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How this post gets written without mentioning federal student loans and grants, I have no idea. It's not a coincidence that every tuition inflation graph you see starts around 1980.



I wonder if the US Gov funding model changed to one where the universities were given money to one where the students were given/loaned money to give to the university of their choice. The difference could be compared to inner-city school choice voucher programs.

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You can certainly look at it that way, if you choose to. The thing is, this is a Pandora's Box situation. The noble goal of using federal grants/loans to make higher education more accessible results in institutions being able to charge more for it. Same number of schools (supply) + more potential students (demand) with more money in their pockets (ability to pay) = higher prices; if each student is charged more money, they need more federal aid to make up the difference. This goes on in a circle, up and up and up. But closing the box now would be too politically unpalatable for any politician to try it. The solution, if there is one, must be highly creative.

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I agree and should have been much less implicit in my argument. Perhaps state universities once (< 80's) charged very little because they (1) got lots of money from the government with the mandate of providing affordable education and (2) students didn't have access to grants/loans to pay more anyway.

Now, the "price" is higher (which is used to create the graphs in the linked article), but the effective cost for the student hasn't increased quite as proportionally because he has a government voucher to use.

Greatly oversimplified, I know. We understand what someone means when he talks about the average price of a gallon of gas at a gas station, but we don't have a common definition for the "price" of education. Out of pocket not counting grants/scholarships? Do we discount the cost if the loans are at a below-market rate because of government guarantees?

Heck, even the gallon of gas "price" is hard to define. Marathon gives me back 5% on gas purchased with my Marathon card. What's my average price per gallon?

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Word to all that.

Come to think of it, I've never personally seen a graph of tuition inflation with out-of-pocket payment, private loan payment, and federal aid payment all on top of each other, mapped over time. THAT would be a telling graph.

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Students currently have access to "cheap money" (i.e. gov't secured loans) regardless of what school they choose.

The bottom line is that cheap money injected into an industry always raises that industry's prices. Housing, healthcare, education.

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