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August 24, 2013 at 12:21 pm

WSJ: Vedder on Obama College Costs Proposal

Wall Street Journal writer Allysia Finley interviewed Dr. Richard Vedder, Director of the Center for College Affordability and Productivity and Professor Emeritus of Economics at Ohio University’s College of Arts & Sciences, on “how subsidies fuel rising prices and why there’s a ‘bubble’ in student loans and college enrollment.”

College costs have continued to explode despite 50 years of ostensibly benevolent government interventions, according to Mr. Vedder, and the president’s new plan could exacerbate the trend. By Mr. Vedder’s lights, the cost conundrum started with the Higher Education Act of 1965, a Great Society program that created federal scholarships and low-interest loans aimed at making college more accessible….

This growth in subsidies, Mr. Vedder argues, has fueled rising prices: “It gives every incentive and every opportunity for colleges to raise their fees.” …

Where the government can help, Mr. Vedder says, is to get out of the way of progress and encourage slow-moving accreditors to allow innovations to move forward more rapidly. But ultimately, the way to improve college affordability is for the government to disinvest in higher ed and wean students from subsidies.

Mr. Obama is dead set against that. “He wants to maintain that world” of nonreality in which demand is impervious to cost, Mr. Vedder sighs. “That world has to change.”

Read the entire op-ed.

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