Early this fall, US Secretary of Education Betsy DeVos declared that the US is embroiled in “a crisis in higher education” due to the rising cost of college. A large part of the problem, according to DeVos, is that “when the federal government loans more taxpayer money, schools raise their rates." However, NPR took a closer look at the research, and determined this is not necessarily the case. Here’s a closer look at the findings.
A Hypothesis, Little Evidence
DeVos cited the ideas of her predecessor, former Secretary of Education William Bennett, who first asserted the link between federal aid and college costs. He wrote in the New York Times, “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.”
While the “Bennett Hypothesis” has been much-discussed, there’s also a shortfall of evidence backing it up, asserts NPR.
A Tenuous Connection
According to the research, the Bennett Hypothesis holds up in only one higher education segment: private, for-profit colleges. Specifically, higher tuitions are likeliest at for-profit colleges where students can pay with federal aid. Not only that, but the researchers found “the difference in tuition between the eligible schools and the less expensive, non-eligible schools was about the same as the federal aid received.”
In the public sector, meanwhile, the evidence points in the other direction. One assistant professor of higher education told NPR, “The amount of money that students can get in federal financial aid is already more than tuition. So [community colleges] already have that incentive to raise tuition to cover what federal aid can support, and by and large, they haven't done that."