Do Government education grants raise the cost of college?
Yes or no?
I've read an interesting argument against healthcare. They explained how the HC bill will raise costs of healthcare by comparing it to how Education Grants raise costs of College.
The argument is that colleges know that most students qualify for Grants. Prior to the grant money, which we'll say holds a value of $Y, colleges would charge $X. And they would fill their colleges. But because students started getting grants, colleges could then afford to charge $X (what they previously charged) + $Y (the extra amount the government is willing to pay for). And they could increase the total revenue signficantly because $Y increased at a rate that equals the change in the cost of college. And so college tuition rates are increasing at 6%, $Y is increasing at a rate to keep up. Colleges have incentive to raise costs without decreasing student population
The problems are of course if you're one of the people who don't qualify for $Y. In which case the cost to you significantly rises because now you're paying $X + $Y out of pocket without receiving $Y. So the number of people going to college remain the same. The upper middle class really get screwed because they either can't or can barely afford the college bill, but make too much to get grants. The super rich pay more, but are at least able to afford it (though it's still debatable as to whether or not this is 'fair'). And so in the end some poorer people get to go to college at the cost of some upper middle class not going to college, all the while the gov't has to spend money (paid for by taxes which are paid moreso by the wealthy who then in turn have to pay more for college and not get the grants or not go to college since costs rose so much) and the colleges make more money too.
This is the reasoning, if I explained it well enough for you. So I ask you two questions - is this reasoning sound? Do Government education grants raise the cost of college? and is it likely that the same model argument could be made for healthcare? why or why not?