There’s no doubt that federal student loan programs were created with good intentions. Advocates wanted to help more young Americans pursue a college education and achieve social mobility. But the unintended consequences of short-sighted federal intervention into the higher education market are growing ever more apparent by the day.
Per CNBC, private colleges have seen 129 percentprice inflation since 1988 in inflation-adjusted dollars.At public colleges, prices have more than doubled over the same period. By handing out student loans like candy on Halloween, the federal government artificially inflated demand—thus encouraging and enabling tuition hikes.
For instance, research published by the New York Federal Reservefoundthat every dollar the government gave out in subsidized loans led to a 60 cent rise in tuition rates. And a Harvardstudycomparing higher education programs that accepted federal aid to those that did not found that tuition at aid-accepting programs grew much faster.