Gee, I Wonder Why College Costs So Much

by Mike on March 27, 2012

in Education,Politics

Publilius Syrus once said that “everything is worth what its purchaser will pay it.”  He had a point.  A merchant can only sell a product at a price enough people are willing to pay.  If Starbucks charged $35 for a cup of coffee, people wouldn’t buy it and the chain would go out of business.  As it is, enough people are willing to shell out say, $5 for a cup of coffee, so that is what the product is worth.

The same principle should hold true in higher education, but it doesn’t.  Because the state subsidizes the market through a series of generous grants and guaranteed loans, universities know that the consumer has an increased ability to pay.  Because of that increased ability, and therefore willingness to pay, the costs of higher education necessarily skyrocket.  It’s common sense, but that doesn’t stop otherwise intelligent people from complaining about the costs of higher education on the one hand, yet screaming for more funding on the other, as if universities wouldn’t try to grab the extra dough.

Check out Neal McCluskey’s piece over at the Cato Institute’s blog for more on the cost issue, and other problems associated with the state’s involvement in higher education.

Link via Instapundit

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