by Patrick R. Gibbons – Nevada Policy Research Institute
Higher education is more expensive than ever. Over the last 20 years, inflation-adjusted costs at four-year private universities have increased 75 percent, while increasing 139 percent at four-year public universities.
Such stratospheric pricing is leading many to question the actual value of undergraduate degrees, especially given the large debt many students are left with after years in college.
Now, some members of Congress think they see a “solution”: targeting for-profit universities as “exploiters” of American students. Senators such as Tom Harkin, chair of the Senate’s Health, Education, Labor and Pensions committee, are ginning up anger that for-profit universities are reaping large profits while few students graduate and many more leave burdened with debt. But the reality is that the for-profit education market is simply responding to the same incentives and benefits that non-profit and public universities have enjoyed for decades. And those incentives arise almost entirely from the federal government.
It is the massive volume of government subsidies, grants, and taxpayer-backed student loans that incentivizes colleges and universities to seek warm bodies to fill their classrooms and thus their coffers. Evidence suggests that more and more universities, to maximize revenue, prey upon students they know are unlikely to ever graduate. This is a significant reason why national college graduation rates are so dismal.