American colleges have a lot of practice by now at rationalizing their annual tuition increases, often by blaming the bad economy or state budget cuts. Slate’s Matt Yglesias breaks down these explanations. While it’s true that state support for public universities has fallen over the past few years, universities have increased tuition by more than is required to close that funding gap.Where is most of that money going? New administrators:
Since colleges are non-profits, ability to charge high prices doesn’t lead to dividend payouts or the acquisition of big cash stockpiles. The money gets spent. And the trend lately has been to spend it on administrators.
All of which is one reason I’m skeptical that you can really do much on the college “cost” front by offering more tuition subsidies. At any given level of subsidy, schools are going to charge families what they can afford to pay and then they’re going to take that money and spend it on the stuff that the people running the school want to spend it on.
Somehow, we don’t think that’s what Congress had in mind when it set up this system.