A Wall Street Journal story last month about a Federal Reserve study showing that federal funding raises tuition has received spirited discussion in that newspaper.
On July 30, establishment figure Terry Hartle of the American Council on Education disagreed with it. He wrote: “There is no agreement among economists over whether there is a causal effect between student aid and college tuition. Many methodologically strong studies explicitly conclude there is no correlation, let alone causation.”
Hartle even reported that higher Pell grants led some private schools to reduce tuition. (This seems astounding, since few schools reduce tuition—it’s a news event when they do.)
Today, in another letter, John Greer said that the “mixed picture of the college tuition/student-aid relationship” stems from many variables, and many special interests.
But unless basic laws of economics have been suspended, how could federal loans and subsidies intended to increase college enrollment not have contributed to rising prices? The magnitude of the marginal demand push on college tuition may be difficult to isolate because of so many moving parts in education, but the direction of the push is undeniable.
And he concludes:
When it comes to federal funding, the American Council on Education’s voice echoes Oliver Twist’s: “Please, sir, I want some more.”