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Aug 15

New Study: For Every New Dollar a College Receives in Student Loans, a College Raises its Tuition by 65 Cents

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We all know that the Federal Student Loan Program has driven up college tuition costs because the Program subsidizes artificial demand.

Now a New York Fed study has found that:

for every new dollar a college receives in Direct Subsidized Loans, a school raises its price by 65 cents. For every dollar in Pell Grants, a college raises tuition by 55 cents. This is one reason tuition has outpaced inflation every year for decades, while the average borrower now finishes college owing more than $28,000.

See here.

These words are taken from a column by economist John C. Goodman, who provides several other interesting facts:

* The U.S. has the most expensive higher education in the world.

* Middle class families who “save” for their children’s higher education are punished severely–by the combination of high taxes on savings, artificially-low interest on savings, and skyrocketing tuition rates. In fact, for every dollar saved, MORE THAN A DOLLAR IS LOST TO this combination of factors!

* And Government “support” for higher education has produced devastating results for poor people. “Low-income students in the United States often end up with the short straw: no degree, no job and a bundle of debt that they must pay anyway.”

* and finally, for-profit schools that do not take or accept government subsidies (such as Lysander Spooner University) are far cheaper than those which do!