Posted on 07/13/2015 9:09:33 AM PDT by SeekAndFind
College affordability is a hot political topic these days, with President Obama pushing to make two-year community colleges free for all Americans. People want college to be affordable both to raise future productivity and to address inequality issues by equalizing access to higher education as much as possible. Yet as important as this issue it, it has also been one fraught with misguided policy and is a perfect example of the law of unintended consequences. New research by economists at the Federal Reserve Bank of New York shows exactly how bad the flaws in our current government policies are.
David Lucca, Taylor Nadauld, and Karen Shen carefully studied a large data set on students, financial aid, and college tuition levels in order to identify the impact on tuition of increases in financial aid. They looked at three types of financial aid: Pell Grants which are given to low-income students and are not repaid, federal subsidized student loans which have dollar limits and are income-capped but go to low- and middle-class families; and unsubsidized student loans which are available to all but carry higher interest rates. Based on appropriate and sophisticated statistical techniques, they found that colleges actually benefit more from increases in student financial aid than students do.
They found that for every dollar that Pell Grants are increased, college tuition goes up by 55 cents. In other words, the students pay an extra 55 cents in tuition for every dollar of Pell Grant they receive, meaning they only save 45 cents in terms of out-of-pocket costs. Colleges gain even more than the 55 cents from each dollar of new Pell Grants because they collect the extra tuition from all their students, including all the ones who do not receive Pell Grants.
(Excerpt) Read more at forbes.com ...
From the department of Duh.
AKA the Department of Redundancy Department. Actually, Forbes could have saved a lot of ink and electrons to tell the laws of supply and demand remain in force, despite the morons who would have you believe otherwise.
What? "Free" college educations for everybody is designed to benefit a tenured group of quasi-gov't employees? That's nearfetched!
Indeed! They can just keep raising tuition.
They can go to Hell.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.