[lotsofpulp]

Price is where supply curve meets demand curve. Demand curve is extremely far to the right due to everyone believing college will land them better, whiter collar prospects than otherwise available to them.

Also, it’s a very conspicuous social status marker and greatly contributes to the network of people that you have for the rest of your life. Not that it’s worth it for most colleges, but people believe, and no one likes to make less than rosy assumptions about themselves or their child.

Couple this extreme demand with an unlimited source of money, e.g. taxpayer funded student loans. Now a college can state whatever price they want, and the buy will be able to pay it! All they have to do is apply for a loan they are guaranteed to be approved for, and many times the parents are on the hook as well due to co-signing in the case of private student loans.

Not a single person does any cash flow modeling during this business of borrowing tens and hundreds of thousands of dollars on an unproven adolescent. Imagine a lender’s requirements for any other scenario where this much money is borrowed. All because it’s all taxpayer guaranteed.

[mrep]

It also allows them to price discriminate against rich parents to get them to pay more, and then they can subsidize kids from less wealthy backgrounds with scholarships. This works pretty well as a progressive system most of the time but there are plenty of stories of kids who have a rich parent or two who won't help their kid out at all and then the kid gets screwed with high tuition costs even though they have to pay for it all.