NCPA - National Center for Policy Analysis

Government Subsidies Boost College Costs

December 8, 1998

The price of a college diploma is soaring and many analysts are blaming federal and state subsidies which, they say, leave schools with little incentive to cut costs.

  • A student attending a public college for four years between 1997 and 2001 will accumulate bills averaging $45,840 for tuition, fees, room and board, transportation, books and other expenses -- $96,730 if he or she attends a private institution.
  • When the academic period 2015-19 rolls around the cost for four years at a public school is estimated at $156,936 -- and $326,940 at a private school.
  • In the 1960s, total spending for higher education in the U.S. was about $7 billion a year, according to Hillsdale College President George Roche.
  • But by the early 1990s, largely because of massive state and federal funding increases, spending surpassed $170 billion a year.

State governments spent more than $44 billion on higher education for the 1995-96 academic year. On average states provide about $6,000 in subsidies per student for higher education each year.

Financial aid -- both state and federal -- hit a record $60 billion this year, up 6 percent from last year. Loan guarantees made up about 60 percent of the total, up from 40 percent in 1980-81.

Experts warn that subsidies to public colleges draws students away from private schools. At the turn of the century, four out of five attended private schools. Now four out of five are enrolled in state-run colleges. More than 300 private colleges closed their doors between the 1969-70 and 1992-93 academic years.

Source: Michael Chapman, "Higher Ed's Soaring Price Tag," Investor's Business Daily, December 8, 1998.


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