Student Loan Subsidies Cause Almost All Of The Increase In Tuition

Student Loan Subsidies Cause Almost All Of The Increase In Tuition by Alex Tabarrok, Foundation For Economic Education In a new NBER paper, “Accounting for the Rise in College Tuition,” Grey Gordon and Aaron Hedlund create a sophisticated model of the college market and find that a large fraction of the increase in tuition can be explained by increases in subsidies. With all factors present, net tuition increases from $6,100 to $12,559. As column 4 demonstrates, the demand shocks — which consist mostly of changes in financial aid — account for the lion’s share of the higher tuition. Specifically, with…