Government Policy and Tuition in Higher Education
32 Pages Posted: 7 Jun 2018
Date Written: 12/16/2013
Tuition and fees for higher education have increased at a rate much higher than inflation over the past 40 years. Although the amount students pay has risen much less than listed tuition, net price also continues to increase faster than inflation. Taxpayer-funded subsidies to higher education have also increased substantially during this period. The Bennett hypothesis states that tuition will increase in response to subsidies. We review the variety of government programs subsidizing higher education and summarize the existing evidence on the Bennett hypothesis. The evidence on the Bennett hypothesis remains mixed, providing some evidence that the effectiveness of the subsidies in increasing college enrollment is diminished to the degree that taxpayer moneys are diverted to the institutions of higher education.
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