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His main premise, that government student loans are co-signed by the government and students resulting in the distortion of demand, is spot on. Demand = Need +
by josh33 17y ago
His main premise, that government student loans are co-signed by the government and students resulting in the distortion of demand, is spot on. Demand = Need + Purchasing Power. With the Purchasing Power of the government at students' backs, schools would see that they needed to raise prices to keep supply at the same level.
- nazgulnarsil 17y agothere are other issues at play too though. schools don't currently maintain a supply and demand equilibrium. they under price and then use rationing. private schools could simply raise prices until number of applicants is approximately the number of positions available. but of course there is a prestige economy in place that interacts with the money economy.
- jbooth 17y agoGreat comment - the prestige economy does seem to have more of an effect on college price than any traditional supply/demand curves. We'd all be wise to recognize that.