The Economics of College Loans

Everybody vaguely familiar with basic economic concepts knows that there’s no such thing as a free lunch. It’s a great phrase and speaks to the principles of both opportunity cost and scarcity. That said, a “free lunch” refers to more than your afternoon repast. Everything costs something. And if you end up paying zero dollars for it, that only means it was paid for by someone else. This holds true for college tuition. It may cost a student zero dollars, and that student will certainly benefit from not having to pay for higher education herself, but what’s really been done is shifting the cost from the student—who is actually using the service—to the taxpayers—who certainly aren’t. So while there’s certainly a big problem with student debt in America, the solution isn’t “free” tuition. Join Antony Davies and James Harrigan as they get deep in the weeds about college tuition and more on this week’s episode of Words and Numbers.

Show Notes:

11 year old hacker changes election results

California law would prohibit restaurants from listing soft drinks on menus

Foolishness of the Week

Cops taser 87 year-old woman

Topic of the Week: Public policy and financing higher education

Tuition discounting

Financing college through equity instead of debt

Student loan data

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Antony Davies on Twitter

James R. Harrigan on Twitter

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