Policy Documents

Obama to Control the Price of Ivy?

Neal McCluskey –
August 22, 2013

In this posting at CATO @ Liberty, Neal McCluskey shines light on the student loan problem caused by the federal government: 

Superabundant federal student aid has done a huge amount to get us into our bankrupting college mess. To get us out, today President Obama will propose, essentially, “soft” price controls. But they will likely add new kinds of woe. President Obama proposes that ratings of schools based on such measures as average tuition, graduation rates, debt and earnings of graduates, and the percentage of a college’s students who are low-income. The ratings would also “compare colleges with similar missions.” Ultimately, the president will propose that the availability of aid be partly conditioned on the new ratings.

McCluskey concludes that, 

The price of college is almost certainly far higher than it should be, fueled largely by federal aid that essentially tells colleges “charge whatever you want – we’ll give students the money.” That’s a major reason that average, inflation-adjusted prices have more than doubled in the last 30 years. And it is good that the president, and many others, are essentially acknowledging the inflationary reality of aid.