Praise the Wall Street Journal! It says something that nobody else wants to say: The federal government is driving up college tuition costs, to the detriment of middle-class families:
Tuition has risen about three percentage points faster than inflation every year for the past quarter-century. At the same time, the feds have put more and more money behind student loans and other financial aid. The government is slowly becoming a third-party tuition payer, with all the price distortions one would expect. Every time tuition rises, the government makes up the difference; colleges thus cheerfully raise tuition (and budgets), knowing the government will step in.
As a result, "colleges have little incentive to cut costs," says economist Richard Vedder, the author of "Going Broke by Degree: Why College Costs Too Much." Mr. Vedder explains that there are now twice as many university administrators per student as there were in the 1970s. Faculty members are paid more to teach fewer hours, and colleges have turned their campuses into "country clubs." Princeton's new $136 million dorm, according to BusinessWeek, has "triple-glazed mahogany casement windows made of leaded glass" and "the dining hall boasts a 35-foot ceiling gabled in oak and a 'state of the art servery,' " whatever a servery is.
Our financial-aid system also hurts middle-class applicants. Parents who have saved money for their child's tuition quickly find that, by the strange calculus of financial aid, they are charged more for college tuition than if they had blown their savings on a bigger house. Mr. Vedder wonders why universities should get to ask the income of their students before telling them how much they'll be charged. That sounds like price discrimination: If a car dealer tried to make you fill out the form students have to fill out for financial aid, he notes, "you'd run to a consumer protection agency."
(To understand reference to ESU: Link.)
