Obama Ringing the Pell
As part of his ill-considered credentialing-to-compete initiative, President Obama wants to greatly increase both the size and availablity of Pell Grants. Under his proposed FY 2011 budget, the total pot of Pell aid would rise from $28.2 billion in 2009 to $34.8 billion in 2011; the maximum award would go from $5,350 to $5,710; and the number of students served would rise by around 1 million.
A critical question, of course, is whether increasing Pell will ultimately make college more affordable or self-defeatingly fuel further tuition inflation. The New York Times took that up in yesterday’s Room for Debate blog.
Economist Richard Vedder has long educated people about the inflationary effect of student aid, and does so again with great clarity. It’s higher-ed analyst Art Hauptman, however, whom I think best captures what likely occurs when Pell is combined with all the cheap loans and other aid furnished by Washington, states, and schools themselves:
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Filed under: Education and Child Policy; Finance, Banking & Monetary Policy
College Prices Aren’t So Bad When Other People Are Paying
Today the College Board — maker of such fine products as the SAT and Advanced Placement exams — released its annual reports on college prices and student aid. College prices, it seems, have gone up significantly over the last year. However, if the following statement from the reports’ author, economist Sandy Baum, is accurate — I haven’t been able to see the reports myself yet — student aid largely offset the price increases. And do you know what that might mean? Colleges were able to charge students more without greatly affecting access by pawning much of the new charges off on donors and taxpayers:
Sandy Baum, the College Board senior policy analyst who wrote both reports, said it was important to focus on the net price students actually paid, after subtracting grants and tax benefits, rather than the published tuition, or sticker price. And in that regard, Ms. Baum said, the situation looks far less dire. “Over all, it could have been worse,” she said.
So could it actually be, as I and others have argued repeatedly, that student aid helps fuel tuition increases by having third parties cover so much of the new costs? Here’s yet more evidence saying that yes, it could.
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