Independent voters who truly want an independent, confirmation-bias-free approach to public policy have every reason to familiarize themselves with the behavioral economic science known as public choice theory:

political behavior

Student debt is no exception and a perfect illustration of what occurs when the government intervenes in a given market to make a good (like a college education) more affordable. The inevitable results are ironically market distortions and perverse incentives that drive up prices and have left students saddled with toxic debts.

Unfortunately, it all starts with the best of intentions and ends buried under a mountain of unintended consequences. First, a problem is identified and countered with a proposed solution. In this case a bunch of technocrats get together and develop a plan to ensure everyone a college education by guaranteeing that all student loans are backed by the full, faith, and credit of the federal government.

Now all those teenagers unable to foot the tuition bills themselves or obtain loans from a bank no longer have to worry. Crisis averted, right? Not quite. Blinded by cavalier, self righteous palm pressing and back slapping in the wake of “solving” another quandary, public choice problems rapidly boil over the surface.

By usurping the market for student loans, universities’ incentives to compete with each other, create new mechanisms to deliver education, and lower costs to make their schools financially attractive are replaced with a series of perverse incentives such as unchecked, arbitrary increases in tuition, the number of newly admitted students per class, and the creation of a resort style atmosphere.

Why? The loans are all guaranteed, so why ask why? Just sign on the dotted line. Now students are graduating college unable to find work, like being strapped with a home mortgage, minus the home. Wait just a minute– that was never part of the plan!

But the outcry for government intervention was overwhelming: Everyone that wants to go to college must be able to go! Sounds familiar, right? Home ownership experienced the same phenomenon, as the ownership society mentality was used to justify Washington's meddling in that market. Now look where we are today, a sequence of bubbles, constantly throwing more money at the problems, and all the while preventing the true cost of such goods and services from being accurately priced by natural market actors.