Exactly a month from today, AAEA will celebrate its fifth anniversary. Starting with our humble motivation to help the average American families to get through college with minimal debts, the Association has become the source of inspirations and a place for researchers, grad students to get new research ideas, for companies to create new business and for other to innovate.
We are surprise that in the past, so little scholars have put their fine mind, talent and time to analyze such a huge problem facing the society. It is AAEA, an independent non-profit, self-funded organization that started to utilized and applied widely available NCES public data to study this important, but neglected sector for so long. From knowing a little, we know more how most higher ed institutions have been managed, and honestly, we are stunned. Our research results show this sector, among others is one of the worse contribution of the financial nightmare to most family in the US in recent years.
None of the researchers has tried to measure the “Dead-weight Loss” cause by public policy and other players in the market. This is our first attempt to put this mystery unveil, at least in the scientific way. Starting in 1958, when the country tried to promote science and technical education which led to the creation of National Defense Education Act. According to this Act, the loan dollars come directly from the Uncle Sam. This noble plan worked fine at the beginning, where moral is the motivation to participate in the effort. However, as time lapsed, group and self-interest and profit motive replace the moral, the bad dreams turn to nightmares.
Since the beginning of 2006, students loans has increase tremendously as shown in the following graph. During the same period of time, the average of college tuition and fees has also increased tremendously. In spite of this phenomenal tuition increase, demand for higher education also experience upticks due to technology change where higher institution offering online classes. Continue to Part II.