Dr. Richard Vedder, a TPPF Senior Fellow, recently appeared on Reason.TV to answer the question, “Why does college cost so much?” His answer: too much government interference in the higher education marketplace.
“It takes a larger percentage of a family’s income to go to college today than it did 30, 40, 50 years ago,” Vedder explained. This has occurred despite government policies aimed at making college more affordable.
Government policies, despite their good intentions, have resulted in the opposite of their desired effect because they have increased demand for higher education. In a free marketplace, supply would go up to counteract this, but in higher education, it is almost impossible for new suppliers to enter the marketplace because of excessive regulations and an overly burdensome accreditation process. Not to mention that government subsidizes public universities but not new for-profit colleges; it’s hard to survive when your competition receives government funds.
Sound familiar? This is similar to the approach the government is taking to “fix” health care. Once again, those in power have failed to learn from economic history. If they had looked, they would find that these anti-market policies have failed across the board, especially in higher education.
In fact, tuition costs have increased twice the rate of inflation for the past 30 to 40 years. That’s faster than the rate of inflation for medical costs! Now, President Obama wants to make Pell Grants an entitlement of sorts, as he thinks this will make college more affordable.
We have seen the consequences of expanding government’s role in higher education. It has only made things worse. In an effort to fix the problem, what is government doing? Expanding the government’s role in the higher education market even more! That’s government for you.
– Elizabeth Young