Clinton Plan ‘Disastrously Misguided’
They hunch over the table, worried and preoccupied. In one hand, a calculator; in the other, a tuition statement. Over and over they run the numbers, desperately trying to make them add up. How can they afford to put this student through college? The tuition alone is astronomical. Add in mandatory fees, housing, textbooks, equipment - it’s overwhelming. Even if they qualify for financial aid, they’re still looking at four years of crushing bills. Where are they going to find the money to pay them, short of going even more deeply into debt?
Millions of Americans see themselves in that picture. The price of a four-year college degree, especially at independent institutions, is so high that only the very wealthy can absorb it without choking. (At state schools, large public subsidies keep tuition and fees relatively low.) For most families, paying for a college education without financial help has become, quite simply, impossible.
No wonder President Clinton made his $50 billion package of tuition tax breaks, bigger Pell grants, and cheaper college loans a centerpiece of his State of the Union message. Politically it’s golden. Tax deductions for college costs? Hugely popular, say the polls. And why not? It’ll make higher education more affordable, won’t it?
It won’t.
Federal student aid doesn’t hold college costs down, it drives them up. For 51 years, starting with the G.I. Bill in 1946, the government has poured increasing sums of money into helping students pay their tuition - and for 51 years, college tuition has increased even faster. If “bigger subsidy” equaled “more affordable,” it should cost less than ever to attend college today. Instead, it costs more than most families can afford.
The creators of the G.I. Bill, the Basic Education Opportunity Grant, the Stafford and Perkins loan programs, and every other federal financial-aid scheme were no doubt motivated by the best of intentions.
But good intentions can’t repeal the laws of economics. As every freshman who takes Econ 101 is taught, higher demand leads to higher prices. Each dollar the government provides in student aid is a dollar that can be spent only at a college or university - a dollar of higher-ed demand. The more of those dollars the government makes available, the more incentive colleges have to capture them by raising tuition.
And raise tuition they have: From 1980 to 1990, the price tag for a college degree soared a staggering 141 percent. In just the past five years, notes economist David Tuerck, director of the Beacon Hill Institute at Suffolk University, inflation for higher education has been running at an average annual rate of 8.6 percent - more than double the overall inflation rate of 3.1 percent.
College tuition is an out-of-control fire, and government aid is the fuel. If you’re dubious, try this thought experiment: Suppose Congress passed a $50 billion package of tax breaks, subsidies, and cheap loans for the purpose of making cars more affordable. When customers began surging into auto dealerships, their pockets stuffed with new “federal driving aid,” what would happen to the price of automobiles?
When university administrators are asked to justify their skyrocketing tuitions, they invariably point to their own rising costs.
But what they mean by “costs” is: anything they spend money on. Teaching Shakespeare to sophomores and buying books for the library are costs, of course. But so is giving a raise to the basketball coach, buying an espresso maker for the faculty dining room, hiring an assistant to the assistant affirmative-action director, paying monthly retainers to a high-powered lobbyist, building a new boathouse for the crew, or adding politically correct courses on “Feminist Literature” and “New Age Religions.”
“Rising costs,” in other words, is simply a synonym for “rising spending.” And spending is determined not by academic priorities but by available revenue.
Every financial aid dollar funneled by the government over the past half-century into making education more “affordable” has been promptly spent by colleges and universities. The more they get, the more they spend. The more they spend, the more they claim to need. The more they claim to need, the more they charge. The more they charge, the more unaffordable college becomes.
“Heavily financed by federal and state aid,” writes George Roche, the iconoclastic president of Hillsdale College in Michigan, “colleges and universities have indulged in a spending spree … that has no equal in American history.” That is why a college degree has become so costly, why hundreds of thousands of students are crippled with debt when they graduate - and why more federal aid will only make the problem more acute.
“Every 18-year-old must be able to go to college,” the president declared Tuesday night. “We must open the doors of college to all Americans.”
Ah, if only government assistance could make that happen. But the world doesn’t work that way. Subsidize something and you get more of it, and for 51 years, the American taxpayer has been subsidizing tuition hikes. Unleashing tens of billions of public dollars for additional student aid will only drive tuition higher.
For higher education to become affordable, colleges and universities must be forced to compete on price. That can’t happen until the federal spigot is shut. The president’s proposal - well-intentioned, maybe, but disastrously misguided - would do exactly the wrong thing.