Count on politicians to come up with programs that will allow them to say, “I did something to help keep down the cost of college tuition!” In Michigan, a state with a public university system that’s remarkably free of governmental control, the state legislature came up with a policy meant to reward university officials if they didn’t raise tuition by more than a certain amount (3.2 percent) annually. “Good” schools are rewarded with extra funding from the state, but not “bad” ones that increased tuition too much.
In today’s Pope Center piece, James Hohman of the Mackinac Center for Public Policy (Michigan’s free market think tank) writes about that policy. In the five years since it was adopted, only three of the state’s universities have failed to qualify for the bonus: Wayne State (which raised tuition by 8.9 percent in 2014), Eastern Michigan (7.9 percent this year) and Oakland University (8.5 percent this year). Because of their “excessive” increases, other schools got their shares as a windfall.
Hohman’s analysis is that the tuition control policy might have kept tuition down somewhat, “but until students start to demand lower tuition or abstain from higher education altogether, the tuition incentive will do little to change the overall trends of universities raising their costs.”
I agree. This policy in a state with minimal government involvement with ostensibly public universities puts the officials in a profit-maximizing position. They can charge what they think the market will bear (as the three universities above did) or they can choose to take the added state money (and perhaps better PR) if they don’t increase their price by more than 3.2 percent. Ultimately, students will determine if those “excessive” tuition increases were good ideas or not by deciding where to enroll.
Hohman concludes that this policy isn’t perfect, but it “at least puts the state on the record — backed by real money — that it disapproves of the seemingly perpetual trend of universities raising the price of admittance.