College Costs Too Much Because There’s No Competition

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from NCPA,

President Obama signed legislation August 9 to restore lower interest rates for college student loans. But don’t expect college tuition to go down or student debt to fall anytime soon. Instead, both tuition and student debt will maintain their steady spiral upward as long as the federal government continues to perpetuate the higher education accreditation cartel, says the Washington Examiner.

In a free market, if demand for something increases, prices will rise, signaling to entrepreneurs that profits can be made by entering that market. After more firms have entered, supply increases, prices fall, and only the best products and service providers are left serving customers.

However, if demand rises in a market where government restricts entry, prices will only go up and up.

Government may then be forced to subsidize that market, if voters feel the product or service is unaffordable. But then firms keep raising prices as demand and government subsidies soar upward.

The product or service in question cannot become more affordable until government restrictions on market entry and subsidies for consumers are removed.

This latter scenario is exactly what is happening in higher education today. Americans know that a college education is essential for obtaining a high-paying career, so demand keeps increasing.

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