News from VA and MD on plans to hike tuition in the face of budget cuts from state government. The rest of the economy is facing turmoil, but with respect to price, what we see is DEFLATION rather than inflation. So how is it that our colleges and universities with their fat endowments can justifiably seek higher tuition from the public? Well, lets look at the "stimulus" package now wending its way through Congress. Over $6B for colleges and universities, not to mention over $12B for the Pell Grant program. Yes indeed, let's not forget...the more money the federal government puts into the pot for college educations, the more people will have to spend on college educations....and the more colleges will naturally charge.
State governments have largely walked away from their colleges as federal funding became more available. Colleges now seek to gain funding for their operations increasingly through tuition, as the state governments prove less pliant. As long as Uncle Sugar keeps pumping money into the tuition machine, demand will rise and so will price.