George Washington University's Stephanie Riegg Cellini and Harvard's Claudia Goldin have a new working paper out from the National Bureau of Economic Research under the title "Does Federal Student Aid Raise Tuition? New Evidence on For-Profit Colleges." Contrary to the usual rules at newspapers, the reason the headline is phrased as a question isn't because the answer is "no." From the abstract:
Many for-profit institutions that are not Title IV eligible offer programs and certificates that are similar, if not identical, to those given by institutions that are part of Title IV. We find that the Title IV institutions charge tuition that is about 75 percent higher than that charged by comparable institutions whose students cannot apply for federal financial aid. The dollar value of the premium is about equal to the amount of financial aid received by students in eligible institutions, lending credence to the "Bennett hypothesis" that aid-eligible institutions raise tuition to maximize aid.