North Carolina has a long history of support for higher education. The state's financial commitment to higher education is among the strongest in the United States. The high degree of subsidization of higher education in North Carolina has some very important effects. First, it transfers wealth from taxpayers in general to those families who take advantage of the low-cost UNC system. Second, it stimulates the demand for entrance into the system. Third, it works to the detriment of the private colleges and universities in the state. This paper will analyze each effect of North Carolina’s high subsidization of the University system.