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Think of these two lines as a dial between perfect knowledge and no knowledge. In this model, a consumer who knows what he’ll make over his or her life will consumption smooth (perfect, or ‘full’, knowledge, flat consumption line); one who is uncertain about what will happen next will rationally not. So if you know exactly how much you’ll be making in the future, large loans aren’t really a problem.
Now we are currently asking children, 17, 18 or 19 years old, to try and assess how much of a student loan debt burden they can handle vis-a-vis their future income over their entire lives. But, especially compared to their grandparents, uncertainty is so much greater now. The consumption smoothing line invokes a world where everyone with a college degree will get a stable, solid job with certainty (and your employer will, of course, pick up the health care tab).
I think this is an appropriate follow-up link:
ReplyDeletehttp://www.thebigmoney.com/articles/diploma-mill/2009/09/08/welcome-yahoo-u
I can't imagine college going to an online-based educational system for awhile because we don't know how effectively it teaches people. Yglesias makes the same point when discussing other cost-effective measures at higher education. Right now, the worth of an Ivy League education is derived from the ostensible knowledge that they attract the most intelligent students, not because they necessarily teach better than other schools. That is still going to be worth quite a bit more over an online university education until prices get so out of control that even ppl who would get aid to go to prestigious schools would go through an online model.
ReplyDeleteEither way, the online education model seems like such a sham - everything mentioned in that article is available to us right now for free for the motivated autodidact - you'd basically be paying $1200 for the priceless Univ. of Phoenix Online degree.