Government Tries To Make College More Affordable, Makes It Less Affordable

July 22, 2011

I’ve called before for a “Separation of School and State” on the grounds that the education itself is different—and not as good, for the recipient or for the rest of us—to the extent that it is paid for by the government.

This week in National Review Online, Michael Barone discusses another reason:  Government’s attempts to help are actually making college more expensive. 

It’s counterintuitive, but it makes sense if you think about it:  We’ve more or less decided, as a society, that everyone should be able to go to college.  (Leave aside the question of whether everyone should go to college in the first place—that’s a topic for another day.)  We’ve decided that that means the government should make up the difference between how much college costs and how much a prospective student (or his family) can afford to pay—in other words, no matter how much college costs, the government will make sure it gets paid for.

But think about what that means:  If four years of college cost $20,000, and I can afford to pay a total of $10,000, the government will chip in $10,000.  If college costs $120,000, the government will make up the remaining $110,000.  To the extent that the government is agreeing to pick up the tab, no matter how much it costs—to that extent, colleges can charge as much as they want.

Of course the government doesn’t do this primarily through outright grants of money; it does this primarily through loans.  And of course not quite everyone gets help from the government.  But that doesn’t change the basic principle at work:  It’s a matter of degree.  Things aren’t as bad as they could possibly be; they could be worse if everyone were receiving government help to pay for college, and they could be worse if the government were doing grants instead of loans.  (If things were as bad as they could possibly be, the cost of college should theoretically approach infinity.)  Of course, doing loans instead of grants has the added disadvantage that it saddles a large (and poor) subset of the population with crushing debt.

So, as many have observed, the cost of college rises much faster than inflation; that makes college unaffordable to more people, which then increases the original justification for the government’s involvement, in what may be a vicious cycle.  Or, as the Demotivators put it:

Hat tip to the Reformed Pastor.

18 Responses to “Government Tries To Make College More Affordable, Makes It Less Affordable”

  1. Snoodickle Says:

    Why did you attend a public school?

    • The school I chose was relatively well-ranked, geographically close to where I wanted to be, and, of course, less expensive than a private school would have been. From my point of view, I think it was a good choice.

      But of course that “less expensive” means less expensive to me (again, from my point of view)—not necessarily less expensive in total (including the money taken from taxpayers to subsidize it). From an abstract, policy point of view, taking into account costs and benefits to everyone, on net, I’m saying this is bad policy and we should stop doing it.

      • Snoodickle Says:

        Sounds like a hypocritical choice to me.

      • I disagree, but I’ll be happy to argue about it if you’d like. Can you articulate how you think it was hypocritical?

      • Snoodickle Says:

        It’s hypocritical because you pretend to care about this principle of separation of school and state but you attend a public school, thus perpetuating the very system you oppose because it’s cheaper for me. That would be like saying I oppose slavery but then owning a slave because it’s cheaper for me. The craziest thing is it wasn’t cheaper, Capital would have given you a full ride. Sounds like you’re a secret public school lover.

      • OK, you’re just being goofy with that last one. I said in my initial reply that the University of Cincinnati was ranked relatively well. Where does Capital rank? I’m pretty sure it doesn’t even come close. (The location isn’t as good from my point of view, either.)

        This is very different from slavery; based on a number of things you’ve said before, I think you would be the first to say that slavery is a moral evil. In the entry above, or even in my earlier “Separation of School and State”, I don’t think I’ve ever suggested that government involvement in education is a moral evil; I’m saying that it’s bad policy. I agree that I would be morally obliged to try not to support slavery by my actions (certainly not to own a slave); I recognize no such obligation with respect to mere policy preferences.

        Anyway the government would have been involved even if I had chosen a private school; as the original entry above mainly discusses, and as Tevyeh discusses below, the government would have given me loans either way. On your theory, am I therefore morally obliged to avoid going to any school of either kind?

      • Ooh, or here’s one for you: Are President Clinton, President Obama, and other Democrats who say that “the rich” ought to pay more in income taxes morally obliged to send extra money to Washinton voluntarily until such time as their preferred tax rates are enacted?

      • Snoodickle Says:

        You still failed to explain how you can justify perpetuating a policy you oppose for your own benefit. That’s why you’re a hypocrite.

      • Snoodickle never answered my questions, but kept throwing around his accusation of hypocrisy; I have nothing more to say to him here.

        To the other readers, if any, I note that upon further reflection, I think my answer was incomplete, an oversimplification.

        On my view, the government’s confiscating people’s property to subsidize a school does indeed have a moral dimension; perhaps the difference between my nonetheless attending said school and hypothetically owning a slave is more like a difference of degree than a difference of kind.

        On the other hand, my unanswered questions remain: What am I supposed to do instead? If the government takes over financing education (it has already done so), can I not morally go to college or law school unless I’m independently wealthy? If the government takes over health care, can I not morally receive any health care? The more of society government takes over, under Snoodickle’s standard, the more those of us who opposed its dominion will be forced to be non-participants in society, or else be guilty of “hypocrisy”.

  2. Tevyeh Says:

    It’s not counterintuitive at all–draw a simple supply/demand graph and see what happens when you shift the demand curve to the right. Now imagine that the rightward shift is a continuous process, and is a function of price…

    • Snoodickle Says:

      That rationale only makes sense if the school he attended is cheaper than every private school, which it’s not, Capital offers full rides to many qualified students, just to name one. And it’s Lutheran!

      • Tevyeh Says:

        Students who attend private universities and colleges are generally eligible for federal tuition assistance, via loans or grants. The simple supply/demand model above, in which demand (i.e. number of qualified applicants willing and able to pay tuition) is subsidized at a continuously increasing rate, is probably even more applicable to private institutions than public ones.

      • Snoodickle Says:

        I was referring to his rationale, not your analysis.

  3. swissecon Says:

    One of the best articles on public education was written by Donald J. Boudreaux. Check it out:

    • Yes! I agree, great piece, great point.

      As you predicted, the full text is no longer available to non-subscribers at that URL (it gives a sample of perhaps a paragraph and a half), but fortunately, I read the whole thing earlier this year when a friend e-mailed it to me. (Maybe one of these days I should just bite the bullet and subscribe…)

      • Snoodickle Says:

        When I go to the supermarket, I hit grains first, then dairy, and produce last to keep it as fresh as possible! How do you guys shop?

  4. […] “Government Tries To Make College More Affordable, Makes It Less Affordable” […]

  5. […] as non-partisan and claims to criticize both conservatives and liberals, it agrees with the (previously conservative) observation that federal student loans themselves are a big part of why tuition costs are so high […]

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