Virginia Postrel has a good Bloomberg piece on the effects of higher-ed subsidies. Just as capital equipment makers can capture some of the benefit of federal policies to encourage purchase of capital equipment, so can colleges captures some of the student-aid dollars meant to help students afford college, she argues.
Money quote: “Instead of having to find ways to operate more efficiently and deliver ever-more value without raising costs, the way private-sector managers, do, college administrators seem able to pass higher and higher bills on to their customers and the public.” Yes, and the steady flow of federal money is crucial to that.