Risks of a Single Payer System: Why Universities Should Support Vibrant Private Education Finance Markets
With the end of FFELP and reductions in state government support of higher education, we are moving toward a single-payer system for higher education. At many schools, both private and public, nearly all funds, whether research grants, need-based grants, need-based loans, Stafford Loans, PLUS Loans, or veterans’ benefits, come from and through the federal government. Such a system is riskier for schools and students than one with diversified funding sources. Case in point: President Obama, in his state of the union speech, proposed to withhold federal funds from schools with impermissible tuition hikes or high costs of attendance, as a means of addressing the unsustainable cost of college for many students. Perhaps some colleges should charge less tuition, but government price controls would probably only hurt students and schools.
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