American Realpolitik brings up something I've never considered before. That aggressive government assistence for college tuition contributed to a huge spike in tuition costs
... an analysis by the National Bureau for Economic Research (NBER) said the credits have succeeded only in giving colleges, especially public universities, incentives to increase tuition because the credits improve students' ability to pay.
In "Tax Credits Don't Spur College Attendance" in the NBER Digest, Bridget Terry Long examined the legacy of the tax credits and found they had little effect on the demographics of college enrollment, but had a significant impact on what universities charged. She found that many states responded to the credits by changing their tuition policies to substitute the federal tax refunds for state aid.
In 1997, Congress could have foreseen this outcome merely by looking back to 1980, the year it reauthorized the Higher Education Act to increase greatly the amount of federal aid for higher education through the Pell Grant program. As Sen. Dodd pointed out, college costs exploded over the next 15 years. And the cause and effect are unmistakable.
Sunday, January 4, 2004
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