From Arnold Kling at TCS:
Some of the entry barriers are natural. Reputation is important in affecting the choices of parents and students, and the costs of building a reputation as a school or university are high.
However, many entry barriers in education are artificial. One of the biggest entry barriers is that government aid to education is given to incumbent institutions, rather than to parents and students. It is difficult for an entrepreneur to compete with a school or college that receives a hefty subsidy from the government. Changing the form of government aid from institutional assistance to vouchers would be a major step toward removing entry barriers in the field of education.
Another entry barrier is the accreditation process, which is controlled by the incumbents. Imagine what would happen in another industry, such as supermarkets or landscaping services, if in order to start a new business in that industry you had to become accredited by a board consisting mostly of incumbents in that industry. Nobody likes competition, and it is easy to think of excuses not to accredit a newcomer, especially an innovative upstart. If we had such an accreditation system in place in other industries, competition would be stifled, and the incumbents would be under no pressure to improve service or reduce costs. Creating a consumer-oriented accreditation board would help to lower this important entry barrier.