Governemt Should Intervene to Lower College Costs

R2 Theme: http://www.youtube.com...I'll address Pro's arguments in sectioned line-by-line format.Tuition Hikes and Debt Burdens1. Correct, costs are increasing. The question is why? Pro doesn't make the case that we have an unregulated market in education, which is what would be required to make the normative argument that we ought to begin intervening. As I will soon argue, there is already a heavy political interest in increasing access to education.2. Analogy to the pre-crash housing market: like higher ed, housing was also the subject of political interest. Unsatisfied with the natural rate of homeownership, programs were instituted to expand access to buyers, many of whom would otherwise be unable to afford it. These measures include tax credits, loan subsidies/purchases [1], and low interest rates. Similarly, in higher ed, there are tax credits for being a full-time student, subsidized loan programs, Pell Grants, etc.The story is the same for both industries--the natural rate of participation isn't "enough" according to a political (non-market) calculation. To remedy this, programs are enacted to incentivize participation. The market operates through signaling--market participants send signals carrying information about what's profitable, where capital should flow, which investments are safe/risky, and so on. This is how the price mechanism works for supply and demand--when production exceeds demand, prices drop in response to the surplus. Participants leave the oversaturated market, investment declines, and prices equilibrate as capital goes elsewhere. When politics interferes with signaling, incentive structures are modified, altering what signals are sent/received. This is how bubbles are created. In housing, cheap capital, low rates on mortgages, the state's participation in the secondary mortgage market, tax credits, etc. created an environment in which capital flowed into the housing industry--subprime lending, construction in excess of real demand--rather than being efficiently allocated based on healthy signals. The result? High default rates, near-collapse of the financial services industry, insolvency, record foreclosures, declining property values, and a lot of debt left to people who had no ability to pay, and no business buying an expensive home.What about higher ed? With politics having restructured incentives to move capital to ed, we see many of the same signs ignored during the housing boom--record highs in participation [2], low interest rates, massive subsidy/ loan programs, high debt burdens, and cost increases (climbing home values paralleling cyclical tuition hikes). In short, as with housing, incentive distortions shift capital into ed to the exclusion of other investment opportunities. Even people who denied there was a housing bubble admit the problem exists in industies like healthcare, where big subsidy nets lead to "unconstrained demand" [3]. Intervention beget similar conditions in higher ed, where people who otherwise couldn't afford it are able to enter. This is bad for numerous reasons:A) Students and parents end up with massive debt which, being required to make access to education tenable, is often difficult or impossible to repay, as evidenced by default/delinquency rates [4][5]. For those who do pay off loans, the principal + interest-over-time also tends to diminish the advantage of any increase in income they might see. And this assumes that their degree is productive and marketable (i.e., that it involves useful skills and isn't connected to an industry in which there is a labor surplus).B) Since subsidies and loans permit [an increasing quantity of] students/applicants to meet tuition, universities can increase the pace at which they inflate tuition until public funding can't keep pace with cost increases. If my story is true, then public financial assistance for borrowers is actually partly responsible for tuition hikes.C) The relationship between subsidies and pricing--especially the rise in pricing for the non-subsidized--is already well-documented: health care, formal housing, and even in niche markets like rent vouchers for low-income housing [6]. So, not only do subsidy programs endanger the people who use them as the same assistance endangered prime and subprime borrowers in the 2000s; they also raise costs for "prime students" who otherwise would not be required to borrow money. Since tuition increases outpace the savings and inflation rates (also given the Fed's current policy of minimizing interest rates), families who would have been able to save enough to put their kids through college are being ushered into subsidy and loan programs which are themselves responsible for runaway tuition increases, creating a weird feedback loop where cheap, subsidized money leads to cost increases, and cost increases outpace savings and inflation to such an extent that affluent families come to rely on subsidies to make up the difference."Market Forces"None of this is actually an argument for intervention--Pro is only contending that costs are going up, and that universities have no incentive to cut costs. But, given a) his lack of an interpretive framework apart from "research", and b) my story about bubbles, capital allocation, and the cost-subsidy link, which explains the incentive distortions and guarantees of business, this section is ammunition for my thesis. Plus, many of these private universities which bump up tuition tend to have 90-100% financial aid rates [8], often because they're smart about their scholarship/grant funding and getting contributions. Harvard, for instance, gets a lot of private funding, and has basically eliminated loans from its funding program [9], and still give massive funding to 70% of their students [10].The Value of a Degree1. Using politics to determine the value of a degree is detrimental--investing the time/money makes degrees a signal of higher productivity, and focusing on maximizing the quantity of education devalues the investment for people to whom it would otherwise be valuable, since it just increases the supply of degrees without worrying about whether that education increases productivity, or whether it's a good investment for everyone (which can't be determined politically).2. Access to education is higher/easier than ever, so Pro's nostalgia about "easier times" is unwarranted.3. Degree surplus is evidenced by the high rate of unemployment/jobs which are unrelated to or don't require a degree [7]. Some of the degrees also aren't marketable, e.g., art therapy, music, but, even if they were all high-skill degrees (ex: if we selectively subsidized only engineering, computer science, math), we'd just end up with a surplus of engineers, computer scientists, etc., driving down income level and driving up unemployment in those fields. Subsidizing, which floods the market with degrees, and inhibits their capacity to act as signals to employers (disadvantaging those for whom a degree would be a good investment), is just a way of distorting the price mechanism that determines how much of any good/service, including education, needs to be "produced" (ex: how many degrees the market can handle before oversaturation occurs and the price of labor drops, which degrees are best to invest in), which means that political administration will be less efficient, a priori, than permitting the market to send signals unhindered about where capital--including human capital--ought to go. Politics screwed up housing by directing excessive amounts of capital into that industry, to disastrous results, and it'll screw up education if signals continue to be ignored. Pro's case just assumes "education good", then attempts to maximize how much we get without consideration for how much is socially optimal, or even which degrees are the best to invest in. College is great, but it's not right for everyone, and enticing everyone to sign up will only lead to ruin.Your turn, Pro.