My twitter feed is currently clotted with Tweets not to cut Pell Grants in the deficit talks (yes, I do have some liberal friends).
Two things: First, pretty much everything is going to take a cut if we’re going to avoid going the Greek route. Second, there’s a good case to be made that federal aid actually drives up college costs. It’s called the Bennett hypothesis. Basically, as the feds provide more money for students to spend, the colleges raise their rates to capture the extra available money. It’s a warped version of supply and demand – one charges what the market will bear, and the feds enable the market to bear a heck of a lot more than it naturally would. While no one has been able to prove the hypothesis, even its detractors admit there appears to be a correlation between aid and college increase costs.
From the Center for College Affordability:
A representative sample from the literature:
“We found no evidence of the “Bennett Hypothesis,” [at private institutions]… We did, however, find that public four-year institutions tended to raise tuition by $50 for every $100 increase in federal student aid.”
“Estimates of the size of this “Bennett Hypothesis” at public institutions range from negligible to a $50 increase in tuition for every $100 increase in aid.”
College costs have been increasing at twice the average inflation rate, so something is going on. Can I prove Bennett is right? No. But I do wish the government would do students (and their parents) a favor and stop “helping” so much.