The Heritage Foundation does not like President Obama’s new plan to try and reduce college tuition. While Heritage thinks Obama is focusing on an important issue, the organization says that his reforms “will not only fail to fix the problem but is also likely to compound it by blunting the competition that is needed to shake up the world of higher education.”
Among other things, Obama’s college reform proposal calls for a federal program that will give states generous financial rewards for getting college tuition (or more precisely the net price students pay for college) down.
According to the research report written by Heritage’s Stuart Butler:
Moreover, the extensive and expensive system of federal aid for college has actually exacerbated increases in the total cost of college. This is because colleges can boost tuition when such assistance enables students to offset part of their costs. To be sure, better-targeted student aid can help specific groups of students afford college, but increasing total aid, as the President proposes, will tend to increase—not decrease—the sticker price of college.
The antidote to this trend is not for the federal government to tweak college assistance. It is to encourage the mounting competition to the current cozy system coming from new and far less expensive higher education business models. Competition—not further involvement from the Department of Education—will transform higher education and sharply reduce costs in the future.
While the financial-aid-causes-colleges-to-increase-tuition theory is somewhat questionable, Butler has an interesting idea. Is innovation the solution? Perhaps.
It’s a risky idea, however; what country has been able to cut the cost people pay to go to college by reducing regulations on higher education? Find me one.