State Student-Aid Policies Drive College Prices, Researchers Say

College leaders often argue that the way to attract more low-income students to college is to increase the amount of need-based financial aid that states offer to those students.

But doing so may also increase the cost of attending college, according to a study that was presented this month at the annual conference of the Association for the Study of Higher Education. The researchers who conducted the study found that an increase in need-based aid resulted in higher tuition and fees at both public and private institutions in the state. Public colleges also lowered their average institutional-aid awards, while there was no change at private colleges.

When states increased merit aid, both public and private colleges had smaller tuition increases, says a paper describing the study’s findings. In that case, colleges may be suppressing tuition increases to compete for highly qualified applicants, say the authors, Bradley R. Curs, an assistant professor of higher education at the University of Missouri at Columbia, and Luciana Dar, an assistant professor of higher education at the University of California at Riverside.

The results of the study may ultimately confound national efforts to increase college access and completion rates, the authors conclude: “State public resources spent on student aid may not meet the expectations of a lower cost of higher education if not coupled with better policy design and/or institutional oversight and control.”