Study on Tuition Hikes: Biggest driver is federal subsidies

A new economics paper has found that state and federal subsidies for higher education, designed to make college cheaper and more accessible, have driven tuition increases.

Analyzing tuition increases between 1987 and 2010, Professors Grey Gordon and Aaron Hedlund found that changes in financial aid “account for the lion’s share of the higher tuition.”
ㅤㅤ
When effects from financial aid were removed, all other factors only accounted for 16 percent of the net tuition increase.

“These results accord strongly with the Bennett hypothesis, which asserts that colleges respond to expansions of financial aid by increasing tuition,” they wrote.