President Obama was here at CU recently taking some great pictures at a local hang-out and talking about student loans. I'm not going to get into the political issues around student loan interest rates, but something from the discussion caught my interest - the idea that the availability of student loans has caused tuition to rise. A survey released today shows that 47% of Americans believe that it has. Clearly the idea behind making student loans more available is not to drive up the price of tuition but rather increase access to higher education, so if in fact easy access to student loans drives up prices then we have a serious problem.
I don't have an answer to this question, but here are a couple bits of data to mull over from the College Board's Trends in Higher Education reports. First, here is the average inflation-adjusted cost of college tuition relative to 1981.
The second graph shows the inflation-adjusted pool of money available for student grants (in blues) and loans (in reds and oranges) per student over the last decade.
From 2000 to the present, tuition has gone up by about 50% and the total financial aid per student has increased by almost exactly the same percentage from about $9,000 per student to a little over $14,000 per student.
Of course correlation does not imply causation and frankly it may be that the increase in tuition is driving the increased availability of financial aid, not the other way around, but I do find this idea intriguing. As people that have spent a lot of time at colleges, I'm interested in your thoughts. Does increased financial aid lead to higher tuition and if so how can the government help keep higher ed affordable?