Taxpayer-Funded Inflation

Yesterday posted an article explaining how government student loans and grants have caused an increase in college tuition. The article points out that federal aid for college students has increased 164% over the past decade, but many potential students still find the cost of a college education unaffordable

The article points out:

Lesley Turner, a PhD candidate at Columbia University, looked at data on aid from 1996 to 2008 and calculated that, on average, schools increased Pell Grant recipients’ prices by $17 in response to every $100 of Pell Grant aid. More selective nonprofit schools’ response was largest and these schools raised prices by $66 for every $100 of Pell Grant aid.

The article further states:

After adjusting for differences among schools, the authors find that Title IV-eligible schools charge tuition that is 75% higher than the others. That’s roughly equal to the amount of the aid received by students at these schools.

Studies like these suggest that if one goal of government is to make college affordable, aid should become more thoughtful instead of merely more plentiful. And the total cost of federal spending on college isn’t fully known. That’s because spending on loans dwarfs that on grants. Student loans recently eclipsed credit card debt.

The article reminds us that with high unemployment and the unavailability of the high paying jobs that graduates need to pay off their college loans, the taxpayers could wind up paying the bill for a lot of college tuition loans.



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