.  That is "Education is another bubble waiting to burst. It is a close parallel to the housing bubble, as some have noted. People are taking on debt they won't be able to pay and the colleges are like real estate agents, they don't care as long as they get their fees and pass the students on. More and more students will discover they've got a lifetime of debt as the lending interests have paid Congress to make these debts inescapable. Goldman Sachs can walk away from billions in commitments if they wish, but an ordinary person will be hounded for their college debt forever."

I also agree with the final analysis, that is "while there may be good strategies for a few individuals to avoid the worst of the bubble, there are not enough alternatives to take care of most students."

Bottom line, is that education is a great national resource and vital to the strength of our society and economy. However, the emphasis of colleges and public policy makers on the private benefits of a college education indirectly undermine the support required to keep it affordable for all.  No easy answers here, but it is certainly worth expanding the scope of the discussion.

In : Education Reform 

Tags: education  student lending 
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About Me

John Fees John Fees is an entrepreneur, strategic marketing executive and business leader in the fields of affinity, collegiate and partnership marketing. During the course of his career, John has founded and led successful companies specializing in strategic marketing and media, affinity, partnership marketing and financial services. Currently, he serves as the co-founder & managing director of NGI Group. NGI Group is a large shareholder in portfolio companies including GradGuard, MassDrive & MyLifeProtected.