Why School Tuition Is So Expensive: A Lesson In Opportunity Cost

This is an article composed by my good friend, Diego Lucero. He is a college student, and well-versed in economics, politics, and systems. Enjoy!

 

BY DIEGO LUCERO


It’s the beginning of the year again, and students are filling the halls of universities and colleges across the United States.  Touted as essential to the “American Experience,” students are leaving their homes at the advisement of parents to pursue their educations.  It can be said that in today’s world, there is almost nothing more desired--or even needed--than an education that would adequately qualify us as participants in the “American Dream”.

This year though, things are different. 

We are in a prolonged recession.  Real unemployment is very high.  Deficit spending is at a record high.  Our national debt now exceeds our Gross Domestic Product.  Let’s not even talk about the interest our country owes against our national debt.  We have wars and rumors of wars.  Political discussion has become polarized and has been overtaken with evil intent.  It’s becoming difficult to be hopeful, as it is becoming more and more clear that the change that we desperately need may never actually come.

Because of these reasons and more, colleges and universities have been seeing a very significant upward trend in enrollment over the last few years.  The National Council for Educational Statistics¹ reports that there are more students applying for admission into higher educational institutions this year than in any prior year (an estimated 20.7 million²).  In 1990-1999 and 2000-2009, overall enrollment increased 38 percent and 45 percent, respectively.  Non-traditional students make up 63.15% of all new enrollments during the 2000-2009 time period¹.  Total enrollment is projected to continue setting records each year, ultimately reaching about 24 million students by the Fall of 2019². 

Just like our demand for quality education, tuition prices have never been higher.  According to Bloomberg and the College Board³, the average tuition increases last year was 8.3% at public universities (almost three times the rate of inflation), and 4.5% at private universities.  At an average tuition increase of 8.3% per year, the price of college will double in 9 years.  It’s also important to notice that the ten-year historical rate is 6%⁴, which doubles college prices after a period of 12 years.  From looking at the data, it is clear that our college prices are rising at much faster rates than our nation’s inflation and average wage.

Washington Post's "Chart Of The Day" for Oct 10, 2011,
featuring Matthew Philips' data at Freakanomics

At the end of the day though, what really matters are completion rates.  In a report by the Organisation for Economic Co-operation and Development (OECD)⁵ which is based on data up until 2007 derived from 30 member countries, it was reported that the United States completion rate ranked first in 1995.  In 2007 however, we had fallen to 14^th with a 36.5% completion rate, well below the OECD average rate of 39%.

"What that tells you is that a number of other countries have been much more successful in expanding their higher-education systems," [says Andreas Schleicher, head of the OECD unit that produced the study.] "The United States has fallen so far behind in higher-education completion, and private costs have become so high, that some people are suggesting that tuition has become a barrier to extending participation."⁶ 

So, we have evidence of a tuition barrier.  It’s actually becoming so expensive that people must drop out of school because they cannot afford it.

What is the primary cause of this trend of expensive schooling?  The short answer: subsidy.  More specifically, federally guaranteed financial aid (student loans and grants included).  Why does financial aid drive up the prices of school you ask?  The answer lies in a basic understanding of how opportunity cost works.

In economics, opportunity cost is defined as “the cost of an alternative that must be forgone to pursue a certain action.”  Put another way, opportunity cost is a measure of the benefits you could receive when you take an alternative action instead.

To better understand opportunity cost try to visualize a really nice, brand new big screen TV that you would love to have in your living room (or room).  However, when you see the price tag, your mouth drops.  If you were to buy this TV you would have to give up eating at Red Lobster weekly for 5 or 6 months to afford it.  To you, that’s too expensive--because you really like your weekly outings to Red Lobster, more than you would love having that really nice big screen TV in your room.  That’s your opportunity cost, and in this case, your opportunity cost is too high.  The lower your opportunity cost for a good, the more affordable that good is to you.  Get it?

University tuition can be explained through this same economic principle.  Put simply, Federal Financial Aid disbursements can be considered extra capital for spending that would not normally be there if the Federal Government did not provide aid at all.   

If you help someone pay for something, they can pay more for it—and for more of it.

The purpose of Financial Aid is to lower a student’s opportunity cost for a college education so they will be more likely to purchase.  In other words, Financial Aid is there to make college “more affordable” in the short term (even in spite of inflating prices).  Of course, we all know that Financial Aid is not accessible to everyone.

Like any business or industry, a college’s main incentive is to increase revenue.  The way they do this is by charging students the most they possibly can for their service and bringing in as many new students as possible.  

So the explanation goes like this:  the more students that have Financial Aid for college tuition, the more Colleges can “get away with” charging more money for tuition every year--because there are more people that can afford the higher prices.

Sources:

¹ http://nces.ed.gov/programs/digest/d10/

² http://nces.ed.gov/programs/digest/d10/tables/dt10_003.asp?referrer=report

³ http://www.bloomberg.com/news/2011-10-26/tuition-jumps-8-3-doubling-inflation-as-obama-plans-debt-relief.html

⁴ http://www.savingforcollege.com/tutorial101/the_real_cost_of_higher_education.php

⁵  http://www.oecd.org/dataoecd/45/39/45926093.pdf

⁶ http://chronicle.com/article/Across-30-Nations-Public/48323

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Would you like to learn more about the College Tuition Bubble? 

Try this sourced article at Freakanomics: http://www.freakonomics.com/2009/06/10/the-college-bubble/

And this data reported by the same site: http://www.freakonomics.com/2011/10/27/cost-of-college-on-the-rise-again/

And this Raw Data from the College Board: http://press.collegeboard.org/releases/2011/new-college-board-trends-reports-price-college-continues-rise-nationally-dramatic-difference

Stand and Be Counted

With the passage of the National Defense Authorisation Act of 2012 (NDAA) the police state, about which every US citizen has been so often warned, has come to pass. IGNORE THIS AT YOUR OWN PERIL AND CONDEMNATION. I will begin with a quote:

    "It is said in the Doctrine and Covenants, that he that keepeth the laws of God, hath no need to break the laws of the land [D&C 58:21]. It is further explained in section 98 [D&C 98], what is meant in relation to this. That all laws which are constitutional must be obeyed, as follows:

“And now, verily I say unto you concerning the laws of the land, it is my will that my people should observe to do all things whatsoever I command them.

“And that the law of the land which is constitutional, supporting that principle of freedom in maintaining rights and privileges, belongs to all mankind, and is justifiable before me;

“Therefore I the Lord justify you and your brethren of the Church in befriending that law which is the constitutional law of the land. And as pertaining to laws of man, whatsoever is more or less than these cometh of evil” [D&C 98:4–7].

     "That is taking this nation as an example, all laws that are proper and correct, and all obligations entered into which are not violative of the constitution should be kept inviolate. But if they are violative of the constitution, then the compact between the rulers and the ruled is broken and the obligation ceases to be binding. Just as a person agreeing to purchase anything and to pay a certain amount for it, if he receives the article bargained for, and does not pay its price, he violates his contract; but if he does not receive the article he is not required to pay for it."

- President John Taylor, Journal of Discourses 26:350  

     The above scriptures are plain as to what duties a citizen of the US, but the Latter-Day Saint especially has, concerning government and law. The people of this earth cannot support (either actively or tacitly) immoral, evil laws and expect their rights as children of God to be held sacred. The passage of the NDAA is, in my opinion, one of the grossest challenges to the eternal nature of God's children, and therefore His authority. In Leviticus 6:2-3, the Lord declares:

     "If a soul sin, and commit a trespass against the Lord, and lie unto his neighbour in that which was delivered him to keep, or in fellowship, or in a thing taken away by violence, or hath deceived his neighbour;

     "Or have found that which was lost, and lieth concerning it, and sweareth falsely; in any of all these that a man doeth, sinning therein:"

     Acts against people are therefore primarily acts against God Himself. Further evidence of this can be seen in Matthew 25, especially verses 34-45 (for more information on this, please see the article In Mine Own Image at www.ldsliberty.org). When a government seeks to act contrary to God's law it seeks, by its actions, to supplant God as the ultimate authority. This is evil, and CANNOT be supported by true Christians. God will not be mocked.

Our Heavenly Banner

     NDAA is such an act against the laws of God. Already it has been shown here--and many more times elsewhere--that the Constitution of the United States enshrines and aims to protect all of humanity with God's law. Here are the main amendments the NDAA violates in the sections listed below (about which I am writing today--there may be other violations in other parts of the NDAA, but they are less than insignificant by comparison):

Amendment 4 - Search and Seizure. Ratified 12/15/1791.

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

Amendment 5 - Trial and Punishment, Compensation for Takings. Ratified 12/15/1791.

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

Amendment 6 - Right to Speedy Trial, Confrontation of Witnesses. Ratified 12/15/1791.

In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence.

     First, many will immediately leap out of their seats and cry, "You cannot quote the Constitution! It is too complex; too esoteric for the consumption and interpretation of ordinary human beings!" To this I merely reply, my Lord and my God has commanded me, through scripture and by the mouths of all his Holy prophets, to study that divinely-inspired document which is the Constitution. He will provide a means by which I can accomplish His commandments. The specific sections of the NDAA with which I have issue are 1031 and 1032. The link for the text of the entire bill can be had at: http://thomas.loc.gov/cgi-bin/query/z?c112:S.1867: . I won't be placing too much of the text here, but I implore all to become familiar with this dread piece of legislation themselves.

The Two Sections

     Section 1031 is about Congress affirming the President's authority to utilize the powers outlined in the Authorization of Use of Military Force (Public Law 107-40, which was NOT a legal declaration of war, nor a legitimate law because it in essence and substance rendered the Constitution ineffectual--more on that below) to detain what could simply be termed 'enemy combatants.' Those people are potentially defined in the broadest sense to include anyone who commits a 'belligerent act' or 'helps' terrorists, without even bothering to define any of the listed actions or attributes! Legislation such as this is one type of what prosecutors and lawmakers call, "catch-all" laws, because they are specifically written to ensnare the greatest number of people and punish them under those rules, thus creating in essence a society of law-breakers. It also states quite clearly that those people captured according to this law could be detained 'until the end of the conflict' (the war on terror), which has been stated on record to last indefinitely.

     Section 1032 (b)(1) & (2) state:

(b) APPLICABILITY TO UNITED STATES CITIZENS AND LAWFUL RESIDENT ALIENS.—

(1) UNITED STATES CITIZENS.—The requirement to detain a person in military custody under this section does not extend to citizens of the United States.

(2) LAWFUL RESIDENT ALIENS.—The requirement to detain a person in military custody under this section does not extend to a lawful resident alien of the United States on the basis of conduct taking place within the United States, except to the extent permitted by the Constitution of the United States.

     Do you see it? It says REQUIREMENT to detain a person does not extend to citizens or resident aliens. It does not at ALL say that it is forbidden, or prohibited to do so, merely that it is not a REQUIREMENT. How kind of my would-be government masters to not REQUIRE by law that I be detained, merely allow it? And for those who do not believe me when I tell you this, I am utilising a well-known legal doctrine in my reading of this section, that of "Tout es que la loi ne defend pas est permis" (That which is not prohibited is allowed). The NDAA provides for the indefinite detainment of ANYONE on earth, including American citizens, by the US military.  READ IT FOR YOURSELF.

Posse Comitatus

    In 1878 a federal law was passed disallowing the use of the Army or Air Force in police activity, unless authorised by Congress or the Constitution (18 USC 1835). Since this would ONLY apply during a war (and we most certainly are NOT in a legal war), the law is still in effect, and members of the military MAY NOT engage in policing activities where non-military citizens are involved. The Navy and Marines are similarly barred from intervention in civilian affairs through 10 USC 375. I REPEAT: Since the US is NOT in a state of legal war, Posse Comitatus is still legally in effect. S1867, or the NDAA specifically calls for the use of military personnel as a police force. IT IS ILLEGAL, and the very definition of a police state.

NDAA VS. The Constitution

     I will take the violations of the constitutional amendments one at a time. Amendment 4 safeguards Americans from warrantless searches and seizures of them or their property. Without probable cause and a warrant, a person is legally protected from being searched or arrested. This means the NDAA's provisos for "snatch and grabs" are the most flagrant violations of this precious, vital freedom. In the NDAA, ANYONE may be arrested and detained indefinitely by the military (in direct opposition to 'Posse') by the mere accusation of 'helping' the terrorists by the President (and thereby his cronies)!

     Amendment 5 specifies that no person shall be deprived of life, liberty or property without due process of law. NDAA sneezes at this then stomps on it with its jackboot. It specifies that detainees WILL be held without trials until the end of the conflict (again, the 27th of Never), where they will then be given a trial, by a military tribunal. MT's are specifically and legally reserved for those in the armed forces, except in times of war. AGAIN, THE US IS NOT AT WAR.

     Amendment 6 expounds on that right of trial, ensuring no-one is sentenced who is baselessly accused of a crime, and where no witnesses are able to furnish proof of the defendant's crime. Provides for speedy trial, impartial jury, that the defendant be informed of the accusations made against him, and have the ability to confront (and disprove!) witnesses. The NDAA brushes all that aside, claiming the President and thus the State has ultimate say in who is and is not guilty, according to the ever-growing criteria for a terror suspect in the War on Terror. No trial, no jury, no questions asked. Submit and Obey or risk being sent to Guantanimo Bay.

The Legal Case for The Constitution

     The NDAA is unconstitutional for the simple fact that it disregards and attempts to nullify the other's precious, sacred protections. There is another legal doctrine, Stare decisis, or that of legal precedent. It states (basically) that previous, correct, and fundamental decisions made at the highest levels in the judicial system are therefore law for every case following that contains elements dealt with in the first case. This is of course to prevent future judges from warping the law to their whim or advantage, where the law and the corresponding rights of men were already laid out. In 1803, the Supreme Court heard a case, Marbury vs. Madison. In their decision, Chief Justice Marshall had this to say about the constitutionality of laws:

     "Certainly all those who have framed written constitutions contemplate them as forming the fundamental and paramount law of the nation, and consequently the theory of every such government must be, that an act of the legislature repugnant to the constitution is void."

   This from a Supreme Court Justice in 1803! I cannot emphasise how important stare decisis is to any stable, righteous legal system. To provide an example, God is an unchanging God, and thus His laws are Eternal and consistent. Stare decisis is an acknowledgement of the invariable nature of God's law, and the importance of consistency in applying it to our lives. Any act of Congress repugnant to the Constitution is void. It is therefore not law, and its enforcement must be resisted at all cost.

Publishing on Purpose

     My purpose in writing this is not to provide some people with some "cool" news or a tidbit intended to be read and immediately forgotten: I want everyone who reads this to do absolutely everything they can to see that the NDAA is thrown out and our freedoms preserved. Call your Congressmen and Senators and DEMAND to know why they have committed treason and signed the bill (if they did). Write emails or snail mails informing everyone you know about this, and why it is in their and humankind's best interest to have this piece of filth law thrown out. Take your representatives to task! Form groups, hold seminars, and swear in your holy wrath to pull down the power of those who seek after the subjugation of your immortal soul. The signers of that bill have fired the first shot in the war on the American people and the Constitution. And a war it is! Do NOT be fooled by anyone who tries to pacify you and lull you into a secure stupor with honeyed words and vain and useless assurances. It has come down to this, and everyone who wishes to remain free must now stand and be counted on whichever side he will be. Will you be for Liberty, or will you be its enemy?

I do hereby swear by all allowed that I will not rest until my liberties are restored to me. I will use every means at my disposal to counteract the tyranny that threatens to engulf the nation I love. I will abide by the principles of and protect the freedoms for ALL people contained in the Constitution, and will wage eternal struggle against those that would corrupt, deface, or destroy it. This is my oath and my prayer that everyone do likewise,

Yours in Freedom,

- Aaron Abell

Nothing is more important than your liberty. Not even life itself.