News Summary 5: Denials of scholarships increased by 20% at the University of Seville

1. This article discusses the issue of many students having to drop out of college due to the inability to meet the cost of education. Increases in university fees and more restricted access to scholarships has caused many students to default on their payments. In Madrid alone, 7,000 students are late on their payments and face expulsion. At the University of Seville, 2,500 students have not yet made their course payments and the 30,000 that applied for a grant from the Ministry of Education do not yet know their standing on acceptance. The rejection rate has increased by 20%, so 13,000 students will be denied a scholarship, saving the government 2 million euros.

http://ccaa.elpais.com/ccaa/2013/06/04/andalucia/1370346575_056321.html

2. In class we discussed how GDP = C + G + I + NX. If more and more students are having to drop out of school and thus lose the opportunity to further their education that could lead to an easier time finding a job, then the consumption factor of the equation will be affected because unemployed people are less likely to consume goods and services so that variable would decrease. Although the government saved 2 million euros by denying 13,000 students a grant at the University of Seville alone, in the long run this will have a negative impact on GDP. In Econ 101 we learned that in order for long term economic growth to occur, investment in education has to be supported. Students unable to pay their course fees will have no choice but to drop out of school and their education suffers for it. So while the government saved money now, down the road this will have a negative impact on the economy.

3. It is probable that the economic crisis in Spain led to this unfortunate situation, however, the hardening of academic requirements also plays a large part. Many students are declined scholarships because they don't meet the requirements for that scholarship. Regardless, in order to fix this situation it is necessary for the government to expand the number of scholarships given to students so they don't have to drop out of school. In the long run, this will be more beneficial to the economy than saving money now.