Economics of Developing Countries

Most people agree that in advanced countries education should be free through secondary school (high school in the United States), which is normally completed at the age of 17 or 18. This question asks, how should university education be financed? Consider the following options.

a. the government runs publicly-funded universities that offer free tuition and room and board to all students who are enrolled. Private universities are allowed to operate, but they receive no government financial support. 

b. the government runs publicly-funded universities that offer subsidized tuition and room and board (which covers about half the cost of instruction plus room and board). The government provides need-based scholarship assistance to students whose families cannot afford to pay the tuition and room and board fees. Private universities are allowed to operate and the government’s need-based scholarships are available to students who enroll in these universities. 

c. the government provides no financial support to any universities. This is the free-market solution.

Think about the six justifications for government interference in a market economy.