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Student Aid and College Tuition: The Upward Spiral
By David W. Kirkpatrick (November 01, 2007)
Senior Education Fellow
U.S. Freedom Foundation www.freedomfoundation.us

 
         Increasing  college tuition and increasing financial assistance for students have become accepted as constants.
 
         Yet at Harvard University tuition remained at $455 from 1928 to 1948. That was a modest figure even adjusted for inflation.  One dollar in 1947 had the purchasing power of $9.35 today.  That is, 2007 costs are 935% of those in 1947.  By that measure, $455 tuition sixty years ago equals $4,254 today.  Harvard's tuition this year is actually about $31,000, nearly 70 times what it was in 1948.  That's a growth rate almost 8 times that of inflation.
 
         Corresponding figures for other colleges and universities would vary but the general rule applies, costs have increased more than inflation, and continue to do so.  A report last week said the price of college is climbing at a rate of 6.6 percent at four-year public schools and 6.3 percent at private ones, each about twice the rate of inflation.
 
         So much for higher education's excuse that their increased charges are an attempt to catch up with inflation.
 
         James Boyle, president of College Parents of America, says that "the day will come - soon - when parents say enough is enough."
 
         Perhaps.  They would be more than justified in doing so. But where are the signs of revolt? These increases have been a regular feature for years. Yet there has been little more than grumbling here and there.  Millions not only continue to seek admission to institutions of higher education, but the more expensive the institution,, the higher the SATs, and the older the institution  the higher the prestige and the more applicants.
 
         Admittedly, most students get some form of aid.  Congress, in fact, has just passed a College Cost Reduction and Access Act which the National Education Association says "represents the single largest investment in college financial aid since the 1944 GI Bill."  The report didn't explain what is meant by "Cost Reduction" but traditionally that refers to an attempt to reduce costs to the students rather than an actual reduction in what colleges charge.
 
         When he was the federal Secretary of Education in the 1980s, Bill Bennett once suggested to a Senate committee that attempts to aid students were not only futile but resulted in higher costs to students because more aid permitted colleges to increase tuition even more rapidly.
 
         The reaction from the Senators was hostile, to say the least, as if to say "how dare he" make such a suggestion.
 
         But he was right.  Now that the 1980s are history, statistics show that in that decade alone, average tuition, adjusted for inflation, rose 50% at public universities and 66% at private ones.  Family incomes, on the other hand, rose at a much slower rate.  Thus, for the decade, public university tuition rose 6 times as fast as family incomes and 9 times as fast at private universities.
 
         The result is not just cold statistics.   The reality is that, prior to student aid, tuition was sufficiently reasonable that few graduates left college burdened by debts.  In my personal case, while a student at a public college in the 1950s, tuition was $100 per semester.  There was no aid but neither was there any debt at graduation.  Even two subsequent years as a graduate student at an excellent private university, serving as a graduate teaching assistant, resulted in no debt.
 
         No longer. The American Council of Trustees and Alumni report that, by 1995, the average public university graduate had $12,000 in debt and those from private colleges owed $14,300.  Both figures have continued to increase.  This despite the fact that, in constant dollars, student aid grew from $18 billion in 1971 to $65 billion by 2003.
 
         In 2005 the Cato Institute, in a publication appropriately titled "The Unintended Consequences of Federal Aid,  reported that for every dollar increase in Pell Grants, private four-year colleges increased tuition by more than two.
 
         Finally, a few years ago a major university had an independent review.  The leading recommendation was that tuition should be raised because its low price gave the impression the institution was not first class.  Tuition not only was raised but this year the university became the first one whose combined tuition and fees exceed $50,000.

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         "Six years ago, I coauthored a series on why tuition costs had almost tripled over 15 years, increasing at a rate higher than cars, housing, or even health care....The real reason schools charge what they do, we discovered, is deceptively simple: Because they can." Karen Heller, Smart Money?," p. 8, Philadelphia Inquirer Sunday Magazine, March 17, 2002

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Copyright 2007 David W. Kirkpatrick
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