Phi Beta Cons

Is Federal Tuition Aid the Problem?

A new study shows a possible relationship between federal student aid and the rapid growth in student debt.

The data in the National Bureau of Economic Research working study, by Claudia Goldin of Harvard University and Stephanie Riegg Cellini of George Washington University, lends “credence to the . . . hypothesis that aid-eligible institutions raise tuition to maximize aid.”

The study was confined to for-profit schools and did not include public and private four-year colleges.

The role of government tuition “assistance” has featured prominently in the presidential campaign. While President Obama made a number of campaign stops promoting his “#DontDoubleMyRate” plan to keep student-loan interest rates low, the Romney campaign has called for a reduced government role in student aid. Romney said last month that “a flood of federal dollars is driving up tuition and burdening too many young Americans with substantial debt.”   

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