Why College is So Expensive

2/25/2012

In this article from SmartMoney the rising cost of college is addressed. We can see with supply and demand everything that is at work in this article. Consider the following: Let's assume that going to college is a "normal good" and that the extension of loans and grants are a form of increased income. What does that do to the demand curve for college? What would happen to the equilibrium price and quantity of going to college? Using a supply and demand graph, could you show this?

Jamal Atwell

2/26/2012 06:46:11 am

I would assume that if college were a normal good and grants and such are an increased income that would cause the demand for college to increase. The equilibrium price would also increase but not the quantity.

Blake Morris

2/27/2012 05:25:12 am

If college is a normal good and grants/ loans are viewed as a increase in income, we would see the Demand curve shift rightward. The equilibrium price and quantity demanded would increase as well due to the shift in demand. Yes using a supply/ demand graph you could illustrate this.

Jacob Page link

2/28/2012 04:19:35 am

The demand curve in theory does shift right with change of income. The equil. price and quantity demanded would increase as well. But with tuition continuing to increase along with interest rates on loans, I forsee prospect students struggling with making the decision to take on a huge loan that will carry with them for a long time. The pressure of the loan hanging over there heads might get the better of them. My advice is join the military and let them pay for your college.

R10379616

2/28/2012 06:05:11 am

If college were to considered a normal good an grants and aid were seen as an increase in income then Demand would shift in a positive manner to the right, increasing the equilibrium price and quantity if represented on a graph.

R10412481

2/29/2012 02:57:22 am

If college is considered to be a normal good, and grants/loans are a form of increased income, the demand curve for college will shift to the right. The equilibrium price and quantity will also increase, however, according to the Bennett Effect, increased financial aid enables colleges and Universities to increase tuition. The price for attending college has tripled while adjusting for inflation as well. I agree with Jacob, just go to the military and let them pay for your college!

R10386241

2/29/2012 04:37:48 am

As others have stated, the demand curve would indeed shift to the right if those things were considered an increase in income. The equilibrium price would increase as well. This could certainly be illustrated with a supply/demand graph...in fact, we should go over it in class!

R01948411

2/29/2012 05:13:27 am

The demand curve would shift to the right increasing, and the equilibrium price and quality would also increase as well. With greater income more students are going to attend college and more people will go back to school. And yes it can be used in a supply/demand graph.

R10455834

2/29/2012 11:18:28 am

If their is increased income that would increase the demand for college. Not only that but preferences have definitely changed over the years to favor attending college rather than forgoing it. This has definitely driven up the price of college.

R10429661

3/1/2012 01:47:43 am

Assuming the college is a normal good and the aids are increased income then the demands curve would shift too the right. Also causing the equilibrium price to rise. Reason being if there is a higher income among people then more people will be demanding college.

R10403506

3/1/2012 07:58:25 am

In my opinion, college is expensive and is getting more expensive but is still worth it. It's only worth it if you are pursuing a degree in something that not necessarily guarantees a career but semi-promises one. I mean it is not worth it at all if you are going to graduate with a degree within a field that has no demands at all.

R10453152

3/5/2012 11:04:44 pm

I agree with you, if you are getting a degree in something that the market has no demand for then why attend college.College is meant to help you get a degree in a field where you can maintain a good job.

R10310218

3/6/2012 04:29:38 am

I also agree with this. Getting a college degree in a field that is a highly demanded in society will more than pay itself off over the years and then some.

R#10449686 link

3/6/2012 04:47:13 am

I agree with you. If you pursue a career with a higher demand by society or by whomever, you are almost guaranteed to pay off your college debt over the years. Not only that, but you will be successful over the years and be happy with your decision to attend college even though it may have placed you in debt. Versus those who attend college, get placed in debt, and then regret their decision because they are still in debt 40 years later and have a low paying job.

R10358580

3/6/2012 07:56:28 am

I agree that a college degree is a good asset to have, however I think the article is more focused on the fact that the rise of grants is causing colleges to decrease their aid to students, leaving less students with the chance to attend college.

r10413789

3/6/2012 12:57:43 pm

I agree with what you had to say. I also want to add that the worth of a college degree depends mostly on the job that you are looking for. If your employer doesn't require a degree then there is no point in getting one, but if your employer does require it then you will have a much higher advantage of getting the job with a degree.

R10359949

3/5/2012 08:23:13 am

If college is a normal good and financial aids are increased income, the demand curve will shift right. The equilibrium price will increase along with the quantity demanded. Although the increasing costs of tuition and interest rates would be a deterrent for some individuals, society demands (professionally speaking) individuals who want to succeed and become a part of the middle or upper class to graduate from college so despite these deterrents, college would still be made a priority for most.

r10461071

3/5/2012 11:28:38 am

I totally agree, despite this issue many young people have the desire of being wealthy in life and be succesfull. It doesnt mean that for this to occur it is a MUST to go to college but it clearly is the common denominator. It will still be the priority for young adults to attend to college

R10492644

3/5/2012 01:00:57 pm

I agree with you! I think that you can't get a really good job with the work schedule you may want without a degree. But the cost of college is just to ridiculous and literally unaffordable. So many people even with a great job still cannot pay their loans back. And the demand curve will shift to the right like that others have said.

R10421613

3/5/2012 01:33:46 pm

This is a very interesting way to look at college financial aid. When looked at from an economist perspective it does make sense that price would increase as aid increases. This is a dangerous issue, but not one that can be fixed without careful consideration.

10363181

3/5/2012 11:40:58 pm

If grants and loans are a form of income then of course this would increase the demand for college as well as quantity because as change income comes change in demand (shift to right). So yes we could show a graph, but in all reality loans by which you have to pay back after you graduate with accrued interest tacked on to them does not seem like a form of income to me.

Caroline Andrews

3/6/2012 02:08:07 am

College is already expensive. So to raise the income assuming college is a normal good, the demand curve would shift to the right. The equilibrium price and demand would increase as well. With this example, this would allow a lot more kids to attend college.

R10368003

3/6/2012 06:13:56 am

I think that college becoming less affordable is not necessarily a bad thing. Competition for higher education jobs will go down because there will be less college educated people. This would eventually drive the cost of college down because the universities wouldn't be charging an equilibrium cost. The colleges would realize that they could be making more money with a higher amount of students allowed to enter at a cheaper cost and adjust accordingly.

R10300144

3/6/2012 07:43:22 am

If college is a normal good and income increases, then the demand curve shifts to the right and equilibrium price and quantity increase. My question is, when equilibrium quantity increase, does that mean that more colleges should be popping up?

10373875

3/6/2012 11:23:11 am

This is a really good question, cause they are making more money so why wouldn't there be more schools?

r10497052

3/6/2012 09:29:23 am

I think that i depends on what state you are in that determines the cost of college. I am not sure if it is true or not but i remimber my government professor saying that Texas is on of the cheapest places to go to school and it is because (again i dont know if this is right) the state pays for 2/3 of our education, which is why you can only drop a total of 5 classes in texas schools. Also i dont remimber where i heard this but the cost for Californians to go to a college in Califoria would be more expensive then sending their kids to Harvard.

Anthony Hall (R#10337293)

3/6/2012 12:46:30 pm

I think that the question Mr. Roach offers us is pretty unfair to begin with; it's sort of loaded, an obvious question when posed in the way he/you (since you're reading this) put it, but when applied to The Actual Problem, it's ... awkward. It doesn't fit.

Calling college a "normal good" to begin with is unfair; a college education in itself by definition a luxury (normatively speaking, it SHOULD be a normal good, but...), though most would say "with the job market...!" If you're getting federal aid, college education as a luxury would go after paying your necessities and your normal goods (like all my aid does). Eventually, yes, as your aid (or your actual income) increases, you'll be able to go to college (as a luxury good), but to set the two in an obvious "if college is normal and all your aid is an increase in income, then why aren't more people getting more college?" question is kind of weird to me.

R10419821

3/6/2012 02:02:24 pm

The question confused me a little too, i don't understand how to apply grants as being an increased income if not everybody gets them

R10419821

3/6/2012 02:01:08 pm

If college is viewed as a normal good then the equilibrium price of going to college should increase, therefore i would assume less people would be attending college. If grants are a form of increased income, then the amount of people attending would go up, but this question did confuse me a little because not everyone gets grants??

R10465652

3/7/2012 01:00:26 pm

I agree with you, it would seem to be counter productive to create more finical aid and increase tuition. All increasing cost would do is put more finical burden on college students and their families.

10363571

3/6/2012 02:06:15 pm

If college is a normal good and aids and grants increase income then the demand would shift upward. Also if aids and grants increase more people would be going to college.

10460329

3/6/2012 02:33:39 pm

As prices are going up, going to college for a degree in something that isn't very demanding in the work force is probably not the best thing. Although getting an education is very good to have if you want to make a decent income for yourself, but if your going to study something that a computer could replace eventually probably isnt the smartest thing to do.

R10438726

3/6/2012 02:34:00 pm

I believe the price of college would go up.

R10419815

3/6/2012 04:36:00 pm

If colleges and universities are giving out more financial aid and grants that would mean more students have the opportunity to get an education beyond highschool. But, if the goverent and these colleges are allowing that to happen then the overall tuition would have to increase due to larger numbers at the school. If more students attend, they need more teachers, more books, etc.

R01962697

3/6/2012 11:31:06 pm

College is a great option for people and I think kids all around the U.S. should continue to go to college. However people need to realize that there are other options. Kids who are not into books, should look into trade school or something else. There are plenty of good jobs out their making enough money without a degree.

10404051

3/7/2012 12:27:43 am

The demand for college continues to increase as time goes on. With most companies you need a college degree to even have a chance to get the job. In most cases, anyone who is successful has gone to college. With that being said, people have realized college is crucial for success. Therefore people would be willing to pay more in order to go to college. That's why demand is increasing and the equilibrium price has increased as well.

R10394227

3/7/2012 12:46:10 am

Education is just another business. the people who own this business want to make profit and take advantage of opportunities. The Government pell grants have allowed them to do so. Education in this society is an inelastic good so no matter the cost students will continue to pursue a college education.

10413060

3/23/2012 06:43:22 am

I would think that if college is being viewed as a normal good and loans or grants are an increased form of income then the demand curve would have to shift to the right. Thus causing the equilibrium price and the quantity would increase. The price just to attend college is skyrocketing, but at the same time degrees are losing value and today a master’s degree is almost what a bachelor degree was for our parents.

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Why College is So Expensive

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