Wednesday, February 15, 2012

More Financial Aid = Higher College Tuition

Does college tuition rise with increases in federal student aid? The answer is yes--at least at for-profit schools, according to a new study from the National Bureau of Economic Research.

The NBER researchers compare tuition at two types of for-profit schools: schools eligible to participate in federal student aid programs and schools that are not eligible. They discover that tuition at schools eligible for aid is 75 percent higher than tuition at comparable schools that do not participate in federal student aid programs. Their conclusion: "The dollar value of the premium is about equal to the amount of financial aid received by students in eligible institutions, lending credence to the 'Bennett hypothesis' that aid-eligible institutions raise tuition to maximize aid."

Source: National Bureau of Economic Research, Does Federal Student Aid Raise Tuition? New Evidence on For-Profit College, NBER Working Paper 17827 ($5)

No comments: