Bennett Hypothesis: Financial Aid Increases Tuition

[dfrecore]

Actually, the rise in tuition prices at greater than the inflation rate started in 1980, after the government greatly expanded subsidies. This was WELL before the recession.

The Bennett Theory says in part: "In 1980, college tuitions began rising year after year at a rate that exceeded inflation. Federal student aid policies do not cause college price inflation, but there is little doubt that they help make it possible."

It's not a coincidence that after the government started something, there were unforeseen issues that arose from that. As usual. The government seems to specialize in that sort of magical thinking that whatever they do, only good things will happen.

But I agree that this is simple economics. Just like the housing bubble was caused by the government loosening restrictions and forcing banks to give loans to people who weren't otherwise qualified for them, the tuition bubble is the same. Easy money to people who can't show that they can repay the loans causes problems.

And no, making it cheaper for people to go to college was not a terrible idea - but letting them take out more in loans WAS a terrible idea. There were better ways to make it less expensive (here in CA we pay $46/cr for CC, there are agreements between every CC and every 4-yr state school to create a less expensive path to that school, and our CSU system is one of the cheapest in the nation, at around $7500/yr - so it's possible). The key is, states get to decide how much they want to subsidize college tuition. Our state has made it a priority, some states don't. But, we have WAY more control of how much our state spends, and can vote people out of office if we don't like their policies, than we do over the national government.