Not long ago I got into it with the YouTube investment wizard and U.S. Senate candidate Peter Schiff over college loans and the ever-increasing price of tuition.
The impish Schiff — who predicted the current economic collapse — hit me with a simple explanation to a question I cannot find an answer for: It's the government's fault for handing out so much money through loans and grants.
No government bailout, Schiffian logic goes, no inflated tuition.
While it's not that easy, there's a significant amount of truth to what he says. Schools know that most students are going to get some kind of government financial aid, so they raise tuition--why not? They get the money!
In what areas of the economy have prices been rising significantly higher than the inflation rate for several years? Health care and higher education. In which two areas of the economy is government heavily involved, skewing the market? Health care and higher education.
The correlation is not coincidental.