Supply and demand and demand and demand
So the U.S. House voted to cut interest rates on college loans. Truck and Barter gives us the economist's take:
To an economist, this looks like a subsidy from other taxpayers to the buyers of college education. The demand curve for college education will shift out, resulting in an increase in quantity and an increase in price. College tuition rates will rise. The less elastic the supply of college education (the steeper the supply curve), the bigger the boost to price (and the bigger the transfer to existing colleges).
But, of course, Speaker Pelosi wants to lower college education costs. Kentucky is looking at similar "solutions" to the college cost problem. The problem with those solutions: They ignore some pretty immutable facts about how schools respond to subsidies.
