Your original supposition was the old Randian saw: unrestrained capitalism will benefit the consumer and drive prices down. What you're seeing now from private universities is the opposite-- universities presently operate in a highly capitalist economy (allowed to charge whatever they want, not required to justify costs, etc.), and prices are increasing, often 8-10%/year. This is the exact opposite of your prediction.

They voluntarily offer financial aid because their business runs on reputation, and therefore they need the most talented students, not only the wealthy ones who can pay full tuition.

Federal financial aid works in a similar fashion-- it won't get you into a college that you wouldn't qualify for, but it might let you attend a college that you would qualify for but couldn't afford.

valguarnera@carrionfields.com