Several people have told us recently that they think the free market is fine in the commercial world, but higher education is "different" and a free market would hurt students. We think it would benefit them.
A "free market" doesn't mean complete absence of government. It does mean, however, that government would stop giving or loaning money to students to enroll in certain approved institutions and would stop getting in the way of nontraditional institutions.
Students and parents could then purchase educational services from a variety of sources, the way Americans purchase veterinary services, legal services, financial consulting, physical fitness training and auto repair. In markets where buyers and sellers are free to choose what they want from whomever they want, competition restrains costs, improves quality and gives individuals the widest range of choices.
Consider the physical fitness market. Consumers who want to improve their health and get in shape can join health clubs, hire personal trainers, purchase physical fitness equipment, rent exercise DVDs, participate in organized activities such as adult volleyball, or run, swim and bicycle on their own. Fitness club fees are disciplined by competition from other fitness clubs, as well as from other available exercise alternatives.
Another example is music education, such as piano playing. Those who want to learn how to play an instrument – or want their children to learn – have many options: private teachers, local music schools, self-instruction materials, and, if they're talented enough, prominent conservatories. Government doesn't mandate or regulate or subsidize anything. Individuals and families choose the kind of instruction that best suits their pocketbooks and needs – and it seems to work.
The market for post-secondary education could be every bit as open, diverse, and consumer-friendly. And costs probably would go down.
Without government financing those who want a college education would become careful consumers because they would be paying full cost. As a result, providers would be forced to keep costs in check, and even lower prices. Just as government grants and loans, which are now provided only for "accredited" colleges, have helped drive up costs, the lack of grants and loans would help bring them down.
While the United States should be pushing alternatives to the traditional four-year college, it also should be pushing alternatives to the way we gauge preparedness for the workplace. The market can provide that as well.
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More: http://www.forbes.com/sites/realspin/2012/02/07/the-growing-potential-of-free-market-education/
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