People who promote the idea of free college are idiots. Who will pay the professor salaries? Who will pay for the electrical bill? Who will pay for salaries of administrators? Stealing money through taxation from the rich, thereby stifling economic investment, in order to further subsidize the runaway cost of college, is not a solution.
The reason why college is so damn expensive is clear. Banks have no risk of people defaulting on their loans. Unlike mortgages, car loans, business loans, no recipient of a student loan can ever discharge that loan in bankruptcy. That means there is no risk for a bank of someone defaulting on their student loans. When a bank has no risk and guaranteed profits, prices skyrocket. That point bears repeating. No one EVER defaults on their student loans. You may not pay it when it is due, but you will pay it eventually with interest and penalties.
People often criticized the idea of bankruptcy as a method of people getting out of paying Financial obligations. However one economic benefit of bankruptcy is to provide risk to banks thereby preventing uncontrolled lending. If you want to see what happens when banks are encouraged to issue loans to anyone who applies, turn to 2008 in your history books.
So as I said in the beginning, the reason why The cost of college is out of control it’s clear. Banks have no risk of recipients defaulting on student loans. So they are willing to issue student loans to anyone for any amount. Plus, The federal government issues student loans to anyone who applies. When colleges know students will be able to get easy money no matter the amount, of course they increase prices.
So to reduce the increase in college costs, banks must once again have the risk of defaults. Student loans should be dischargeable in bankruptcy. Why are they the only loans banks get absolute protection from default? Plus… Any college whose costs increase faster than a predetermined amount, should lose The ability to receive federal student loans, and should lose their tax exempt status. There! Problem solved.