Genuine Change Won't Come this Way | Neal McCluskey | Cato Institute: Commentary

Genuine Change Won't Come this Way | Neal McCluskey | Cato Institute: Commentary: "Suppose I'm willing to buy a hotdog for one dollar, but then get a dime in frankfurter assistance. Now I'll happily pay $1.10. And then suppose my local wiener retailer, from whom I've always bought one-dollar dogs, knows I've got that aid. By charging $1.10 he can make himself richer without making me any worse off. It's tuition inflation in a nutshell or bun, as the case might be.

College pricing and aid data strongly suggest this dynamic is at work. For instance, between 1986 and 2006, published tuition, fees, room and board prices at four-year private colleges rose an inflation-adjusted 68 percent. But students didn't cover most of the increase with their own money. They got grants, cheap loans, and other forms of assistance that made their perceived increase only about half that of the published amount. That big difference gives strong reason to believe that 'sticker prices' were only able to rise so high because consumers felt just a fraction of the pain, and schools knew it."

"stingy state and local spending can't explain tuition inflation in private schools, which the task force itself puts at 154 percent between 1979 and today.

In addition, total taxpayer burdens for public institutions haven't fallen. According to the federal Digest of Education Statistics, between 1990 and 2005 (the latest year with available data), real state and local appropriations to public degree-granting institutions rose almost 15 percent, hitting nearly $67 billion.

The only way state and local funding has dropped has been on a per-pupil basis thanks to growing enrollment, which the report ultimately notes. Even on that score, though, one can't lay most of the blame for tuition inflation on state and local governments – tuition revenue per-student has risen much faster than government allocations have dropped."