Driving Up the Cost of College

Driving up the cost of college
Jeff Jacoby

February 11, 2005
"We must open the doors of college to all Americans," declared the
president in his State of the Union message. "To do that, I propose .
.. . The largest increase in Pell grant scholarships in 20 years."

Do you remember hearing George W. Bush say that last week?

Actually, you don't. Those words are from President Clinton's
State of the Union address in 1997. But if you tuned in to Bush's
speech on Feb. 2, you heard him say something quite similar: "We will
make it easier for Americans to afford a college education by
increasing the size of Pell grants." The new budget he unveiled this
week would gradually raise the maximum annual grant to $4,550, an
increase of $500.

Presidents come and go, but laments about the high price of higher
education are eternal -- and so are calls for ever more federal aid to
mitigate it. For 60 years, the federal government has been shoveling
money into programs meant to make college more affordable -- yet a
college degree today is more unaffordable than ever. Rarely has
Washington so comprehensively worsened a problem it was determined to
solve.

Beginning with the GI Bill in 1944, federal tuition aid has
metastasized into a dizzying array of subsidies, most of which are now
encompassed in the Higher Education Act. In addition to Pell grants,
there are Federal Supplemental Education Opportunity grants and Federal
Work-Study jobs, as well as Perkins Loans, Family Education Loans,
Direct Student Loans, and Stafford (or Guaranteed) Student Loans. In
2005, these will account for more than $73 billion in overall federal
financial aid to college students.

Then there are the billions of dollars' worth of tuition credits
and deductions written into the tax code -- the Hope Tax Credit, the
Lifetime Learning Tax Credit, the higher education expense deduction,
the student loan interest deduction, and the tax-exempt Qualified
Tuition Plans, known as "529s."

And the result of this energetic government campaign to hold down
the cost of a college education? The cost of a college education is
skyrocketing -- and has been for years.

Tuition and fees were up 10.5 percent at state colleges and
universities last year. The year before that, they were up 14 percent.
Every year for nearly a quarter-century -- since before most of
today's college students were born -- higher education costs have raced
ahead of inflation. And far from slowing this runaway train,
government aid serves only to stoke the engine.

How could it do otherwise? Every dollar that Washington generates
in student aid is another dollar that colleges and universities have an
incentive to harvest, either by raising their sticker price or reducing
the financial aid they offer from their own funds. Higher Education
Act funds "are seen by colleges and universities as money that is there
for the taking," observes Peter Wood, an anthropology professor at
Boston University. "Tuition is set high enough to capture those funds
and whatever else we think can be extracted from parents. Perhaps
there are college administrators who don't see federal student aid in
quite this way, but I haven't met them." In 10 years of attending
committee meetings on the university's annual tuition adjustment, says
Wood, "the only real question was, 'How much can we get away with?'"

It's an old story. City University of New York began charging
admission in 1976, ending a century-old tradition of free tuition. As
New York's deputy commissioner of education later explained, that
decision was eased considerably by the knowledge that students would
qualify for government aid.

The anecdotal evidence is backed up by scholarship. In a new
monograph for the Cato Institute, political scientist Gary Wolfram
surveys the literature on the effect of financial aid. "The empirical
evidence is consistent," he finds, in showing that "federal loans, Pell
grants, and other assistance programs result in higher tuition for
students at our nation's colleges and universities."

The cat has been out of the bag for a long time. In a 1987 New
York Times column titled "Our greedy colleges," Ronald Reagan's
education secretary, William Bennett, rebuked colleges and universities
for repeatedly jacking up tuition far beyond any reasonable adjustment
for inflation. "Increases in financial aid in recent years have
enabled colleges and universities blithely to raise their tuitions,"
Bennett charged, "confident that federal loan subsidies would help
cushion the increase."

Isn't it time to stop pouring fuel on this fire? Instead of
renewing the Higher Education Act, Congress should phase it out,
thereby forcing colleges and universities to compete on price. That
would leave financial aid to the private sector, which can target it
far more effectively -- and where it should have been left all along.

©2005 Boston Globe

On 14 Feb 2005 05:52:44 -0800, "Michael Ejercito"
<mejercit.RemoveThis@hotmail.com> wrote:

>Driving up the cost of college
>Jeff Jacoby
>
>February 11, 2005
> "We must open the doors of college to all Americans," declared the
>president in his State of the Union message. "To do that, I propose .
>. . The largest increase in Pell grant scholarships in 20 years."
>
> Do you remember hearing George W. Bush say that last week?
>
> Actually, you don't. Those words are from President Clinton's
>State of the Union address in 1997. But if you tuned in to Bush's
>speech on Feb. 2, you heard him say something quite similar: "We will
>make it easier for Americans to afford a college education by
>increasing the size of Pell grants." The new budget he unveiled this
>week would gradually raise the maximum annual grant to $4,550, an
>increase of $500.

Whup-dee-doo ...

> Presidents come and go, but laments about the high price of higher
>education are eternal -- and so are calls for ever more federal aid to
>mitigate it. For 60 years, the federal government has been shoveling
>money into programs meant to make college more affordable -- yet a
>college degree today is more unaffordable than ever. Rarely has
>Washington so comprehensively worsened a problem it was determined to
>solve.

>
> Isn't it time to stop pouring fuel on this fire? Instead of
>renewing the Higher Education Act, Congress should phase it out,
>thereby forcing colleges and universities to compete on price. That
>would leave financial aid to the private sector, which can target it
>far more effectively -- and where it should have been left all along.

Clearly the colleges need to be put on a diet. If
they can't GET big money then they'll have to learn
to get by with less - and that means more affordable
tuitions.

A question worth asking is "WHERE is all the money
going ?". College profs & assistants sure don't earn
big salaries. The janitors aren't driving Caddies.
The secretaries don't own 2nd homes in the Bahamas.
Sometimes they buy 'stuff' ... new equipment, new
buildings ... but a LOT of that stuff is heavily
subsidized by private donations - alumni and such
who get an ego boost by having their name nailed
to the side of a building or whatever.

So, you've got sky-high tuitions, private donations,
state grants, federal grants, military grants, corporate
grants ... you'd think these schools would be swimming
in dough. So WHERE'S IT ALL GOING ?