Tuition Subsidies

In this article "U.S. Universities Feast on Federal Student Aid: Virginia Postrel", the author gives a very nice example of the unintended consequences of subsidy policies. Government subsidies to higher education in the U.S., aimed at increasing college enrollment, may have ended up increasing tuition costs. The economics at work are easy to understand and familiar to economists: the ultimate owner of any input of a production process  (higher education in this case)  rips the benefits of artificially increasing its demand (through subsidies).