This is the Cato Daily Podcast for Monday, April 15th, 2013.

I'm Caleb Brown.

Student loan debt is on the rise, eclipsing by some measures even credit card debt among young people and it would be easy to lay

the blame at the feet of colleges and universities for raising tuition but Neil

McCluskey author of feds in the classroom asks well just what forces allow them to raise prices with such impunity.

So between 2004 and 2012 non-mortage balances have generally been in some sort of decline or at least ebbing

and flowing a little bit but student debt for people under 30 has climbed very steadily sort of following a trend where there doesn't seem to be a

trend in other data sets.

Well other data sets track things that more or less run like a normal market obviously the government has been

involved in housing to some extent and metals in a lot of other areas but the

federal government is the primary funder for customers of higher education and it

doesn't function as a result as a real market at all.

Basically what happens is colleges can raise their prices at constant pretty

astronomical rates compared to normal inflation and they can do it because

the federal government for years it said we will make sure that anybody who wants to go to college

can pay whatever price they're confronted with.

At the very least, they can get the money to do it up front. And a lot of that is federal student loan.

So this doesn't respond to normal market fluctuations.

It doesn't respond to people who are economizing

nearly the way other things do.

Because the federal government is saying,

ever go to, everybody go to college and here's the money to do it.

...