tuition inflation

State Spending vs. College Prices

Professor Paul Campos, something of an antagonist of our higher education system, caused a bit of ruckus last week when he wrote in the New York Times that skyrocketing college prices cannot be blamed on falling state appropriations to schools. The reality, of course, is that declining public support could explain some of the increase in prices (though not much at private colleges) but it seems unlikely it would explain all of the increases.

Let’s look at the trends.

First, note that overall state and local support, at least for general operations at public institutions, is indeed down over the last several years. Using data from the latest State Higher Education Finance report – released just yesterday – total state and local support for general operations at public colleges, adjusted for inflation using a higher education-specific index, fell from a peak of $83 billion in 2008 to $73 billion in 2014, a pretty big drop. That said, in 1989 total spending was only $64 billion, which means it has risen since then.

Obama Ringing the Pell

As part of his ill-considered credentialing-to-compete initiative, President Obama wants to greatly increase both the size and availablity of Pell Grants. Under his proposed FY 2011 budget, the total pot of Pell aid would rise from $28.2 billion in 2009 to $34.8 billion in 2011; the maximum award would go from $5,350 to $5,710; and the number of students served would rise by around 1 million.  

Merry Christmas, Ivory Tower!

If you ever want to see how federal student aid is used for political gain, look no further than the report on the American Opportunity Tax Credit released today by the U.S. Treasury Department.  The accolade-begging for the President begins right on the cover page:

The Biggest Leeches Always Live

By proposing to eliminate the Federal Family Education Loan Program, President Obama has raised a pretty big ruckus in the relatively staid world of higher education policy. For the uninitiated, FFELP uses taxpayer dollars to essentially guarantee profits to participating financial institutions, and to keep student loans cheap and abundant. 

Shuffle, Shuffle, Shuffle…

This morning I attended a federal student aid event at the New America Foundation. The big topic? Not the effect of aid on out-of-control college prices, by far the most important concern from the contexts of economic growth, affordability, fairness to taxpayers, etc. No, it was the Obama Administration’s “bold” (NAF’s word) proposal to kill the federal guaranteed student loan program and do all lending directly from Washington.

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