Warning: Tuition Hike Ahead

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As Congress and the President continue to squabble over consolidating the federal budget, they pass bills that simultaneously undercut their efforts and expand government, says Brian M. Riedl, a Heritage Foundation fellow.

Riedl gives a glaring example of one such bill that counteracts any comparatively minor budget cuts that have been made. He writes, “virtually unnoticed, the House of Representatives voted 354 to 58 on February 7 to add $169 billion in new higher-education spending and create at least 50 new federal programs. In other words, one step forward, ten steps back.”

While the Congress is certainly dominated by the Democrats, Riedl absolves no one of blame in this vicious cycle of irresponsible deficit spending. The overwhelming support for this bill indicates complicity from both sides of the aisle.

Riedl’s paper pulls no punches, and calls Congress out on the pledge made by Senate majority leader Harry Reid (D-NV): “If you want to have a new program, figure out a way to pay for it without raising taxes.”

Under the leadership of Democrats in the House and the Senate, and with Republican complicity, this Congress has developed a consistent pattern of “brazenly breaking its pledge to keep spending and the budget deficit in check.”

Riedl lays out the provisions included in the new College Opportunity and Affordability Act of 2008. Particularly egregious is the manner in which this bill vastly expands federal student aid while failing to acknowledge or alleviate the undeniable link between increasing student aid and rising tuition costs.

Riedl provides some rather alarming statistics to substantiate this link. “Over the past 30 years, the average cost of tuition, fees, room, and board has grown 124 percent faster than inflation at private four-year colleges and 96 percent faster than inflation at public colleges,” he writes. He goes on to conclude that if federal financial aid were not increasing at a similar pace, there is no way universities would be able to justify or maintain an increase of this magnitude.

By viewing colleges and universities as a service industry, Riedl makes it clear that raising prices to this extent would not be practical or possible without a corresponding hike in federal financial aid. Simply raising costs without significant financial aid increases would decrease demand for the service that colleges and universities provide, and ultimately cost them money. Thus, it would make little sense for a service industry to hike their prices in this manner if a large percentage of their consumers could not afford to pay those prices.

Riedl suggests that a good first step towards monetary responsibility with regard to higher education would be to shift funding from grants to student loans. Taxpayers bear a much heavier burden for grants than they do for student loans.

However, given the less than stellar Congressional record of intelligent deficit spending on higher education, taxpayers shouldn’t hold their breath on this one.

Jeff Waldmann is an intern at the American Journalism Center, a training program run by Accuracy in Media and Accuracy in Academia.