[ahsanhilal]

Government subsidies towards student loans is a well known fact. Just like government subsidized the cost of borrowing for mortgages, so has it inculcated a perverse system of college financing. Evidence of this can be seen in the largest increase in student defaults since 1990 at around 9.1%. whereas car, mortgage and credit card default rates are around 1-4%. That is called adverse selection run by a government system that is incentivized to give out bad loans due to the profit it sees in the long term.

Colleges, in a theoretical free market might compete on cost, but in real-life they actually are competing on providing amenities and extra curriculars, not in any way associated with how well kids are educated. College prices, inflation adjusted, have gone up by 120-130% in real terms, while median family income is stagnant. Most of the increase in Net revenues in colleges is NOT spent on paying educators since their wages and teacher/student ratios have been increasing linearly. The rise is mostly attributed to budgetary items for Other Employees, coaches adminstrators etc and large infrastructure funding.