Apr 10, 2008

Why more financial aid isn't the answer

We talk about the rising cost of healthcare, but almost as serious an issue as that is the rising cost of college tuition. I believe the average tuition at a 4-year college is now $25,000 per year, which is a huge step up from even 10 years ago when I was in school. (I'm glad I'm not there now!)

Everyone seems to thin the answer to the problem is to increase the size and number of federal student loans. The problem is that such a policy just encourages state university systems to increase spending on "amenities" for students and pushing public universities into competition with private ones.

Just yesterday the NYT ran a ridiculous story about how colleges must now offer students gourmet dining options such as pho, lobster, mineral water and brick-oven pizza if they want to attract students. (The reality, of course, is that they'll still attract good students, but that free market competition between universities is forcing them to add on deluxe features like better food, huge new workout gyms with rock climbing walls and mega basketball arenas.)

Obama was asked about the tuition issue yesterday on the campaign trail:

Obama, a Democrat, said students today put more expectations on nonacademic features such as on-campus health clubs, state-of-the-art cafeterias and dazzling student social centers, features that drive up the cost of higher education.

"I have to tell you, when I went to school, we knew the food was going to be bad," Obama joked with a supportive crowd of about 2,000 people gathered at Great Valley High School. "We knew the gymnasium wasn't going to have all the state-of-the-art nautilus equipment. …

"The point is, you didn't expect first-rate facilities at college because you were there to learn."

He's almost competely right on this issue, but I would say that instead of blaming individual students, the blame lies with federal policy of subsidizing a competitive educational market that encourages universities to spend billions on extraneous facilities and services. And why are we even allowing private university systems to benefit from federal student loans? France, Britain and Canada all do just fine without substantial private systems. I can tell you first-hand that the French university system is much, much, much less plush than our own... but students don't mind because they pay no tuition!

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