Subsidy for education

At the end of this activity, you will have examined economic reasons for and against a government subsidy for education.

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.

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