Saving is good, price supports for tuition aren't

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I love the idea of giving more Americans chances to save their money tax free. So, I really want to support Congresswoman Lynn Jenkins and her bill to make 529 plans more accessible and efficient for people saving for college tuition.

But I can't. Because while it's a good thing to encourage people to save, when the government does anything to help people pay for college the only guaranteed result is that the colleges will raise tuition.

The reason is simple. Colleges and universities aren't stupid. They've come to learn that no matter how much they charge in tuition, the government will essentially guarantee they get that money up front in the form of student loan programs backed by Washington. Sure, that doesn't mean the student who took out those loans will be able to pay them back. But what does the college care? It's been paid already.

Thus, the Jenkins plan to help more Americans get into a 529 plan and get more of a return on their savings is only going to encourage institutions of higher education to charge those Americans even more. The hard fact is that the U.S. government helps to massively inflate college tuition via student loans programs, 529's, and endless speeches by politicians extolling the primary importance of a college degree. And it's time for this to stop.

Some education advocates who want to see college tuition reduced are pushing for plans that would force schools to repay some percentage of their students' defaulted debts. Others want tax benefits and access to student loans to be increased and decreased depending on a given school's graduation rate.

Those ideas have their hearts in the right places, but they won't work either. History shows that the only force than can reliably reduce prices for any real length of time is the free market. If colleges and universities were forced to truly compete for every dollar, then you'd really see tuition price reductions, more tiered tuition pricing, and better educational options too. It's as simple as that. When it comes to gas prices, food prices, college tuition, and everything else you save up to buy, the government is simply not your friend.



Commentary by Jake Novak, supervising producer of "Power Lunch." Follow him on Twitter @jakejakeny.