Craig Depken links to a Washington Post story about how traditional non-profit colleges are trying to block legislation that would make it easier to transfer credits from for-profit schools such as the University of Phoenix and Devry.

I don't see what the problem is. Setting aside the issue of why the federal government is even involved in contractual relationships between colleges, why is this lobbying wrong? Depken calls it a barrier to entry, but I'm not so sure it is. Nothing is preventing schools from starting and offering degrees.

Instead what we have is a self-enforced barrier to trade. Sure not accepting credits from for profits is a barrier, but lots of things are barriers. Restaurants won't let you bring in outside wine without a corkage fee, for example. That's a barrier, but I don't see how it warrants government intrusion.

From the perspective of a non-profit school it might be optimal to limit all transfers, from for-profit or non-profit schools. Imagine you are a small liberal arts college in an urban area with a large state university. Despite your higher sticker price, students want to attend your college because of the personalized attention you give your students and the value of coming from a semi-selective institution.

Your optimal policy is probably not to accept transfer credits, or at least a lot of them, because students will have a strong incentive to take as many classes at the cheaper state university and then transfer to your institution. Why should you, as a non-profit business, allow that?