Understanding College Public Financing

Discussion of the economics of college funding is something that makes most people roll their eyes and look for the nearest exit.  Many folks seem to think that it's great and is responsible for everything from the post-WWII boom to the computer revolution and they don't want to hear otherwise or apply any critical thinking to the issue.

However, us political economist types don't have that luxury.  We have to apply a series of analytical tools to the issue to get a real view of what is going on with student loans.  What we find is that the market for a college education is no different than any other market in terms of how it functions.  A scarcity of dollars will cause prices to go down as competing universities chase a diminished supply of capital.  Conversely, when dollars are plentiful, prices rise.  See where I am going with this yet?