How is it a market failure?
If anything it's a direct result of the ease at which students can get loans from the federal government.
If anything it's a direct result of the ease at which students can get loans from the federal government.
Market failure is a concept within economic theory describing when the allocation of goods and services by a free market is not efficient.
Colleges are not operating in a market system. They get money rationed to them by the government in various ways. Therefore it is not a market failure.
https://news.ycombinator.com/item?id=5098258 http://news.ycombinator.com/item?id=5112837 http://news.ycombinator.com/item?id=4738488 http://news.ycombinator.com/item?id=963251 etc
People keep calling things like city planning a market failure when it is full of regulation.
Or healthcare when the U.S. government spends the most money on healthcare in the U.S.
etc
People throw the term around without knowing what it means.
EDIT:
Changed "is a market failure" to "are market failures".
edit: I was being humorous.