Despite the hard times, families will not be deprived of access to federal student loans. The real danger is a hike in tuition. Often in past recessions, states have cut funding for colleges and tuition has skyrocketed. The Cato Institute says a better policy would be for the states to maintain the subsidies to colleges.

If government cuts the subsidy to colleges, why will tuition rise and the number of students enrolled decrease? Why does the Cato Institute say that it’s a better policy for government to maintain the subsidy?