Chart: More Aid = More Pain
This chart comes from a recent staff report from the Federal Reserve Bank of New York, which took 51 pages of dense economic jargon and methodological explanations to tell us what many of us commentators already knew. A big reason, if not the main reason, for the rapid rise in college tuitions over the past few decades has been the steady increase of Federal financial aid in the form of grants and loans. After all, we cannot attribute the cost increases, which would naturally go down in the face of lower demand, to rising wages or increased savings rates among Americans.
No, it seems that the main source of the pain of tuition increases has to do with the government’s number one solution to it. Continue reading