I addressed this in my comment. You'd end up with schools not lowering their prices, they would just be available only to the upper class.

There are not enough upper class to go to all of the schools currently operating- colleges would have to lower prices or disappear.

Yes exactly. The small schools would just disappear, and the big names would keep going.

Clearly both would happen, right? Harvard doesn't set their prices based on loans, they wouldn't care. Some mid-rank colleges would disappear, and some would adapt to serve the new market.

> Harvard doesn't set their prices based on loans,

They most definitely do:

https://www.thecrimson.com/article/2006/10/25/tuition-increa...

Well perhaps I should have said, they don't have to. Right now they need not bother to charge at all. And how they set the sticker price is only a small part of the picture anyway, since they gather near-perfect information about your parents ability to pay (or to donate!) before anything gets agreed.

This source does not have any information related to loans availability correlating with tuition prices. Are you making the assumption that tuition hikes can only be caused by loan availability?

I disagree a bit. The big name schools can get away with charging their current prices, but small schools would radically re-think. No more football stadiums, fancy dorms, etc. People still need to get educated. The rest of the world has universities with sensible pricing - only the US is an anomaly.

So you're saying small schools would choose to close rather than lower their prices and stay open?

It’s not really a choice. Those schools tend to have very expensive, high maintenance campuses. I suppose they could also let all the buildings deteriorate but then they risk being closed against their well due to safety concerns.

In truth, the costs of these schools results from a ratchet effect. Wealthy donors buy the fancy buildings which the schools are then stuck maintaining. It’s a classic case of a white elephant [1].

[1] https://en.wikipedia.org/wiki/White_elephant

It's not uncommon for organizations to have to downsize due to changing economic conditions.

In fact, when people ask why colleges are paying administrators 6-7 figure salaries while classes are taught by lecturers making a fraction of that, they say they need to compete with private industry for top talent. I would hope that an administrator making $300,000+ can come up with a more creative plan for what to do with high maintenance buildings than just "let them deteriorate".

Why? Schools can't be cheaper?

or the small schools find a way to make education more cost effective. i'm sure there are tons of businesses that would be happy to give you an online education for cheap if it were legally allowable.

Universities don't hike prices for the sake of extracting more money from students. They do so because it's the only way to make up for the enormous cuts in funding from states, which have historically provided the bulk of revenue that universities see.

Maybe at Harvard, but smaller and less prestigious schools definitely would.