Increases in subsidies aimed at offsetting the net cost for students will be self-defeating, as they are known to cause further inflation. When the government delivers a subsidy, in the form of a voucher, to a student, the student’s purchasing power increases. Unfortunately, institutions are aware of that fact-or at least will feel that change when it comes to students’ willingness to pay for enrollment. And whether they intend to or not, their prices will slowly creep up to capture that purchasing power, which means that the government will need to intervene with additional tax dollars again and again in order to keep the level of affordability constant.
Price controls won’t fix the problem. Ultimately, if colleges face a restriction on what they can charge, the number of seats they make available will likely decline. That will undoubtedly hurt the most disadvantaged people first.
Colleges that offer a loan repayment guarantee often utilize the financial services of a company called LRAP (Loan Repayment Assistance Program) to make it work
All this does not mean that we are stuck with the status quo. Continue reading The financial mechanism that makes insurance work is in operation behind the scenes for most college loan repayment guarantee programs