Why Are Higher Education Subsidies
Going Toward Lazy River Rides?

by Mary Clare Reim / @Mary_Clare21

Navigating life after college can be tricky for new graduates. Students are struggling to pay off debt and many recent graduates find their degrees don’t guarantee a job in their preferred field. The debt many students are incurring — more than $30,000 for the typical graduate — appears to be underwriting luxurious living at some universities.

Recently, College Rank released the “35 Most Luxurious College Recreation Centers.”

Although this list isn’t representative of most universities, here are just a few examples of the amenities available at some institutions:

And here’s the kicker,

There’s no doubt students appreciate the opportunity to stay in shape while in college, but these amenities come at significant costs to taxpayers and the students themselves. One of many problems with virtually unlimited student loans is that the borrower doesn’t always internalize the cost of college, and becomes less sensitive to price increases. As college costs soar, students take out loans with little thought given to their repayment four (or in many cases six) years down the road.

Moreover, federal subsidies have encouraged a facilities arms race, too often rendering academics secondary to flashy buildings and amenities that court prospective students.

The Goldwater Institute found that the administrative costs of universities far surpassed spending on academic or research obligations. Between 1993 and 2007, spending on administration per student rose 61 percent, while spending on instruction rose 39 percent. The Goldwater report concludes that “government subsidies for higher education play a central role in facilitating excessive growth in administration.”

Additionally, the Federal Reserve Bank of New York recently found that for every additional Pell Grant dollar, universities raise their sticker price of tuition 40 cents. Even more troubling, every dollar increase in federally subsidized student loans corresponds with a 63 cent increase in college tuition.

Although the subsidies are concentrated to the students who qualify for them, increases in tuition are passed along to all students who attend a school. Inflated tuition costs may price out students who don’t qualify for subsidies and would prefer to pay for academics, but are forced to underwrite Xbox tournaments and wilderness yoga.

To restore the integrity of higher education and refocus on its educational purpose, Congress should rein-in federal subsidies and enable a market of financing options to thrive.

Mary Clare Reim is a Research Associate in Education Policy at The Heritage Foundation.

This article first appeared on March 3, 2016 at The Daily Signal, http://dailysignal.com/2016/03/03/why-are-higher-education-subsides-going-towards-lazy-river-rides/ and is reprinted with permission from The Daily Signal.

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