Tuition prices have been increasing as colleges and universities have learned to capture more federal funding with higher prices.
Student aid drives college costs instead of offsetting them, according to a working paper from the National Bureau of Economic Research. Making college affordable by offering more funds to students has backfired, the paper proposes.
“Colleges increase tuition even more, because they know financial aid can cover the difference. Student aid may cover more of students’ tuition — but if the aid wasn’t available, tuition might not have gone up in the first place,” Ellen Wexler wrote for Inside Higher Ed.
The conclusion is controversial, however. The Bennett Hypothesis, where more financial aid pushes up college costs, isn’t accepted by most higher education experts.
For financial aid reform, the implications of the hypothesis could be gaining ground regardless. The New America Foundation published a paper that advocates an end to the federal system of financial aid. Instead, the paper wants “a new federal and state partnership in higher education.” Formula-funded grants, lowering costs, making colleges accountable to outcomes, and encouraging state investment is the core of the proposal.
Presidential candidates have avoided those ideas. Democratic proposals aren’t concerned about the structure of higher education, but how it’s funded. Republicans have talked of accountability by pushing schools to have “skin in the game,” but the candidates lack a bold vision for the future of higher education.
A debate over the structure of higher education would be enlightening. Income-based repayment plans target student debt and increased federal and state funding are meant to tamper higher costs, but a rebuilding, or deep modification, of higher education could force new ideas.
And new ideas, among academia, are desperately needed.
