10
Dec
11

Feel-good higher ed

Adam Ozimek comments on the “crackdown” on for-profit colleges:

The Obama administration’s attempts to regulate for profit colleges are reportedly being “watered down” under pressure of lobbyists and the industry.

[…]

What seems clear to me is that the original form of the new regulations as envisioned by the administration contained a much more egregious and much larger “watering down” in the application of the regulation to for-profit schools only, rather than both for-profit and non-profit. On what basis can one justify this exemption?

One can argue that the for-profit sector vastly underperforms the non-profit sector, and thus is the one in need of stricter standards. But it seems hard to argue that 1) standards have been designed to affect only underperforming colleges 2) non-profit schools aren’t underperforming, and 3) subjecting non-profit schools to the standards would affect them. If subjecting them to the regulations will harm them, then they are underperforming. If they aren’t underperforming, then subjecting them to regulations won’t harm them.

I think mood affiliation makes some people instinctively see for-profit schools as bad and deserving of attacks, and non-profits are good and deserving of praise.

Note that a number of common programmes offered by “non-profit” schools — distance-ed professional certifications, like M.B.A.s and M.Ed.s — often turn a profit for the departments that run them.  The “for-profit”/”non-profit” distinction isn’t as sharp a line as is often drawn.  But anyway….

On a similar note, Alex Tabarrok comments on a Virginia Postrel article:

“Who pays a tax is determined not by the laws of Congress but by the law of supply and demand,” as Tyler and I say in Modern Principles. In particular, whether demanders or suppliers pay a tax is determined by the elasticities of demand and supply. The more elastic side of the market can better escape a tax, leaving more of it to be paid by the inelastic side. The same thing is true for a subsidy but in reverse, the inelastic side of the market gets the benefit of the subsidy.

(Click through and RTWT.)

We subsidize colleges more than we think we do, because of the ability of colleges to capture easy student-loan credit by raising tuition.  Making student loans easy to get feels good — we’re providing opportunities for “average” kids to get a college education, rather than restricting admission to elites (either the very rich who can afford normal tuition, the very smart who can get academic scholarships, or the very athletic who can get sports scholarships).  Of course, what we’re really doing is creating a transfer from those “average” kids to colleges, which is almost certainly regressive.

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