That’s what one Cato Institute wonk said at a panel there:
“Colleges are able to raise their prices because it’s not the consumers paying that cost,” said Neal McCluskey, associate director of the Center for Educational Freedom at the libertarian Cato Institute, in a presentation called “Student Aid Explains the Pain.” Average tuition rates have gone up hundreds of dollars every year, he said, but the actual price students pay after grants and loans are subtracted has barely increased in the past decade.
The solution, he said, is to phase out federal student aid, including subsidized loans and grants, to “make colleges reliant on people who are paying with their own money.” Prices would drop as a result, he said, so college would not become a privilege of only the rich.
A few other panelists argued that Mr. McCluskey’s idea was politically impossible and unnecessary. Requiring colleges to disclose more information, such as measures of how much students are learning, would be enough to drive prices down, those panelists said.
Because there is little information available on how much students learn at any particular college, institutions’ reputations have come to stand in for actual quality, said Robert E. Martin, a retired economics professor at Centre College and the author of the report “The Revenue-to-Cost Spiral in Higher Education.” Money, including endowments and research spending, plays a major role in how colleges are regarded, leading institutions to charge more so they can spend more, he said.
It’s hard to imagine McCluskey’s idea ever happening. And if it did, it’s hard to imagine that it wouldn’t harm plenty of innocent people while we waited for the market to adjust.