Governor Hoeven Announces Massive New Tuition Entitlement

This is a rather expensive solution to a problem I’m not even sure exists.

BISMARCK, N.D. – Governor John Hoeven today proposed Aid for College Tuition-North Dakota (ACT-ND), a financial aid initiative that when combined with the federal Pell Grant program will cover most of the cost of tuition for eligible undergraduates requiring financial assistance.
“ACT-ND brings the dream of a college or technical education within reach of thousands of North Dakota young people who aspire to a career and one of the good paying jobs we’re creating through aggressive economic development,” Hoeven said. “This college tuition assistance plan will help them reach their goal.”
ACT-ND will provide $40 million per biennium to ensure that all North Dakota resident students who demonstrate a financial need will receive assistance. The program will provide up to $2,000 per year in individual needs-based assistance to more than 11,000 financially qualified North Dakota students. That represents a six-fold funding increase over the current financial assistance program, which allocates $6 million per biennium for grants of up to $800 for 4,000 students. Also, the program is structured so that it partners with and does not jeopardize qualifications for federal assistance.
On average, eligible students will receive nearly $1,800 per year. That, combined with the average Pell Grant of $2,400, will provide state and federal assistance of $4,200 per year on average, which will cover all of the tuition at any NDUS two-year college, and at least 80 percent of tuition at the state’s public four-year universities.

The problem with tuition entitlements is that they tend to feed the vicious cycle of rising tuition costs. Colleges raise tuition fees. Students have a difficult time affording those new fees so they turn to the government for relief. The government comes through with new tuition entitlements, but just as students are better able to afford their tuition the colleges raise their rates again.
Because college administrators aren’t stupid. They know that tuition entitlements increase the tuition-paying capacity of their students/customers, so when new entitlements come online they raise tuition to take advantage of them.
If we want to put spiraling tuition rates in check we should cut tuition subsidies and entitlements. Far from resulting in a decline of college enrollment such a move would result in a decline in tuition rates. Colleges aren’t likely to price themselves out of the higher education market, so when fewer tax dollars are available to pad their tuition rates they’ll bring those tuition rates down.
They’ll complain about it a lot, sure, and college administrators/professors will talk a good game about poor kids not getting the education they need, but ultimately these colleges are businesses. And businesses need their customers.
Pandering politicians like John Hoeven like to champion their taking of money from hard-working tax payers to pay for the higher education of other people’s kids because it makes them look like good guys, something that plays well in the dumbed-down world of politics, but really it’s strikingly bad policy.