For-profit colleges that can accept federal financial aid from students charge about 75 percent more in tuition than those that can’t, according to a new study from the National Bureau of Economic Research, which suggests that federal aid might drive up college costs.Read more: http://www.insidehighered.com/news/2012/02/14/profits-receive-federal-aid-charge-more-study-finds#ixzz1mOh23IRY
While the reasons for higher tuition levels at aid-eligible for-profits are hard to pin down, those colleges “may indeed raise tuition to capture the maximum grant aid available,” wrote Stephanie Riegg Cellini, an assistant professor of public policy and economics at George Washington University, and Claudia Goldin, a professor of economics at Harvard University, the study's authors.
The two economists say their research lends credence to the so-called “Bennett Hypothesis,” a difficult to measure theory attributed to William Bennett, Ronald Reagan’s second education secretary, who alleged that federal financial aid disrupts the higher education marketplace. But unlike Congressional Republicans or Bennett, who have pointed to nonprofit colleges when making that argument to bolster attempts to cut aid programs, the researchers focused on for-profits.
The difference in tuition between the two categories of for-profits “seems to match, pretty well, the size of a Pell Grant,” said Cellini.
Inside Higher Ed