NCPA - National Center for Policy Analysis


January 18, 2007

Making college more affordable is a laudable goal, especially in light of the stratospheric heights to which tuition has soared over the last few decades.  But making student loans cheaper will only exacerbate the problem, says Neal McCluskey, an education policy analyst at the Center for Educational Freedom.


  • Federally backed loans, for one thing, regularly go to the wrong people -- in 2003-04, nearly 30 percent of students from families earning more than $100,000 a year got them -- and they make tuition more expensive for everyone.
  • And while federally subsidized loans -- on which Democrats are now focusing after promising to cut rates on all federal student loans during the campaign season -- go to fewer wealthy families, they still tend to benefit well-off students and those whose parents understand how to game the system

Despite the clear connection between cheap money for higher education, ever-more extravagant student demands and skyrocketing college prices, many policymakers continue to claim that aid is the solution rather than the problem.  Instead, they finger an old favorite: The notion that states have drastically cut funding to their public colleges, forcing schools to raise tuition.

It's baloney, says McCluskey:

  • According to the latest U.S. Department of Education figures, far from dropping, real state funding for colleges and universities has risen dramatically over the last couple of decades, jumping to $62.9 billion in 2000-01 from $40.1 billion in 1980-81.
  • On a per-pupil basis, according to the State Higher Education Executive Officers, while state funding has tended to rise and fall in cycles, in 2001 it actually reached an inflation-adjusted 20-year high of $7,124.

So states haven't cut their funding, it's just been eclipsed by the astonishing growth in money coming through students, explains McCluskey.

Source: Neal McCluskey, "Democrats' Middle-Class Payoff," Cato Institute, January 18, 2007.

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