Better Federal Aid?

On Wednesday this week the New York Times Room for Debate blog (a regular Times feature in which experts debate a topical issue) covered an issue of great interest to the College Guide: the rising cost of tuition. More specifically, the Times looked at whether or not federal money can reduce the cost of college. According to the piece:

Supporters of the Pell Grants, which began in 1973, want to make them an entitlement, as the cost of higher education continues to rise. But some researchers say the expansion of the grants and other federal aid has a counterproductive effect — that colleges and universities simply soak up the gains by increasing their tuition and other costs.

Interesting point.

Richard Vedder, an economist at Ohio University, says:

President Obama wants more and bigger Pell Grants to help relieve rising college costs, along with revamped student loan programs. I think he has it backward: federal student financial assistance is more a cause than a consequence of rising college costs. …Exploding student loan programs have contributed to higher tuition charges, and if Pell Grants grow more inclusive and generous, the same effect will occur with them.

This is a compelling argument but taken to its logical conclusion it seems a little, well, troublesome: give students less money for college to reduce college costs?

Jane Wellman of the Delta Project on Postsecondary Education Costs, Productivity and Accountability sees that federal money probably hasn’t been entirely helpful in terms of reducing the cost of college, but her solution is more nuanced:

The question is: should the federal government require institutions to show evidence of cost containment, as a quid pro quo for getting the increased funding? The colleges say no, and yell loudly about federal “price control” if the government even goes so far as to publish information about tuition increases. But public disclosure about cost increases is a far thing from “price control,” and if the institutions are right when they claim that federal aid has no relation to their tuition policies, then they should have nothing to fear.

Colleges are notoriously reluctant to publish information about their schools, but if they’re on the public dime, maybe it’s time to keep the public informed.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer