Distorted Market

Reader comment on: Why Is College In America 'So Expensive'?

Submitted by Ralph Corsi (United States), Sep 12, 2018 23:17

In reality, the college tuition market is a distorted one. Normal markets are driven by supply and demand. In the case of college tuition however, students can obtain college loans from the government which highly distorts the demand. Therefore, if you plot it on the old supply and demand chart, the price of tuition is raised accordingly. Prior to government funding, there were only a limited number of students who could afford the tuition or who were willing and able to get a loan. Today, any high school graduate that is admitted to a college, can apply and receive the money to pay his tuition, room and board. Colleges don't advertise their fail out rate which can be up to 50%. That means some students will incur a debt of $40,000 to $60,000 or more for their two years of college and have nothing to show for it, not a degree, not a specialty, not a certificate or anything which can be turned into a desired credential for a job. Worse, students will carry that $60,000 or more loan into their future effecting their ability to marry, buy a home, and start a family. It may also limit their ability to start a new occupation that pays a low starting salary with the possibility of future financial gains. I think the use of the government to pay for college will, in the future, be seen as the foolish mistake it is. The previous system allowed students, who didn't have the money for tuition, to pay for college tuition by working through the summer and part time during the year. Now we can see, its not such a bad deal.

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