Obama Gets an “F” in Tuition Economics
The vote buying season is in full bloom, manifested by President Obama’s speech decrying the rising cost of a college education.
The President is a smart man. Why does he embarrass himself this way?
Colleges and universities raise their tuition much faster than the rate of inflation for two reasons. First, too many of their customers (students) don’t care enough about what it costs to go to college. These students are receiving gobs of loan money to pay those costs. The government makes students even less sensitive to college costs by guaranteeing the loans, thereby artificially maintaining low interest rates.
When buyers don’t much care about the cost of what they are purchasing, why should the sellers keep costs low? This econ 101 stuff.
The second reason that tuition increases are out of control is that universities continue to expand their bureaucracies. They seem more interested in cultural education than practical education. For example, the “diversity and inclusion” apparatus at many colleges is sucking huge amounts of money from the primary educational mission.
Here is one article that discusses this second point and yet a third reason why the President gets an F in tuition economics. At the same time that the government is pushing too many students into college with cheap loans, it is requiring colleges to make sure that the costs of attending exceed the amount of money that can be borrowed.
Read it for yourself: Obama Fosters the Skyrocketing Tuition He Criticized.