Richer subsidies will push up costs without improving education. There’s a smarter approach.
“Revolutionary.” That’s how Terry Hartle, senior vice president for government relations at the American Council on Education, describes President Joe Biden’s new higher education plan. “It is very different than anything we have ever tried to do before in postsecondary education,” he declared. That’s a nice sound bite, but the president’s plan actually relies on the same dubious principles that have guided U.S. higher education policy for the better part of a century. It would boost federal subsidies intended to lower the cost of higher education for people who can’t afford it — but which have turned out to let colleges spend more money (rarely on teaching), raise tuition prices and make higher education harder for ordinary Americans to afford. The Biden plan offers variations on the same theme. If the new administration wanted to help more poor kids afford college and to halt rising college costs, it would instead trade in open-ended higher education subsidies and aid in return for a single item — an increase to Pell grants. These help students without inflating tuitions because they provide a fixed amount of money, targeted at families below a certain income level. Colleges that raise costs would risk losing out as recipients hunt for places they can afford. By contrast, the Biden Families Plan proposes to make community college free to everyone by having the federal government subsidize up to 75% of the costs. And there are new subsidies for students who attend “minority serving” institutions, including historically black colleges and tribal schools.
