In an American Spectator column, Neal McCluskey of Cato takes a look at the current hand-wringing over the increasing cost of going to college. He easily refutes the politically popular notion that endowment hoarding is the problem. He also dispatches the explanation that costs are rising because state governments have been too cheap to give higher ed the support it needs.
So, where do we put the blame? McCluskey argues that we should point the finger at rising federal subsidies for higher ed, which increased by 77 percent from 1996 to 2006. “In other words,” he writes, “college prices kept rising because aid made sure they could.”
I don’t disagree, but there is another factor that I think should be considered — the rising wealth in the country. There is a huge amount of wealth owned by older Americans. The sellers of luxury cars, glamorous jewelry, posh condos and similar things have been charging more for their goods, too. They know how to separate rich people from their money. Colleges and universities also know how to play that game. Grandparents with big estates don’t hesitate to write out the checks so Johnny and Suzy can get their degrees. My guess is that we would see tuition rising even if it weren’t for federal subsidies, although not as rapidly and widely perhaps.
The bursting of the real estate asset bubble will make a lot of wealthy people significantly less wealthy. That should do much more to slow down the rise in tuition than anything the politicians could cook up.