Dive Brief:
- While blame for climbing tuition has been placed on expensive campus amenities, bloated administrations, or state disinvestment in higher education, a working paper from the National Bureau of Economic Research ties the rise to access to higher levels of federal student aid.
- Inside Higher Ed reports researchers examined data from private and public nonprofit institutions, creating a model for one hypothetical college, finding that increases in federal aid did not offset cost to students because colleges raised tuition to capture the difference.
- Critics say the model is not nuanced enough, arguing there are significant differences between the actions of public and private colleges, which were studied, and for-profit colleges, which were not, but may make the most compelling case for the theory.
Dive Insight:
Former president Ronald Reagan’s secretary of education, William Bennett, said back in 1987 that increases in federal financial aid give colleges and universities the freedom to raise tuition without losing students. Since then, the hypothesis has been studied by dozens of researchers, some of whom have found compelling evidence to support it and others of whom have said it’s simply not true. There is evidence to show, for example, that schools peg their sticker price to the ability of the wealthiest students to pay. Their ability to pay does not have anything to do with federal financial aid.
Inside Higher Ed reports the second controversial argument in the working paper is that faculty salaries do not raise tuition. In their model, the hypothetical college increased enrollment to cover the additional costs rather than increasing tuition. There's no mention of administrator salaries, however, which have been attacked as a part of the problem as well.