I would prefer that the government grants or loans didn’t exist at all. They have the effect of raising tuition costs for everybody.
So then you also prefer to get rid of the mortgage interest deduction on your income tax? That’s a pretty huge giveaway that benefits only a fraction of the most needy – those who have the means to save for a down payment. The rest of the deduction goes to people who own houses and who really don’t need the help from Uncle Sam. Oh yeah, and the deduction inflates prices on houses too!
I guess you’d also prefer that the government get out of the business of road building too, since since the constant impulse to build more road and add more lanes just erases the price signal associated with travel by motor vehicle. And developers price the improvement in travel time associated with building a new road between undeveloped land and a job center. They’re willing to pay more for that undeveloped land, so the road has inflated prices! Same thing for port dredging, bridge building, airport construction, and other government infrastructure projects.
I’d suppose you’d also suggest that we get rid of the tax deduction for employers on their employees’ health insurance. All that extra insurance beyond what the market will bear results in higher demand for health care. That raises prices too!
While we’re at it, why don’t we get rid of the subsidy for security on private property. Police protection of your home from burglary or invasion surely means that you can claim a higher price for it, which is kinda unfair since you could use that extra money to hire your own security guard. Fire departments too!
Heck, while we’re at it, the existence of a military distorts the market as well, by providing subsidy to everyone and preventing them from having to arm themselves. Of course, our naval patrols in the Persian Gulf are also artificially driving down the price for oil, which disadvantages other energy sources not so dependent on the military protection of shipping lanes.
Clearly, I’m being satirical here. Unless you’re a radical libertarian or anarchist, you’re not going to call many of these government programs an improper use of government money. The point is that the U.S. economy is not a truly free market. The government is involved in regulating the economy, from the Federal Reserve’s setting of interest rates to your town’s zoning your neighborhood a residential area.
