Tuesday, August 27, 2013

Why Education Costs Are Inflated

It should be no surprise to anyone that education costs are going up.

In the USA ...

Mr. Vedder sees similarities between the government's higher education and housing policies, which created a bubble and precipitated the last financial crisis. "In housing, we had artificially low interest rates. The government encouraged people with low qualifications to buy a house. Today, we have low interest rates on student loans. The government is encouraging kids to go to school who are unqualified just as it encouraged people to buy a home who are unqualified."

Just in case any smug Canadians think they are on some higher moral plane in this matter....

The only difference here is that  Canadian universities and colleges were socialized under government control before anyone in the USA even considered it. And, the real costs hidden under taxpayer subsidies for all that time.

On the home owner front, the CMHC has been using taxpayer money to subsidize banks mortgage risk since 1948.  What began as an effort to help Canadians recover from WWII and kick start the housing industry has been turned into a scam to force taxpayers to prop up banks that make bad mortgage loans to people who cannot and therefore should not be qualified for home loans.

It is the primary reason that a house built in 1953 for $4000 might now sell for as much as $500,000 in some markets.

Should taxpayers be used to create inflated house costs or inflated education costs?

Not in my view.


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