Question

Before answering this question, piease complete the assigned reading for this week, specincaly, The EConomics of Public Issues ch. 22 "Student Loans." Since you are all in this class, I know that you all have to consider how to pay for college and all of you will solve that problem slightly differently, whether it be through paying yourself. help from your parents, financial aid or student loans. Critics of ever-expanding college enrollments argue that many students should not be going to college. Rather, they should be going to trade or vocation schools to become electricians, plumbers, stonemasons, etc. The reasoning is that skilled tradespeople often earn higher lifetime incomes than those who go to college and major in the humanities. The conclusion is that students would be better off because more students would go into trade or vocational schools and on average earn higher lifetime pay. Additionally, with fewer students attending college, tuition rates would decrease making college more affordable. Do you agree or disagree with this argument? Why? If this happened, what would be the impact on student loans (if any)? Be sure to explain your reasoning and use economics to justify your answer.

Answer 1

I agree with the statement.Because from the reality view point most of the children from poor and middle class families are doing several small jobs instead of pursuing higher education.As there is an opportunity cost for them that of not becoming a graduate they are earning for managing their own expenses with their vocational education.In today's world most of them have smart phones and a two wheeler also.For meeting these kind of expenses they are ready to go with small jobs. So they are looking for trade or vocational education which requires only less cost and less duration and also high payments to meet their expenses. It is why the number of boys in a degree class getting lowered.On the other hand there is an opportunity cost for the studying population(graduation) too as they are not earning anything.And of course the cost of education or the fee rates get reduced as said according to the law of demand.Now the demand for colleges are decreasing and ITIs are becoming increased.So as the demand decreases the price will decrease. In case of educational loans too there is a lower demand.So there will be certain reductions in the interest rates to boost the borrowing. As there is excess money supply than money demand the interest rates will fall down.