Right Hooks

Study: Gov't Subsidies to Blame for Skyrocketing Tuition

But let's give out more "free stuff."

Dan Gilmore · Dec. 22, 2015

In 1987, President Ronald Reagan’s Education Secretary William Bennett took to the pages of The New York Times to opine against the rising cost of higher education. Tuition was increasing beyond the rate of inflation, and the quality of education was little changed. His idea why? The U.S. government and its generous student loan program was at fault. “If anything, increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase,” Bennett declared, thus creating what has become known as the “Bennett hypothesis.”

Today, college is viewed as a necessity and priced as a luxury. The situation has gotten so bad that a study found that college loans can affect college-educated citizens’ ability to save for retirement. Now, a study published by the National Bureau of Economic Research joins the growing body of research that supports Bennett’s hypothesis that the government was at fault for stepping into the college funding game. According to the researchers, “Existing theories can fully explain the increase in net tuition between 1987 and 2010. Our model suggests demand-side theories have the most predictive power. In fact, our results show the Bennett hypothesis can fully account for the tuition increase on its own.” And to think politicians want to “solve” the problem of college availability with more subsidies and more free stuff.

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