by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Jenna Robinson’s latest Martin Center column reminds readers about a 30-year-old pronouncement from the then-current U.S. education secretary.
It’s been 30 years since then-Education Secretary William J. Bennett took to the pages of The New York Times to chide colleges for their “greedy” behavior. He decried the negative effect federal student aid seemed to have on tuition, namely, that it allowed universities to raise prices without feeling the consequences of reduced demand or lower-quality students.
To quote Bennett:
“If anything, increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase. In 1978, subsidies became available to a greatly expanded number of students. In 1980, college tuitions began rising year after year at a rate that exceeded inflation. Federal student aid policies do not cause college price inflation, but there is little doubt that they help make it possible.”
And, the problem has only grown since the 1980s. Colleges are still filling their coffers with federal money and increasing tuition each year to capture more of it. This phenomenon, called the Bennett Hypothesis, is now more than just an observation in an editorial. Scholars and pundits have amassed considerable evidence its favor.
The theory is really just common sense. If the government gives money to students to spend on education, then students will be able and willing to spend more on that product. Universities, knowing that the funds are available, raise tuition without worrying about whether students can afford it. An ugly cycle ensues.