Market Forces Will Eventually Drop the Cost of College
Politicians can keep throwing money at higher education but as Professor Glenn Reynolds often says, something that can’t go on forever won’t.
That’s the gist of a top article at Real Clear Politics by Barton Hinkle.
Why College Costs Will Soon Plunge
“My goal,” says the candidate, “is a healthier America. That is why I am setting an ambitious target of sending 1 million more Americans to the hospital in the next five years. To make sure they get there, I am announcing a new, low-interest loan program to help them pay for their treatment. This will ensure that hospital costs stay within reach of the typical American family.”
If you heard a speech like that, you probably would start scratching your head. Sure, people with acute medical conditions need hospital care. But most people don’t have to lie for weeks in a hospital bed to get healthy. And lavishing more money on hospital care will simply drive the price up — just as giving everyone a $2,000 vehicle subsidy would jack up prices for cars and trucks.
Yet this is what politicians routinely propose for higher education: Send more people to college, and give them more money to help them get there. Virginia Gov. Bob McDonnell proposed cranking out 100,000 more college degrees in 15 years. Around the same time, President Barack Obama said he wanted the U.S. to have “the highest proportion of college graduates in the world” — which would more than double enrollment. His new higher-ed plan calls for yet more financial aid.
Aid to higher ed already has exploded: In 1964, federal student aid was only $264 million, or $1.7 billion in current dollars. Today, the feds shell out $105 billion a year just in student loans. Total federal aid has soared from $64 billion (in 2000) to $169 billion (in 2010).
Flooded with such largess, colleges have sent prices skyward (tuition is up more than 500 percent over the past three decades) and indulged in luxuries that would have made Marie Antoinette blush, from gourmet dining halls (sushi at Bowdoin, vegan at JMU) to rock-climbing walls. Last month, Virginia Commonwealth University announced the construction of two new dorms that will add 426 beds. Their $41 million cost comes to more than $96,000 per bed. Thank goodness Virginia is, comparatively, fiscally conservative: Princeton recently built a dormitory at a jaw-dropping cost of almost $300,000 per bed.
Trend lines like these cannot go on — and they won’t. But not because of politicians’ efforts to rein in college costs. College costs will drop because of market forces politicians will be powerless to stop.