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Freedom's Phoenix

Rising Costs in Education

April 8, 2010 - 12:15am
Nick Coons by Nick Coons

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Everything that government puts its hands on seems to crumble to pieces. Whether that crumbling is in the form of higher prices, lower quality, corruption, or all of the above, the result is inevitable. Education is no exception.



K-12 education is provided for by the government. This is a perfect example of socialism, where the government not only pays for education, but it controls it completely. Economically, there's no way this can be sustained. Because education is paid for, and those in the educational system are paid, whether they perform to consumer standards or not, there is no motivation to provide better service or to increase efficiency in order to lower costs. This inevitably results in higher prices and lower quality, which is exactly what we see in public education, not only over time, but also compared to private education. This is all very straight-forward.

But when getting into higher education, it gets more complicated. Universities are funded in part by student tuition payments. There are several factors that are involved in costs increasing. Foremost is the existence of government financial aid. Student loans are available at rates far below market value, and this is just as harmful to tuition costs as it was to housing costs.

In a free market where interest rates are set by lenders based on the availability of capital and the risk of the borrower (instead of an artificial influx of cash from the Federal Reserve system) spikes in prices don't occur. Since 1980, tuition costs have risen sharply, far faster than inflation and even health care. These price increases correlate almost exactly with the increase in government involvement in financial aid. As long as government is involved at providing discounted financial aid to college students, tuition will continue to rise. And as long as people don't understand this correlation, they'll continue to call for what is essentially a positive feedback loop by demanding for government involvement to help pay for rising tuition costs.



Related Content:

Bond Passes, Education Won't Get Better, We Lose - Nick Coons
Is The United States Built on a Foundation of Christian Principles? - Kimberly Ruff


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