Professors as Profiteers

Megan McArdle blames the high and increasing cost of higher education on state intervention into the market.  Who would have thought.  She also writes that

[b]ut beyond the high default rates[on student loans], consider what a student loan does.  In the past, college degrees conferred higher incomes on those who earned them.  But almost all of that surplus went to the student rather than the college, because aside from a small number of extremely affluent families, the students were young and did not have that much cash.  If colleges wanted to expand their market, college tuition was constrained to what an average student, or their family, could pay.

Introducing subsidized loans into the picture allowed students to monetize that future income now. It's hardly surprising that colleges began to claim more and more of the surplus created by their college degree. Think about it this way: if colleges create an extra million in lifetime salary, you're theoretically better off if you pay them the discounted present value of $999,999 in order to earn that extra million.

What does a student loan do?  Pays for an education which sometimes leads to a better paying job but the "surplus" created by the better paying job isn't returned to the university so tuition had to go up to pre-capture the potential surplus and this was only possible because the state guaranteed student loans.

Have I got that right? McArdly is blaming the capitalist drive for profit maximization for increasing tuition costs? Sure the state had to step in to allow the capitalists' desire for more profit to work, which is a big glibertarian sin, but the universities are acting like good capitalists.

Am I the only one who finds this less than compelling?

Here's a slightly different suggestion about why the costs of education have gone up at least at state schools declining state support, increased enrollment, etc combined with an increase  in the size of university administrations.