David Warren, president of NAICU, has done excellent work for independent colleges and universities across the U.S. over the years, but his argument in today’s NYT that federal financial aid does not contribute to increased education costs misses on two counts.

First, the effect of throwing government money (your tax dollars) at higher ed is often indirect, but still very real and very problematical. It’s inflationary effect is no urban legend, as he’d like us to believe. To claim that federal aid has no inflationary effect on college tuition at all is a self-serving claim made by those institutions dependent on that money. The test of this would be simple: if you take away their federal aid, what would happen? Institutions would either have to raise tuition to cover the gap or cut staff and programs down to what students actually need and can afford. In other words, the federal money is allowing institutions to increase expenses (programs, staffing, facilities, toys, etc.) they don’t really need and can’t actually afford. That’s ultimately unsustainable and that has artificially and unnecessarily increased the costs of higher education nationally for everyone (students and taxpayers alike).
Second, the current decreases in tuition rates and college costs we’ve seen recently do not demonstrate the lack of inflationary pressures from federal aid, as Warren suggests, but are evidence that the long-overdue political pressure on colleges and universities to rein in their costs is finally working. Without that pressure during a time when Americans of all economic levels are feeling the pinch in this government-fueled depression, colleges and universities would feel little or no need to adjust their tuition rates downward. With federal financial aid constantly back-filling their accounts, why would they feel the need to restrain expenditures or to stop wasting money on the frivolous campus amenities that have no rational relationship to higher education?
Federal aid has made institutions lazy and careless and wasteful (common effects on those who become dependent on government handouts). Out of fear of losing their federal aid fix, institutions have tried to show some restraint and responsibility with taxpayer dollars for the first time in a very long time. But you can’t break addiction by continuing to supply the user with his drugs. Federal financial aid has so blurred the relationship between real costs and student affordability that a good many institutions have been emboldened to raise their tuition just to earn the reputation as the most expensive, most elite (think of Geo. Washington U. not long ago). Only when students start paying the real costs of their education will institutions rein in these excesses paid by taxpayer dollars, stop being the lavish academic cruise ships in dry dock with semi-professional sports franchises they’ve become, and start getting back to the basics of actually educating students at a reasonable, affordable cost that isn’t coercively subsidized by other people’s money.
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