Education

Is It True That Tuition Increases Are Robin Hood For Economically Disadvantaged Students?


Roman jurists were trained to ask, cui bono?, “who benefits?” from the alleged deed. That, indeed, is the key question regarding tuition increases.

There is no doubt that tuition increases hurt many students and their families. They fuel debt. Notwithstanding President Biden’s controversial and arguably illegal $400 billion-plus initiative to cancel college debt, the young graduate in a time of high inflation has sound cause to worry about the bills that might well come due. And taxpayers have every cause to worry.

But are tuition increases paradoxically a public good, acting as a benign boon to economically disadvantaged students that ultimately supports their scholarships?

This is the argument that Wellesley College economist Phillip B. Levine contributed to an article last month in the Washington Post on the tuition increases that many colleges and universities have implemented this school year. He criticized tuition freezes because they “limit revenue that could be used for financial aid” for low-income students. In a Robin Hood-type effort, institutions charge more to affluent families as a way to lower the price for lower-income students. “The money has to come from somewhere,” Dr. Levine remarked. “And it needs to come from higher-income families.”

If tuition increases enable meritorious students of limited means to have access to higher education, then the justification is self-evident. But to what extent is tuition revenue actually being used to widen access for disadvantaged students? Hypothetically, if all funds from higher tuition were passed on to lower-income students, the net price would essentially stay the same. According to the most recent Department of Education data, the American Council of Trustees and Alumni (ACTA) found that the net price—including tuition, room and board, and other expenses such as books—paid by full-time, first-time students who attend a four-year public school at the in-state or in-district tuition rate, and who receive any type of government or institutional grant or scholarship aid, has grown by 12% in the past 10 years when adjusted for inflation. At private schools, net price for these students has grown 6% from 2009–2010 to 2019–2020. Despite the pleasing thought that additional funds from increased tuition are being used to keep financial aid robust, the numbers do not add up. The higher education Robin Hood does an ineffective job of redistributing tuition revenue. And it must not be forgotten that the burden of tuition increases, as Virginia Governor Glenn Youngkin noted, falls most heavily on middle class families, who must pay all or most of the “sticker price” of tuition.

In the past 10 years, the average amount that public colleges spend on scholarships and fellowships per student has increased by 16% when adjusted for inflation. But while schools may hail this as a victory, other types of spending have grown even more. According to ACTA, at these same institutions, spending on administrative expenses has grown by 18%, and spending on student services has risen 21%, suggesting that while institutions could put more money toward scholarships and fellowships, many are instead choosing to fund administration or student services instead. One student services expense—diversity, equity, and inclusion (DEI)—has been on the rise in recent years. In 2020, the University of California–Berkeley spent a walloping $25 million on its Division of Equity & Inclusion.

College leaders often insist that the sticker price is not what many students typically pay. But raising the sticker price has consequences. As ACTA documented in The Cost of Excess: Why Colleges and Universities Must Control Runaway Spending, a $1 increase in the in-state public school tuition was found to be associated with a $0.84 increase in net price. We also found that more spending is associated with higher sticker prices. And by increasing sticker prices and thus, net prices, institutions are hurting students, families, and taxpayers.

Better than Robin Hood’s leaky system of redistributing tuition revenue is what has happened at Purdue University. Its tuition has been frozen for over 10 years. Adjusted for inflation, tuition is lower at Purdue now than a decade ago, and wise strategies on room and board have lowered the cost of attendance.

Regarding the Biden plan to cancel college debt, Purdue’s president Mitch Daniels recently commented in the Wall Street Journal that “much of this unpaid debt would never have been accrued if colleges hadn’t raised their prices at the highest rates of any category in the economy.” The upward spiral of spending and tuition increases will inflict financial damage on everyone, whether they pay full price or net price. And Robin Hood is unlikely to be willing or able to fix that.



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