Higher education is one of those areas—like health care—in which prices are so out of whack because of so many distortions in the market that it’s hard to know just how to go about rectifying the situation.
Richard Vedder, a great economist who has done pathbreaking work on the causes of the Great Depression, offers an incisive analysis of a Democratic proposal to lower student loan interest rates. It serves as an excellent case study in the law of unintended consequences.
By the way, the bill, which was voted on yesterday, passed.
