However, one additional thought – it may actually be a case of over supply. Since federal aid is readily available and students can defer their cost while they study, students may not be factoring the cost into their decision. The result is that the amount suppliers receive is far greater than what demanders pay (assuming loans are largely discounted as a factor, given the long range payment), then suppliers end up over-supplying the market and operate on the inefficient portion of the supply curve. A piece of evidence to support this claim is the excess amount of spending being done in internet advertising.

To explore this very topic, Andrew Jackson University is teaming up with the Department of Economics at San Jose State University.

Either way, the choice is clear – students should look for lower cost option – those schools who can provide a high quality education at a low price!

Don Kassner (MA Economics)
President
Andrew Jackson University