Government Spending

How Financial Aid Drives Up the Cost of College

Massive infusion of money through subsidies and student aid offers no incentive to control costs or seek out efficiencies in higher education.


This past fall, Virginia Sen. Mark Warner toured the state to talk about college debt—a burden that weighs heavily on an increasing number of students and their families. Warner proposed several worthwhile reforms, but they are modest ones. The same is true of the proposal by Kirk Cox, the Republican majority leader in the House of Delegates, to cap student activity fees. That too is a worthwhile idea, but it also nibbles at the real problem instead of tackling it head-on.

That problem is obvious: During the past few decades the price of a college education has grown more than four times faster than the consumer price index. According to a recent piece in The Wall Street Journal, a typical family in 1970 had to spend 16 percent of its annual income for a private college's four-year tuition. Today that same family would have to pay 36 percent of its income for the same product. In the past five years alone, tuition has risen 10 percent at private colleges—and 17 percent at public ones.

The public-policy prescription for this trend has been to throw more money at the problem, in the form of student aid. This is lunacy. It does nothing but encourage colleges and universities to charge even more, secure in the knowledge that student aid will rise to keep up.

And indeed it has. Student loan debt exceeds $1 trillion. Many institutions now offer scholarships and grants not only for low-income applicants but also for middle-class and even upper-middle-class families. Harvard has a program for families making up to $150,000. So does California—the Middle Class Scholarship Program—which pays for as much as 40 percent of the cost of attending a public university for families making that much. Washington & Lee University in Lexington has an aid program for families earning up to $75,000.

And remember: All of this student aid comes in addition to the already substantial subsidies that public colleges and universities receive from the taxpayers through direct appropriations. You often hear leaders of higher education complain that their appropriations were cut during the Great Recession. For many, the claim is misleading: Their year-over-year appropriations actually rose, but their per-student funding declined because they chose to admit more students. That's what happened in Virginia, where state appropriations for higher-ed operating costs rose from $3.5 billion a decade ago to $7.5 billion today (and thousands of jobs were added to the higher-ed payroll). In any event, even when the complaint about funding cuts is accurate, it ignores a key point: whether the earlier appropriations could be justified in the first place.

The massive infusion of money through student aid and other avenues carries with it no incentive to control costs or seek out efficiencies. Little wonder, then, that most colleges and universities squander their resources. For example: Between 1989 and 2010, the share of full-time faculty members who reported spending at least nine hours per week in the classroom fell from 60 percent to 44 percent. (Not 40 hours a week, or even 20—nine.) Here in Virginia, the State Council of Higher Education says a dozen institutions are falling short of the benchmark for efficient use of their buildings (classrooms are supposed to be used 40 hours a week, and labs 24). And it's hard to believe any amount of efficiency could justify $96,000, which is the cost per bed of two new dorm buildings at VCU.

Meanwhile, administrative costs have skyrocketed; the growth in support personnel has far outstripped the growth in instructional staff. Some of that is due to the natural bureaucratic tendency toward bloat. Some of it is owing to the universities' ideological devotion to identity politics and their attempts to appease the grievance industry by creating new offices and departments.

As a result, many colleges and universities now resemble the University of Virginia—which has a six-person Office for Diversity and Equity, a six-person Office of African-American Affairs, a Center for Diversity in Engineering, an Office of Graduate Student Diversity Programs, an associate dean of diversity for the medical school (not to mention a director of diversity initiatives for the same medical school), a program coordinator for Asian/Asian Pacific American programs, a program coordinator for Hispanic/Latino, Native American, and Middle Eastern Student Services ("Office Hours: 2-3 pm Tues, Wed"), a coordinator for LGBTQ student services, and so on. Kindly note that these offices do not exist to prevent discrimination in higher education—multiple federal laws, enforced by the Department of Education's Office of Civil Rights, already do that.

Trying to address spiraling college costs by increasing student aid is like trying to put out a fire by dousing it with gasoline. The way to cut the cost of college is to cut college spending—by making colleges trim their administrative fat, require more work from their personnel and close those offices and departments—including a majority of money-sucking athletic programs—that do not pull their own weight.

Colleges, of course, will scream bloody murder. Let them. At some point, the gravy train has to come to a stop.

NEXT: Worried About Legal Action, Dad Calls Sheriff's Office to Witness Him Spanking His Kid

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Price is no object when you’re spending other people’s money.

  2. Also, kids coming up these days are all about the diversity. If they ask why college is so expensive, just say it’s for all of those diversity offices and they’ll go right along with it.

  3. My friend was complaining about the cost of college. I said subsidizing it increases the cost. So he then suggested we cap the amount that colleges are allowed to charge.

    Government solutions to government created problems, and never a moment of self-reflection

  4. “The way to cut the cost of college is to cut college spending”
    Good luck with that.

  5. my friend’s sister makes $68 an hour on the laptop . She has been without work for 10 months but last month her check was $21549 just working on the laptop for a few hours. browse this site……….

    1. She must work for a college.

    2. Whose lap top was she working on?

  6. The simplest solution (assuming that abolishing Government aid entirely is too politically unpopular to attempt), would be to have all colleges report to the state the full amount of tuition and fees that they charge for the coming year. Then the state will only fund scholarships, grants, and loans for the schools that charge less than the median amount for that year.

    Within a few years, the prices should drop considerably.

    1. An simpler solution is to abolish pensions for public sector employees and replace them with 401K plans.

      Tuition is expensive because today’s students are paying for the bloated pensions of university bureaucrats who retired decades ago and will receive outrageous (and nearly unfunded) pensions for decades.

      1. An even simpler solution would be to remove “disparate impact” bullshit regs on the private sector that prevents companies from giving quantified tests to their applicants. Yes I know that aid is causing the problem, but the demand for college is not for education (colleges, outside the STEMS, actually are pretty fucking useless) but to give the employer a signal that they can do the work-an IQ test in disguise. If employers were allowed to test their applicants HOW THEY WANTED TO,the whole thing would collapse. Maybe then we wouldn’t have unemployed or underemployed people in their 20s and 30s with BAs in cisgendered white male privilege studies or whatever and people who can actually DO shit.

  7. The funniest part of the story is when UV increases the number of students enrolled. We are now a society that values credentials above all else. These school systems that preach diversity are, by and large, entrenching people into the classes they were born in with only a few exceptions.

    And a large percentage of those who graduate from these schools still aren’t educated. Grade inflation means most of them are walking about with almost no real skills, never having really applied themselves. It’s all part of the progressive fantasy that school is really about ‘finding yourself.’

  8. Between 1989 and 2010, the share of full-time faculty members who reported spending at least nine hours per week in the classroom fell from 60 percent to 44 percent. (Not 40 hours a week, or even 20?nine.)

    I wonder if that figure calculates that most of them aren’t on campus and/or doing any university work at all for three months out of the year. They might be doing work during the summer, but it’s work for the advancement of their own careers, which their salary shouldn’t have to cover.

    I’m almost to the auto-puke point whenever I see the word “diversity.” Such whiny victim-cult bullshit.

    1. The average class is 3 hours of teaching a week. So, what the stat is talking about is how many classes they have. No teacher is going to have 20-40 at that level and really made the writer here look ignorant. But you would think most full-time faculty would be teaching 6-9 hours.

      Basically you have ‘full-time’ faculty teaching fewer classes.

      1. That comment makes the writer look very, very ignorant. Apparently they don’t know that instructors have to prepare lessons, select homework sets, grade exams…outside of the classroom.

        I also believe that the statistic they’re quoting is misstated. They said:

        “the share of full-time faculty members who reported spending at least nine hours per week in the classroom fell from 60 percent to 44 percent.”

        If it said “the share of all faculty members” it would be more accurate. They most likely misread their source for that information.

        As a part time math instructor, I teach 2 classes. With that, I have about 7 hours of classroom time per week. The 60% to 44% numbers match what I remember about the number of full time faculty dropping over the last couple decades. The drop in their statistics is simply because colleges are hiring more part time instructors. I could rant about why that is a problem, but I won’t here.

        The thing that pisses me off the most is that schools need to higher more part time instructors without benefits in order to pay for the enormous benefits that full time faculty get. That way a select elite group of faculty have nice, cushy jobs with enormous benefits while the rest of us have to drive between 2, often 3 schools just to work full time.

        1. Thanks for bringing your experience to the discussion. Unfortunately your opinion made too much sense to get any responses from the retards that comment here (I don’t actually think most are retards, I just know that an obvious troll is more likely to get responded to than a thoughtful poster.)

      2. Colleges are buffing out a lot of their intro classes with grad students and part-time instructors as a way of saving money (don’t have to pay full-time salaries, or cover health insurance and/or pensions that way). This has been a trend for quite some time, so it’s not at all surprising that full-time faculty are spending less time in the classroom teaching.

  9. just before I looked at the draft four $9879 , I didn’t believe that…my… father in law had been truly erning money part time from there computar. . there dads buddy has done this for only 21 months and just repaid the dept on their apartment and bourt a great Land Rover Range Rover .
    Read More Here ~~~~~~~~

  10. I make up to USD90 an hour working from my home. My story is that I quit working at Walmart to work online and with a little effort I easily bring in around USD40h to USD86h Someone was good to me by sharing this link with me, so now i am hoping i could help someone else out there by sharing this link Try it, you won t regret it! …

    Here’s a way better site : : : == http://WWW.WORK4HOUR.COM

  11. just before I looked at the draft four $9879 , I didn’t believe that…my… father in law had been truly erning money part time from there computar. . there dads buddy has done this for only 21 months and just repaid the dept on their apartment and bourt a great Land Rover Range Rover .
    Read More Here ~~~~~~~~

  12. my neighbor’s step-aunt makes $80 an hour on the internet . She has been laid off for five months but last month her payment was $12901 just working on the internet for a few hours.
    website here……..

  13. I think that college students shouldn’t have to graduate with the burden of too much debt on their shoulders. I personally love the idea of free education without any debts, but nowdays it seems alsmost impossible Essayteria.

Please to post comments

Comments are closed.