Cheap for Whom?

Many more factors figure into the cost of a bachelor's degree than just tuition. Depending on the type of college or university, as well as its level of selectivity, taxpayers may contribute a substantial tax subsidy or, in rare cases, receive a moderate net "profit" per bachelor's degree.

It is important to consider all of the costs and returns involved in higher education when considering dropout prevention and retention efforts, as well as how government subsidies are or should be distributed among colleges and universities. This Outlook is designed to fuel a discussion about the true costs of higher education and who pays for them.

Key points in this Outlook:

  • Tuition at both public and private for-profit and not-for-profit US higher education institutions is increasing, but taxpayers are also bearing significant hidden costs.
  • Average taxpayers provide more in subsidies to elite public and private schools than to the less competitive schools where their own children are likely being educated. 
  • High dropout and low graduation rates drive up taxpayer costs, so degree completion and retention should be a focus of US higher education reform and state and federal policy discussions. 
  • Business as usual in higher education is too expensive. We need new modes of delivery for higher education to reduce taxpayer costs and rein in tuition.

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AMERICAN ENTERPRISE INSTITUTE FOR PUBLIC POLICY RESEARCH

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