However, since loans take an increasingly larger proportion of the prices paid in higher education, Hauptman argued that they indeed have an effect on price. What bothered some of us on the Commission was the leap in logic. Hauptman established a direct correlation between changes in price and changes in availability of aid. There are several other obvious relationships. The fundamental fallacy in Hauptman s approach is to ignore the fact that higher education sells its wares at a significant discount to the cost of production.
Every student receives a subsidy, a reduction from the actual cost of providing the education.
Hauptman tags student loans as the culprit in increases in tuition, especially at independent institutions, yet data on college pricing over a very long period of time seem to indicate that prices have risen in an inconsistent pattern outside of the availability of loans. What is most odd about this is that the fastest growth in loan volume in recent years came when institutions were either freezing or limiting their tuition growth. Some of us did spend a considerable amount of time thinking about the implications of proposals that the federal government establish price controls. But neither the argument for specific controls nor the evidence of other price control mechanisms offers any convincing evidence that they will achieve any measure of success. However, there is considerable evidence that price controls in other areas produce unintended negative consequences.