https://www.brookings.edu/research/the-d...versities/
This report from the Brookings Institute pretty much lays this to rest.
From a study done in 2004 using data between 1979 and 1998:
"The authors find that, 'for the average institution in our sample, it would take an increase of $1,000 in state appropriations per student to generate an in-state tuition reduction of only $60.' That means six cents of every dollar in appropriations find their way into lower tuition."
Another study done in 2014 using data from 1998 to 2007:
"According to Kim and Ko, if state appropriations were to increase as a share of that total revenue by one percentage point, which would be an increase of $191 per student, tuition at public colleges and universities would be expected to fall by $19.71. (See Figure 4.) That means just ten cents of every dollar increase in appropriations would find their way into lower tuition, an effect similar in magnitude to what Rizzo and Ehrenberg found for an earlier time period."
It's important to note that neither study was interested in the effects of appropriations on tuition rates but only included them as control variables. If such a trivial amount of the subsidy actually ends up lowering tuition rates, then throwing more money toward student aid is foolish. Even though neither author set out to do so, both studies inadvertently disprove the theory that increasing state subsidies would lead to substantially lower tuition rates.
This report from the Brookings Institute pretty much lays this to rest.
From a study done in 2004 using data between 1979 and 1998:
"The authors find that, 'for the average institution in our sample, it would take an increase of $1,000 in state appropriations per student to generate an in-state tuition reduction of only $60.' That means six cents of every dollar in appropriations find their way into lower tuition."
Another study done in 2014 using data from 1998 to 2007:
"According to Kim and Ko, if state appropriations were to increase as a share of that total revenue by one percentage point, which would be an increase of $191 per student, tuition at public colleges and universities would be expected to fall by $19.71. (See Figure 4.) That means just ten cents of every dollar increase in appropriations would find their way into lower tuition, an effect similar in magnitude to what Rizzo and Ehrenberg found for an earlier time period."
It's important to note that neither study was interested in the effects of appropriations on tuition rates but only included them as control variables. If such a trivial amount of the subsidy actually ends up lowering tuition rates, then throwing more money toward student aid is foolish. Even though neither author set out to do so, both studies inadvertently disprove the theory that increasing state subsidies would lead to substantially lower tuition rates.
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