“Some researchers argue that government subsidies have had the perverse effect of encouraging colleges to increase tuition so as to capture more federal dollars, an effect known in the literature as the ‘Bennett hypothesis’. To see how this could work, imagine a school that charged $0 in tuition and fees. Suppose that the federal government then offered $5,000 vouchers to pay for college tuition, but only at schools that charge tuition. Obviously, our hypothetical free school is going to increase tuition to $5,000 a year to take advantage of that money. That’s just money on the table.”

http://www.economicpolicyjournal.com/2013/05/the-bennett-hypothesis-why-college.html

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