I agree that land use decisions are also an important contributor to the problems in the mortgage market, especially in places like the peninsula. But without federal loan support, the market could not have reached the heights that is has since ultimately people can only afford to pay so much per month. If interest rates are much lower, then you can afford a higher principle amount for the same monthly payment. In a housing market with shortages, this allows prices to be bid higher.
But of course those land use policies are also exactly the kind of first-order thinking about government policy that I decried in my post above.
From the hip: Direct != indirect subsidizes and shouldn't be conflated. Direct subsidizes lowers the retail cost.
Outsiders need to understand that, just like business, higher ed has been reducing costs aggressively. Most faculty and staff have been taking it in the teeth. Meanwhile, admins and coaches and select faculty have been getting outsized compensation. No different than any where else.
Edit: If I had to guess, tuition at private institutions went up because it could. Charge what the market will bear. Maintain appearance of a premium quality product. Differentiate oneself from the plebes.
Edit 2: Chewed on the other two articles. Tim Worstall confuses cause and effect. Both he and Alex Tabarrok ignore that tuition costs were just fine before state subsidies (to the institutions) were removed. Drives me nuts. Further, why the American-centric exceptionalism? There are plenty of other nations with a variety of systems. A god-given natural experiment. So we can compare and contrast. Why are their costs and outcomes ignored?
If interest rates are much lower...
Changing access and cost of capital won't free up land to be redeveloped, therefore increasing supply.
You are using the arguments of supply and demand and free market economics where it is convenient, and saying the market fails higher education in other posts where it is convenient. Which is it?
https://fee.org/articles/student-loan-subsidies-cause-almost...
http://www.theatlantic.com/education/archive/2015/05/the-rea...
http://www.forbes.com/sites/timworstall/2015/08/03/increased...
I agree that land use decisions are also an important contributor to the problems in the mortgage market, especially in places like the peninsula. But without federal loan support, the market could not have reached the heights that is has since ultimately people can only afford to pay so much per month. If interest rates are much lower, then you can afford a higher principle amount for the same monthly payment. In a housing market with shortages, this allows prices to be bid higher.
But of course those land use policies are also exactly the kind of first-order thinking about government policy that I decried in my post above.