The CCAP published its revision of the explanation—called the “Bennett Hypothesis”—of why higher education institutions increase tuition. Looking at CPI data, higher ed. costs have soared above inflation and other notable goods and services over the last 34 years:
The original Bennett hypothesis is named for former Secretary of Education, William J. Bennett, after he claimed in a 1987 New York Times editorial that universities were capturing increases in federal financial aid. Despite the charts above, the evidence for the hypothesis is mixed, leading CCAP to conclude that it allowed other researchers to:
- lump aid that went to poor students (like Pell Grants) with aid available to all (Unsubsidized Stafford Loans);
- Ignore the effects of tuition caps at public universities and price discrimination in scholarships by others; and,
- Most importantly, fail to note longitudinal effects of competition among universities.
Aside from easing university-wide subsidies, the obvious solution is to allow applicants better access to information on educational quality and net price, i.e. transparency, which would force universities to compete over outcomes.
The CCAP paper is a good read, and I recommend reform-minded types to read the PDF here, especially those who were horrified by law professor Jonathan Glater’s recommendation that we fully subsidize higher education. I’m curious what counterarguments it will engender, but seeing that higher education costs are growing faster than even medical care (aka “Budget’s Bane”) and prescription drugs, I’m guessing Bennett 2.0 is theory of the day.
But the fun part is towards the end, where author Andrew Gillen calls out America’s law schools.
“[Access to unlimited GRAD PLUS loans] allows law schools to all but ignore capacity concerns, focusing instead on revenue and selectivity considerations. Thus compared to undergraduate students, law school students have access to a massive amount of aid and according to Bennett Hypthesis 2.0, law schools will take advantage of this situation by increasing tuition. This is exactly what we see.
[M]any schools are making a ‘profit’ on law school students, using them as cash cows to fund other activities, and yet tuition is still rising faster at law schools. Bennett Hypothesis 2.0 offers one of the few explanations for this phenomenon: more generous financial aid for law school students allows law schools to raise tuition more.” (24, PDF page 32)
Bear in mind two things. One, there are many more private law schools than public ones. Two, Grad PLUS loans are fairly recent, meaning many law students were using private loans to pay for their educations until then. This means we’re comparing the same phenomenon under differing underlying conditions. These concerns may mute Gillen’s point somewhat, but I’m still persuaded overall.
Part of what I write about on this blog is the intersection between higher education finance policy and legal education. Unfortunately, the legal profession still doesn’t want to admit its relationship to these policies (save for a handful of law school professors who do care about the issue) and instead prefers to issue resolutions calling on Congress to protect law school debtors (which is good, but they don’t demand bankruptcy rights, aside from the National Association of Consumer Bankruptcy Lawyers) and law schools’ entitlement to endless taxpayer subsidies. This is why the Gary Munneke’s of the academy can write:
“What we need today is a cooperative dialogue among stakeholders in the legal market to forge a workable future. What we have is a stalemate, like two galleons firing broadsides in a Nathaniel Philbrick novel.” (11) [LSTB: This is a good line.]
…Yet expect us to believe that the legal academy is an equal stakeholder is this cooperative dialogue. However, the profession has nothing to gain by treating the legal education establishment as a stakeholder whose interests are worthy of protection. Indeed, it loses nothing by talking to legislators and demanding cuts to the subsidies, and it may regain some of the dignity it’s lost due to merciless poundings by scambloggers and media outlets. Hopefully “Bennett 2.0,” to say nothing of the NACBA’s report, will start playing a more prominent role in discussions about the future of the legal profession.