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COLLEGES USE AID BOOSTS TO JACK UP TUITION!
March 07, 2007
Gee, this is a surprise:
A prominent question in public debate is whether Pell grants tend to be appropriated by universities through increases in tuition – consistent with what is known as the Bennett hypothesis. Based on a panel of 1554 colleges and universities from 1989 to 1996, we find little evidence of the Bennett hypothesis for in-state tuition for public universities. For private universities, though, increases in Pell grants appear to be matched nearly one for one by increases in list (and net) tuition. Results for out-of-state tuition for public universities are similar to those for private universities, suggesting that they behave more like private ones in setting out-of-state tuition.
No doubt that the "Hope Credit," "Lifetime Learning Credit," the deduction for tuition and other tax breaks for college are similarly sucked up by tuition increases.
The next time a politician promises to "make college education more affordable," remember: he really means that he wants to "raise tuition."
RELATED: LOWER SUBSIDY = LOWER PRICES? AMAZING!
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