Question

All U.S. states subsidize education for college students, usually by charging below-cost tuition fees. Nearly free tuition is available in many European countries and has been proposed in California. Should the government subsidize college education so that it can be provided at very low tuition fees? Or should college education be allocated in a market system where prices are set by supply and demand?

Consider this policy issue and respond to the following:

List the economic benefits of, and problems with, subsidized college education. Examine subsidized college education by considering answers to the three basic economic questions:

·       What to produce with limited resources?

·       How to produce the goods and services we select?

·       For whom are the goods and services produced?

Be sure to not use opinion in your answer, just economics.

Answer 1

Benefits of subsidized college education,

1) Equal education and opportunity to all,

2) Poors and medium class can affort college degree

3) More educated people in society would mean better growth prospects

Drawbacks of subsidized college education:

1) With the huge demand of education due to subsidy, state govt may have problem to allocation eligible professors and teachers

2) Certain class of people may misuse the subsidized education system leading to wastage of resources and money

3) With heavy supply of educated and skilled labor, there is a requirement of enough jobs and opportunity to absorb them. With low opportunity and heavy supply of labor, the economy maybe in jitters.