Tuesday, August 19, 2014

The Remarkable Rise In College Tuition & Fees

Notice something about the chart below? The three major categories that have seen their prices surge (college tuition, medical care and shelter) are three sectors where the government provides financing and dominates the market.

If the ability (qualification) and cost (interest payments) to borrow money and enter a market becomes easier then there will be more demand for a product which creates a higher price. What you are left with years later are people having to take out massive loans in order to pay for those same goods. Those new entrants are now have a lifetime prison of debt payments.

Ah, but "how would people buy houses or go to school if the government didn't pay for it?" If the government stepped away from the market, prices for those goods would collapse back to a level the free market could afford. What you would be left with is people paying a lot less every month on student loans or housing payments. They would have more disposable income for saving, investing, starting a company or consumption.

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