Federal Policy and College Tuition

Robert B. Archibald and David H. Feldman

in Why Does College Cost So Much?

Published in print October 2010 | ISBN: 9780199744503
Published online January 2011 | e-ISBN: 9780199866168 | DOI:
Federal Policy and College Tuition

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Recent congressional investigations into rising college tuition have laid the groundwork for price controls on tuition. This chapter explores the rationale for tuition controls by examining the relationship between federal policy and how colleges and universities set their tuition. Much of the public discussion is based on an argument first made by former secretary of education William Bennett in 1987. Bennett's hypothesis is that increases in federal financial aid lead to increases in college tuition. This chapter contains an alternative to the Bennett Hypothesis called the Congressional Squeeze. The Congressional Squeeze suggests that the causation is reversed. Increases in college tuition cause increases in federal financial aid. The chapter ends with a discussion of the tuition proposals in the College Opportunity and Affordability Act of 2008. The act does not contain price controls, but there are some sanctions for colleges and universities with high tuition increases.

Keywords: Bennett Hypothesis; Congressional Squeeze; price controls; tuition; College Opportunity and Affordability Act of 2008

Chapter.  5704 words. 

Subjects: Financial Markets

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