Adverse Selection and Moral Hazard problems involved with Student Loans

Adverse Selection and Moral Hazard problems involved with Student Loans

For years, the rising price of college tuition has outpaced everything else, even healthcare.  For this week’s discussion you are to use the concepts that you see in Section 5 of your textbook and apply it.  Please pay special attention to the Adverse Selection and Moral Hazard problems involved with Student Loans.

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Please watch the videos and then, using economic analysis, please discuss where each video is correct and incorrect.

Additionally, please use economic reasoning to suggest some solutions to this spiraling problem.

Video #1: “What’s behind the steep rise in college tuition?” (3:00m) www.youtube.com/watch?v=73siaI9ASGs&feature=emb_title

Video #2: “The Cost of College in 4 Minutes” (4:05m) www.youtube.com/watch?time_continue=25&v=uIkwuI6gIwE&feature=emb_title

Bonus Video: “The Increasing Cost of College Tuition – Dave Ramsey Rant”  (8:05m) www.youtube.com/watch?v=pCDf6zubMYU&feature=emb_title

Bonus Bonus Video: “John Stossel – Rising Cost Of College” www.youtube.com/watch?v=BKvLSN4eBfc&feature=emb_title

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