I seem to recall mortgage fraud playing a large part in The Great Recession.
I am familiar with the NY Fed study. I’m skeptical, for several reasons:
- The study focuses on sticker tuition price, not net price after FA, It's the latter figure that most families care about, and reasonably so. At many institutions the sticker tuition price has increased much faster than the actual net price paid by students and their families, as institutional FA has come to play a much more prominent role.Looking only at sticker price rather than net price will overstate the role of federal FA in raising the actual cost to families.
- The study focuses only on tuition, not COA. Again, it's net COA, not just sticker tuition price, that most families care about. By correlating increased federal FA with sticker tuition increases, the study doubly exaggerates the effect of federal FA on college costs, first by looking only at sticker cost rather than net cost, and second by assuming increased availability of federal FA affects only tuition, not total COA. Other major factors in COA like room & board costs have been increasing faster than overall inflation, in part because students and their parents now expect and demand more deluxe living accommodations and higher quality and more varied food options including vegetarian, vegan, gluten-free, dairy-free, nut-free, Kosher, halal, and other such options that simply weren't offered back in my day. I fully approve of accommodating those needs and preferences, but it all costs money. Where does that money come from? Well, all the usual sources, but that includes federal FA which can go toward room & board as well as tuition. But by assuming federal FA goes 100% toward tuition, the NY Fed study exaggerates the relationship between increases in federal FA and "college costs" which it equates with sticker tuition price, not net COA.
- At the end of the day, the study seems to acknowledge that there's at best a weak (or statistically insignificant) relationship between expanded federal FA and "college costs" (narrowly defined as sticker tuition price) at public universities and highly selective private universities---i.e., the two segments of the market that seem to be of most concern to CC readers and participants. Instead, the effect of expanded federal FA on tuition costs is apparently strongest .at non-selective (or not-very-selective) private colleges. I don't see any effort to distinguish the for-profit, fly-by-night operations from others in this segment. But in any event, I find it not at all surprising that some marginal, heavily tuition-dependent private institutions with low-to-middling admissions standards would raise their tuition in lockstep with the availability of federal FA for their students. That's an unfortunate situation, and efforts should be made, and are being made, to crack down. But that has little or nothing to do with the (net) cost of attending elite private or quality public flagship institutions, which is what most CC readers seem to care about,
I’m skeptical too, but to me, a published "study’ by a senior federal official is more than a “shred”.
I’ve noted some large price differences in undergrad vs. grad tuition. While some private universities charge the same tuition for grad as undergrad, a number of expensive private universities charge much less for grad than undergrad tuition (disregarding business and law which are often high-priced). However, typically grad aid is usually merit-based or involves research or teaching assistant work, while many of these expensive universities provide large amounts of need-based aid for undergrads.
^^of course, nearly every grad student – who, according to fafsa, is independent – would qualify for need-based aid since parental income/assets no longer count (generally). So the rules change once one has a BA/BS.