More Evidence Federal Student Aid is Killing Higher Education

Indiana's Ivy Tech Community College, with 23 campuses across the state, is considering capping enrollment because of a lack of funding from the taxpayers. This is unsurprising given the student-funding environment over the past thirty-five years. The federal government has long guaranteed student aid loans and grants, with the honorable goal of permitting more students to attend college. But this has resulted in schools increasing their budgets at a far greater rate than the economy allows.

Because of federal aid, students have been able to pay tuition regardless of the cost since 1972, when Congress opened the floodgates, and schools have responded accordingly, raising their tuition at unmanageable rates. In Ivy Tech's case, student fee rates rose 43% between 1995-96 and 2004-05 alone, while inflation increased 24% in the same period. To Ivy Tech's credit, its tuition increases do not even approach other state schools such as Indiana University, where student fees increased 100.9% over the period, and Purdue University's 111.2% increase.

Schools keep raising tuition, and the federal government keeps guaranteeing loans for the full amounts. And just as the government spends every dollar, and more, that it receives in revenue, colleges spend the money that they receive. It is a cycle that saddles students with mortgage-size loans that they must repay for a decade or more after graduating, and it is now hitting schools, which rely upon the guaranteed revenue. If Ivy Tech does, indeed, cap enrollment, no one should be shocked, and the school should not shoulder full blame for denying students an opportunity to further their education. Equal or greater fault lies with federal policy. We have come to expect that organizations and governments cannot help but take advantage of every opportunity to gouge the taxpayer and to spend every dollar that they receive. When it comes to public institutions, restraint is not an option.