HIGHER EDUCATION BUBBLE UPDATE: Footing The Bill For Higher Education.

Federal and state policymakers are often working on similar policy challenges from different vantage points. And when they do not coordinate their decision-making, what may start as a promising response to a major public need can end up being difficult to implement, unsustainable, and in some cases, counterproductive.

Higher education illustrates the point.

The cost of higher education and growing student debt levels are being discussed everywhere from the kitchen table to the campaign trail. And while there is no consensus about a solution, members of both political parties have expressed concern about college affordability.

At no time of year is that more important than now. Students will soon find out where they’ve been accepted to college; they and their parents will immediately want to know how much financial help they can expect when the bill comes due. Unfortunately, while there have been significant increases in federal financial aid in recent years, many schools had even bigger tuition increases in the wake of state budget cuts. . . .

Over roughly the past decade, federal spending on higher education per full-time student grew by 32 percent in real terms, with the Pell grant seeing a substantial increase since the start of the recession. Over the same time frame, however, state government spending on higher education has shrunk by 37 percent, and public colleges and universities across the country have significantly increased tuition. At many schools, the increases in federal financial aid have not been enough to offset rising tuition.

And they never will be, since tuition increases to capture the subsidies.