> The way student loans were before income-based repayment, we'd have expected college cost to rise until it meets the lifetime expected benefit of college discounted to the present.
Given zero competition, maybe. With multiple schools all competing to be the ones to take your money, and also competing to get the most lucrative future alumni, you have a complex market where there exists downward price pressure. In the end, given two relatively equivalent schools the cheaper school will have a better pick of students.
Market forces will intervene eventually, but in the subsidized-student-loan regime, that has been some time coming. ISTM the impasse won't be broken by cheaper colleges, but rather by private firms providing rigorous standardized testing. If a MOOC student feels her 18 months of online study is equivalent to a four-year degree, and has the test results that prove it, smart employers will embrace the future.
Given zero competition, maybe. With multiple schools all competing to be the ones to take your money, and also competing to get the most lucrative future alumni, you have a complex market where there exists downward price pressure. In the end, given two relatively equivalent schools the cheaper school will have a better pick of students.