In Case You Missed It,new analysis from the American Enterprise Institute (AEI) shows colleges are already lowering tuition in response to the Education and Workforce Committee's reforms in the Working Families Tax Cuts.
"Limiting borrowing aims to force expensive graduate schools to lower tuition. Opponents of the reform predicted that colleges would do the opposite: raise tuition even further, requiring students to take on even more debt from private lenders. Now, the opposite is happening."
AEI points to several examples of universities adjusting their pricing and citing the new federal borrowing limits. Among them, Santa Clara University is giving law students a guaranteed $16,000 scholarship, Emory University is giving students in graduate public health programs a guaranteed $25,000 tuition scholarship, and the University of California, Irvine is reducing tuition for its Flex MBA program by approximately $30,000 and cut tuition for its Executive MBA program by roughly $48,000.
Why do these changes matter?
"Uncapped federal borrowing enables universities to raise prices, year after year, confident that the government will extend loans to students to cover the bill. When Congress removed caps on federal lending in 2006, researchers found that colleges increased their prices in response."
For years, colleges could keep raising tuition because the federal government would continue lending more money to cover the cost. Students took on more debt, and taxpayers were left footing the bill. The Education and Workforce Committee's reforms in the Working Families Tax Cuts put reasonable limits back on federal graduate loans, giving colleges a stronger incentive to keep costs down.
Bottom line: As AEI's reporting demonstrates, schools are already responding by lowering prices—a positive sign that Working Families Tax Cuts are beginning to restore sanity in college pricing resulting in better value for students and taxpayers.
