New Tune, Same Stupid Key

Tuesday, October 6, 2009
Well, it had to happen sometime. Faced with a thoughtful, responsive piece of federal legislation to reform the financial aid system, some ideologue had to come forward with a proposal to end federal student aid entirely. Yep, you heard me right-- get rid of financial aid. Throw out the baby with the bathwater.

The Chronicle is reporting that a director of the Cato Institute's Center for Education Freedom -- aka the freedom not to be helped by the government-- is purporting that "student aid explains the pain" of rising tuition. This "higher education expert" (honestly, some people are way too kind) argues that phasing out aid will make colleges more responsive to people who pay "with their own money."

Too bad this expert, Neal McCluskey, didn't bother to do his homework. If he'd cracked a book, he would've learned--fast-- how wrong he is. Not to mention unoriginal. Back in 1987 then-Secretary of Education Bill Bennett made the same argument in a New York Times op-ed titled "Our Greedy Colleges." And economists including Ron Ehrenberg, Caroline Hoxby, and Sandy Baum flatly rejected it--on empirical grounds-- as simplistic and ideologically convenient (much as Kevin Carey apparently did today). Since that time, plenty of studies have tested the hypothesis. As one (real) expert, Harvard's Bridget Terry Long, puts it, "Of the many studies that have tried to identify whether colleges react to federal financial aid, most find little to no response. While several studies do find a college price response, their overall results are mixed and often contradictory. In summary, none of the numerous studies on the subject have found a "smoking gun" in terms of college pricing behavior....the fact that these two trends (rising tuition and rising aid) move in similar directions does not mean that one caused the other." Heck, even Rich Vedder's shop has moved past the simplicity of the idea, instead developing a (somewhat) more nuanced twist in which aid contributes to rising spending, not rising tuition (the latter could occur, but isn't inevitable).

Yet the Bennett hypothesis keeps on rearing its ugly head. I think after more than 20 years of this nonsense it's time to call the idea what it is-- just plain stupid-- and stop giving ink to the people who repeat it.