Handre@Handre
College tuition has exploded 1,200% since 1980 while wages rose just 213%. In 1963, a student could work a minimum-wage summer job and pay for a full year at the average public university. Today, that same job covers roughly one month of tuition. The culprit isn't corporate greed or underfunding. It's government intervention distorting every price signal in higher education.
Federal student loans created artificial demand that universities exploited ruthlessly. When government guarantees endless credit to teenagers with zero income or assets, colleges face no market constraint on pricing. Why charge $3,000 per year when students can borrow $30,000? The money flows regardless of educational quality or job prospects. Universities responded predictably: they jacked up prices and hired armies of administrators to capture this guaranteed revenue stream.
Easy credit always inflates asset prices, whether houses in 2005 or degrees today. Free market economists warned this would happen, just as they predicted the housing bubble. When you subsidize demand without increasing supply, prices skyrocket. Colleges simply absorbed every dollar of increased lending capacity into higher tuition, fancy dorms, and bloated bureaucracies.
The 1950s model worked because students paid real prices with real money; either their own or their parents'. This created immediate feedback between cost and value. If Harvard charged too much, students went elsewhere. Today, that price mechanism is completely severed. Students don't feel the true cost until years later when loan payments hit, and by then universities already pocketed the cash.
Every additional dollar of federal aid generates roughly 60 cents of tuition increases. The government created this monster, feeds it annually through increased lending limits, then acts shocked when colleges behave exactly like the rent-seeking cartels they've become.
