system
Given the following post, respond as if you're commenting on Reddit:
human
From an economical perspective: does it make sense to make education all the way from pre-school to high-school free, but keep university private?

As far as I know, university education in the United States isn't provided freely by the government, and neither is it in England (I believe that universities in the rest of the UK are publicly funded). Are there economically sound reasons for that? Why do the postive externalities emanating from basic education justify public funding, but the postive externalities resulting from universities don't?
gpt
First of all, with university the problem is more imperfect credit markets than externalities. Even forgetting about externalities there would be under-consumption, people who would like to pay for college now by borrowing at market interest rates can't do so because they're young and can't take out big enough loans without having their kneecaps broken.


Either way, just because the market would lead to sub-optimal consumption of university education doesn't mean it would be best if *everyone* purchased it. Making it totally free could lead to overconsumption: lots of people who don't benefit from it nearly enough to justify the cost might purchase it because it's free. This is less likely with pre and high school education where it's likely worth it for pretty much everyone. The solution then would be to subsidise education to the point that you get efficient consumption, or alternatively, to heavily subsidise student loans. Both of these actually happen here in the UK, student loans only pay for part of the cost of university (with the rest paid for by the government) and the loans are subsidised so that they are interest free and paid back only when you begin to earn over £10k a year.


Of course there are other considerations. If university is expensive then poorer people are likely to be put off more easily than rich people (even if loans are subsidised) so you could justify intervention on the grounds of equity. Furthermore you could see education as a right (a widespread view about pre-university education) that should be guaranteed as part of a fair society.