Jun 12, 2012 5:47 AM GMT
This seems like a no-brainer to me. Rising tuition is associated with a greater capacity to pay - and demand is being fueled by government subsidies - particularly for unsustainable degrees. Not that I think it will matter soon with the technological revolution that's happening... and that will crush a large number of institutions to the benefit of consumers of education.
Rising student debt levels and fresh academic research have brought greater scrutiny to the question of whether the federal government's expanding student-aid programs are driving up college tuition.
Studies of the relationship between increasing aid and climbing prices at nonprofit four-year colleges found mixed results, ranging from no link to a strong causal connection. But fresh academic research supports the idea that student aid in the form of grants leads to higher prices at for-profit schools, a small segment of postsecondary education.
The new study found that tuition at for-profit schools where students receive federal aid was 75% higher than at comparable for-profit schools whose students don't receive any aid. Aid-eligible institutions need to be accredited by the Education Department, licensed by the state and meet other standards such as a maximum rate of default by students on federal loans.
The tuition difference was roughly equal to the average $3,390 a year in federal grants that students in the first group received, according to the National Bureau of Economic Research working paper by Claudia Goldin of Harvard University and Stephanie Riegg Cellini of George Washington University.
The authors only examined programs that award associate's degrees and nondegree certificates in fields including business, computer sciences and cosmetology. They didn't look at tuition charged for bachelor's degrees or at public and private nonprofit universities, which together educate roughly 90% of postsecondary students.
The authors said their findings lent "credence to the…hypothesis that aid-eligible institutions raise tuition to maximize aid."
Steve Gunderson, president of the Association of Private Sector Colleges and Universities, a trade group for for-profit schools, disputes a link between federal aid and prices, saying colleges merely respond to market demand.
The study's authors warned their findings don't apply to public colleges and private nonprofit schools, which they say are different because they aren't motivated by profits and because their prices are largely determined by state funding and donations.
A spokesman for Education Secretary Arne Duncan said the administration believes there is a link between federal aid and tuition increases at for-profit schools, but that it sees no such tie with public and nonprofit schools.