Government can’t fix college costs

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President Obama said in his State of the Union Address that he is putting colleges on notice to lower costs. A few days later, he spoke to students at the University of Michigan, with a promise of more federal aid. Politicians claim they can make college affordable. No They Can’t!

In the last 30 years, inflation is up 160%, but tuition costs are up 750%.

It’s because colleges have no incentive to cut prices when students can get money from government. Federal aid, adjusted for inflation, increased from 32 billion in 1987, to 169 billion in 2010.

Government tells us, “Here’s the gap between what you can afford and what the college is charging, we will now make up that gap. And then the college just inches up the tuition a little bit higher,” says Naomi Riley author of The Faculty Lounges: and Other Reasons Why You Won’t Get the College Education You Paid For.

Colleges don’t use all or even most of that money in the classroom. We were stunned at the gyms and dining halls that serve lobster and sushi. Check out the University of Missouri, which is proud of its spa, rock climbing wall and “Tiger Grotto” – an elaborate pool complex.

Government creates perverse incentives. Colleges compete on prestige and luxury amenities, not their price tag. Administrators don’t worry about high tuition costs because their customers have government subsidies.