Supply, Demand, and Andrew Cuomo

Author: Alex Pearce

As another semester draws to a close and “adulthood” becomes that much closer, I can’t help but wonder what the future holds. Since the earliest days of elementary school, the value of higher education has been engrained in my head as being the “right-move” after high school. During my last weeks of high school, the halls were filled with joyous members of the Class of 2015, touting their newest collegiate apparel to let everyone know where they were headed in the fall. Even those who weren’t the biggest fans of school could not hide their excitement for this new chapter of their lives.

There is no denying that education is not only a personal benefit, but a benefit for society as well. Economically speaking, it can be seen as a positive externality that presents a collective good for those associated with the college graduate. However, we are currently facing a situation in which more and more individuals are encouraged to continue their education. Government aid continues to pour in, loans become easier to get, and subsequently, tuition costs continue to rise. Since the early 1980s, the average family income has risen more than 140%. Compare that to the 500% increase in tuition rates since the same time period and we are now looking at a huge problem.

Why this dramatic rise? First, one could assume that simple rises in inflation and costs of living have attributed to this. However, using CPI Inflation calculator from the Bureau of Labor Statistics, the average 1980 tuitions cost of $2,500 [in today’s money] should be approximately $6,200. That’s a lot less than the $33,415 I pay annually for my private school education. While private schools tend to be pricier, even the SUNY school down the road from my college still averages anywhere from $9,000-$24,000, depending on where the student is coming from. Therefore, this clearly isn’t a result of inflation.

Since the 1980s, the Federal Government has removed subsidies given to private lending institutions for college loans, shifting the source of money to the always trustworthy United States Government. Moreover, their loan cap has increased from $2,500 annually to a staggering $20,500 per study per year. There is more than $1-trillion dollars in student loan debt. The government promises an education to all, declaring the benefits endless, while more than 7% of the graduating Class of 2015 are out of work. Loans aren’t being paid, graduates aren’t finding work, and tuitions are becoming more costly every semester. New York State’s solution? Free SUNY Tuition! While certain criteria must be met, this program is nothing more than an extension of federal aid, further inflating the student loan bubble. What’s better is that this “free” money comes with stipulations such as staying in New York after graduation or facing the risk of paying all of the money back.

According to supply and demand, the larger the supply of something, the less it is demanded. How can we continue to promise our children that “college is worth it” when a SUNY degree is going to become no different then having a high school degree. Additionally, entrance into schools is going to be based more on your family’s income than the work the student put in during high school. Class seats will be filled by those who the state is paying for rather than those who earned the seat. Tuitions will rise as colleges and universities will begin to rely on state-funded tuitions, causing these costs to grow the same way they did when federal aid became the way to finance college. Don’t forget about the taxpayer – somebody must pay for it! Given New York’s already record high tax rates, this is a recipe for disaster. Degrees will lose value, costs will rise, and those already facing student loan debt will have a larger burden as they will now be funding the education of their fellow New Yorker’s. The word “free” does not exist in basic economics. Maybe Governor Cuomo should take advantage of this free tuition and refresh his Econ 101 skills.
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6 thoughts on “Supply, Demand, and Andrew Cuomo”

  1. Supply is not a determinant of demand. The statement “According to supply and demand, the larger the supply of something, the less it is demanded” is entirely false. Maybe there is an extra seat in that Econ 101 class…

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    1. When the market becomes saturated with a good (in this case SUNY degrees), the value of them goes down, decreasing their demand. Employers will no longer value a SUNY degree as more and more individuals will possess them, making their value decrease. Sure demand may go up for those wishing to attain a SUNY degree as this bill will make them more affordable in some instances, but to employers that will not be the case. Sorry for the confusion, this should clear it up. Thanks!

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    2. Yes, Zach is correct. Supply and demand are independent of each other, and you learn that in Econ 101. I also don’t think it’s fair to compare the price of college in 1980 to today. Not only did inflation contribute to this increase in price, so did the need for colleges to expand to accommodate more students. About 8.41 million more in 2016 compared to 1980. Not to mention schools providing athletes more incentive to apply with athletic scholarships. The list goes on and on and inflation isn’t the only factor explaining why college costs more than it did 37 years ago.

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      1. This free tuition also protects students who make too much money to qualify for financial aid, like myself. My single mother makes too much money for me to get any gov’t financial aid, but she doesn’t make enough to pay full freight. Class seats won’t be filled by students whom the state pays for either. I can say with a good amount of certainty that states schools like SUNY Albany with become increasing competitive in the coming years as people rush to apply, and Albany can’t expand to keep up with the influx of students. To imply that one no longer needs to “work hard” to get into college is absurd, as state schools still have the right to admit incoming students.

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  2. 1980 was used as a reference point as it marks one of the last times government backed off its increase of student loans as Raegan attempted to decrease government spending. Since then government involvement has increased and tuitions costs have skyrocketed. I never stated governement was solely responsible, rather they have played a great role in these high costs. Inflation was fully accounted for in my analysis (note my reference to, and my use of, the BLS CPI calculator). Of course other factors have played a role but athletic scholarships and expansion of schools do not warrant such dramatic increases in tuition costs. And sure SUNY schools have the potential to become more competitive but guaranteed money from the government is an enticing reason for schools to accept a student who qualifies for the aid over one who doesn’t and for schools to increase tuition a costs as they will have a stream of guaranteed income. Additionally, if they expand their class sizes to accommodate these “paid for students,” the exclusitivity of the SUNY degree drops as more and more individuals will get a degree. Your points have vailidity, there’s no denying that, but I have many concerns with “free” tuition.

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  3. Have any SUNY or CUNY schools indicated that they will be dramatically expanding their enrollment numbers? Colleges don’t just create seats to fit the number of students who can afford to attend. More students may be able to apply, but won’t this give SUNY schools the ability to be more selective and only admit students with higher grades? This would increase the value of the SUNY degree wouldn’t it?

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