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Thread: Feds Discover Their Own Aid Is To Blame For Rising Tuition

  1. #1

    Feds Discover Their Own Aid Is To Blame For Rising Tuition

    A new report by the Federal Reserve Bank of New York has found that the massive investment in grants and student loans by the federal government is a major contributor to the unbridled growth in the cost of attending college.

    College tuition rates have consistently risen faster than inflation for some 25 years. One theory for the rise, dubbed the “Bennett hypothesis,” was put forward by Ronald Reagan secretary of education William Bennett, who argued that hikes in government student aid simply gave colleges a free pass to hike tuition.

    Now, the New York Fed’s research suggests there’s some merit to the idea, and that it means the government could be spending billions on education to no effect.

    “While one would expect a student aid expansion to benefit recipients, the subsidized loan expansion could have been to their detriment, on net, because of the sizable and offsetting tuition effect,” the paper concludes.

    On average, the report finds, each additional dollar in government financial aid translated to a tuition hike of about 65 percent. That indicates that the biggest direct beneficiaries of federal aid are schools, rather than the students hoping to attend them.

    The numbers were not quite as grim for Pell Grants, where 55 cents of each additional dollar turned into higher tuition, but it was even worse for subsidized student loans (the most common type of aid), where every dollar loaned translates to a 70-cent tuition hike.

    The report reached its conclusion by comparing tuition levels at different schools and determining the percentage of students at each who were able to make use of Pell Grants and more-available student loans. The evidence showed that schools where students could access more aid were also able to impose higher tuition levels, with the effect strongest at expensive private schools that are reasonably selective but not among the most elite schools in the country. Such an outcome, the paper theorized, was because these schools have a high number of students who rely on taking out a large volume of loans in order to attend school.

    The researchers also found that for-profit, publicly-traded schools had their stocks tick upwards whenever the government expanded its financial aid availability.


    In the long-run, federal aid could actually be making college less accessible on average, because higher tuition will also affect individuals who aren’t able to access federal aid. As a result, while financial aid is costing the government hundreds of billions while also causing a huge surge in debt among young Americans, it may be having a very marginal effect on access to education.

    The new report adds substantially to earlier research that has been mixed on the topic. A 2012 paper by Harvard and George Washington University economists found that student aid at for-profit colleges mostly translated to higher tuition, and a 2007 paper found that higher Pell Grants drove up tuition at private schools as well as out-of-state tuition for public schools. Other papers, though, have found no evidence the Bennett hypothesis is true. One expert urged policymakers not to embrace the new study too quickly as a justification for slashing federal aid.

    “Nobody in their right mind believes that a $5,775 federal Pell Grant causes a college to charge $50,000 to $60,000 a year,” financial aid expert Mark Kantrowitz told the finance website ThinkAdvisor.
    Read more: http://dailycaller.com/2015/07/07/fe...#ixzz3fIDgXn8i
    Quote Originally Posted by Ron Paul View Post
    The intellectual battle for liberty can appear to be a lonely one at times. However, the numbers are not as important as the principles that we hold. Leonard Read always taught that "it's not a numbers game, but an ideological game." That's why it's important to continue to provide a principled philosophy as to what the role of government ought to be, despite the numbers that stare us in the face.
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  3. #2
    Whodda thunk?

    And how much did this study cost the taxpayers?

  4. #3
    Quote Originally Posted by tod evans View Post
    Whodda thunk?

    And how much did this study cost the taxpayers?
    How many decades have we used this argument only to be told it isn't so?


  5. #4
    One expert urged policymakers not to embrace the new study too quickly as a justification for slashing federal aid.

    “Nobody in their right mind believes that a $5,775 federal Pell Grant causes a college to charge $50,000 to $60,000 a year,” financial aid expert Mark Kantrowitz told the finance website ThinkAdvisor.
    Well, crap Malarkey-Mark, I'd hate for you to have to find a real job.

  6. #5
    How many more years will it take for them to apply the same logic to other government subsidies?

  7. #6
    Government study proves that government studies are costly.
    Dishonest money makes for dishonest people.

    Andrew Napolitano, John Stossel. FOX News Liberty Infiltrators.


    Quote Originally Posted by Inkblots View Post
    Dr. Paul is living rent-free in the minds of the neocons, and for a fiscal conservative, free rent is always a good thing
    NOBP ≠ ABO

  8. #7
    Pretty slow on the uptake there folks. Many of us figured that BS out decades ago. BTW, same with health care, etc..

    Is government finding their employees through "Goodwill"?

    What was your first clue, Sherlock?

    "Everything government touches turns to crap." -- Ringo Starr
    Last edited by Ronin Truth; 07-08-2015 at 05:10 AM.

  9. #8
    Quote Originally Posted by Ronin Truth View Post
    Is government finding their employees through "Goodwill"?
    These particular welfare recipients draw 5, sometimes 6 figure checks.......



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  11. #9
    Quote Originally Posted by tod evans View Post
    These particular welfare recipients draw 5, sometimes 6 figure checks.......
    Where do I go to sign up? Goodwill?

  12. #10
    Quote Originally Posted by Ronin Truth View Post
    Where do I go to sign up? Goodwill?
    Any government office including college campuses, all you'll need to do is pretend to tow the party line and regurgitate what you're told.....



    [edit]

    Median $78,358
    Last edited by tod evans; 07-08-2015 at 05:53 AM.

  13. #11
    Hmmm... You mean artificially increasing demand will raise prices??

    Where is Krugman to counter this nonsense?!
    "And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works." - Bastiat

    "It is difficult to free fools from the chains they revere." - Voltaire

  14. #12
    Quote Originally Posted by tod evans View Post
    Any government office including college campuses, all you'll need to do is pretend to tow the party line and regurgitate what you're told.....



    [edit]

    Median $78,358

    "Sincerity is the most important thing. When you can fake that, you've got it made."

  15. #13

  16. #14

  17. #15

  18. #16
    Quote Originally Posted by Ronin Truth View Post
    "Sincerity is the most important thing. When you can fake that, you've got it made."
    “I had no idea that being your authentic self could make me as rich as I’ve become. If I had, I’d have done it a lot earlier.”~ Oprah Winfrey



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  20. #17
    Quote Originally Posted by timosman View Post
    “I had no idea that being your authentic self could make me as rich as I’ve become. If I had, I’d have done it a lot earlier.”~ Oprah Winfrey
    I thought it was her popularity that made her rich and she giving her live audience gifts provided by the sponsors that made her popular.
    Quote Originally Posted by BuddyRey View Post
    Do you think it's a coincidence that the most cherished standard of the Ron Paul campaign was a sign highlighting the word "love" inside the word "revolution"? A revolution not based on love is a revolution doomed to failure. So, at the risk of sounding corny, I just wanted to let you know that, wherever you stand on any of these hot-button issues, and even if we might have exchanged bitter words or harsh sentiments in the past, I love each and every one of you - no exceptions!

    "When goods do not cross borders, soldiers will." Frederic Bastiat

    Peace.

  21. #18
    I would like to say, "Feds, meet petard. Petard, Feds" - only it ain't the Feds who're bein' hoisted ...
    https://i.imgur.com/BwU46s8.png

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  22. #19
    Hey Fed, Peter Schiff has been saying that $#@! for years.

  23. #20
    The big loosers here are the students as they spend a good part of their first working decade paying off these loans instead of investing in stocks or saving for their first home. It's the early dollars that matter the most, so this is in fact a government program that encourages poverty.

    -t



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