A few days ago I posted a blog about student loans and the bubble that will soon burst. In the article, I showed how government backed student loans have been a major factor in the high cost of education.
Today’s Lansing State Journal’s front page reports on a development at Michigan State University, which is only a few miles away from our home. “MSU top faculty see higher pay raises” is the headline of the article, written by Matthew Miller.
The article reports that four Cincinnati researchers were lured to MSU in 2009 and 2010. Their starting salaries then were between $175,000 and $210,000. As their salaries have been determined to be on the low side, they are now going to receive substantial raises. One justification for this is that they have brought in more than $8 million in grants.
A table accompanying the article shows that MSU typically pays professors $131,200 per annum, while Associate professors receive $90,900 and Assistant professors have to make do on a mere $71,000.
I have no doubt that these salaries are justified in order to attract top people from other institutions of higher learning that pay more.
It is also no wonder that so many university professors are liberal and support big government. After all, they have done very well out of government. They likely assume that if the government controlled everything, we would all be better off.
But these salaries contribute to the student loan bubble. Last week, it was announced that neighboring former Lansing Community College students are defaulting on their loans at a rate of 17.2%. A few days later, MSU increases the pay of some of its top employees.
Do we see the connection here? Rising costs are simply passed on to students. Students can pay because they can borrow excessively from government. Most students, being young and inexperienced, don’t realize there will come a day when they have to pay it all back. Almost impossible in the present job market, unless, of course, they end up employed by a government-funded university!
It’s time for a level playing field. Only true free enterprise will give us that.
Abolish government backed student loans and demand for education will drop. That will bring the price of education down to a realistic level. Simple “supply and demand” will always work – it’s a law of economics, sometimes distorted by governments to try to get votes.