Kayla Fowler
Dr. Weaver
English 1102
3 May 2022
Understanding the Bennett Hypothesis
According to the national center of educational statistics, “At public 4-year institutions, average tuition and fees were $9,400 in 2019–20, about 13 percent higher than they were in 2010–11 ($8,300).” This can even further complicate current and entering students in colleges’ ability to afford higher education. It is common for state funding to increase federal aid through grants, scholarships, and loans to combat the rising rates and ensure higher education to be accessible to all. Former secretary of education William Bennett popularized a belief that providing federal aid influences colleges to raise their tuition accordingly. This came to be known as the Bennett Hypothesis. Although it is believed that Bennett’s argument was reasonable, many question how it tries to explain the rising levels of tuition, its validity, and its inaccuracies.
Bennett’s well-known opinion first became popularly recognized through the New York Times opinion pages titled: “our greedy Colleges”. He declares that:” If anything, increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuition, confident that Federal loan subsidies would help cushion the increase. In 1978, subsidies became available to a greatly expanded number of students. In 1980, college tuition began rising year after year at a rate that exceeded inflation. Federal student aid policies do not cause college price inflation, but there is little doubt that they help make it possible.”
There are many studies created to debunk or validate this hypothesis, each varying in results. A research paper named “The Student Aid Game: meeting need and rewarding talent in American higher education” by Michael S. McPherson and Morton Owen Schapiro from the Consortium for Policy Research in Education concludes from their research stating that “For public institutions, the effects of federal student aid differed in important ways from what we found at private institutions. We did not find any significant relationship between federal aid and instructional expenditures. We did, however, find that public four-year institutions tended to raise tuition by $50 for every $100 increase in federal student aid.” (pg.96) “Does Federal Student Aid Raise Tuition? New Evidence on For-Profit Colleges” By Stephanie Riegg Cellini and Claudia Goldin from the National Bureau of Economic Research found that “The dollar value of the premium is about equal to the amount of financial aid received by students in eligible institutions, lending credence to the “Bennett hypothesis” that aid-eligible institutions raise tuition to maximize aid.” (pg.2) Overall, most results conclude that the hypothesis is somewhat accurate.
Though it is backed by research, it can be considered that it is merely an argument based on the wrong parts of information. An article “History of Student Loans: The Bennett Hypothesis” by Richard Pallardy “Consider that Federal Stafford loan limits did not increase from 1993 to 2007 or from 2008 to the present, yet college costs continued to increase during these periods. The maximum Federal Pell Grant remained unchanged at $2,300 from 1989-90 to 1994-95, at $4,050 from 2003-04 to 2006-07 and at $5,550 from 2010-11 to 2012-13, yet college costs continued to increase. […] Some research about the Bennett hypothesis purports to find correlations with gross tuition rates or sticker prices. These results evaporate when retargeted at correlations with net tuition and net price. The correlations also disappear when re-examined at a granular level.” Through this thought process, the hypothesis could be considered only weakly tied to the previous evidence when examined further.
The bennett hypothesis has many considered accurate parts but may not be as considered accurate as a whole. The increase in tuition can occur after an increase in federal aid, but they are not always straightforwardly connected, as there are multiple aspects that are not directly examined when viewing the broader details. This argument can be considered valid, but not sound as it is not errorless.
Works Cited
Hanson, Melanie. “College Tuition Inflation Rate” EducationData.org, October 18, 2021, https://educationdata.org/college-tuition-inflation-rate
McPherson, Michael S, and Morton Owen Schapiro. “The Student Aid Game: Meeting Need and Rewarding Talent in American Higher Education.” Princeton University Press, 1998. https://files.eric.ed.gov/fulltext/ED431340.pdf
Cellini, Stephanie & Goldin, Claudia. (2012). Does Federal Student Aid Raise Tuition? New Evidence on For-Profit Colleges. American Economic Journal: Economic Policy. 6. 10.1257/pol.6.4.174. https://www.researchgate.net/publication/228268863_Does_Federal Student Aid_Raise Tuition New Evidence on For-Profit Colleges/citation/download
Pallardy, Richard. “History of Student Loans: The Bennett Hypothesis.” Savingforcollege.com, Savingforcollege.com, 11 Mar. 2022, https://www.savingforcollege.com/article/history-of-student-loans-the-bennett-hypothesis#:~:text=Much%20of%20the%20research%20about,and%20changes%20in%20college%20prices.