Obama’s Solution to High College Costs: Fight Subsidies With Subsidies

“We are putting colleges on notice,” declared President Barack Obama. “You can’t assume that you’ll just jack up tuition every single year. If you can’t stop tuition from going up, then the funding you get from taxpayers each year will go down.”

Obama, speaking at the University of Michigan in Ann Arbor on January 27, sketched out a plan for bringing the cost of college tuition down. The President said he considers it an urgent need because “tuition is going up faster than inflation, faster than even health care is going up.” At that rate, he explained, “no matter how much we subsidize it, sooner or later, we’re going to run out of money.”

A more observant (and less opportunistic) individual might, at this point in his speech, have asked the obvious question: If the costs of two of the most heavily subsidized sectors of the economy are growing at a clip far outpacing inflation, are the subsidies, perhaps, at the root of the price hikes?

Obama, apparently, has never bothered to ask himself that question or else has decided that the reverse — that high prices cause subsidies — is the case. As a result, his solution to rising college tuition is exactly the same as his solution to increasing healthcare costs: Subsidize those costs some more, then order everyone on the receiving end of the subsidies to behave in ways that run counter to their own interests. The results are predictable: Prices will continue to rise rapidly, in turn bringing calls for greater subsidies and stricter mandates.

There is little doubt that federal student aid is the underlying cause of spiraling higher education costs.



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