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ERIC Number: ED536151
Record Type: Non-Journal
Publication Date: 2012-Feb
Pages: 32
Abstractor: ERIC
Reference Count: 23
Introducing Bennett Hypothesis 2.0
Gillen, Andrew
Center for College Affordability and Productivity (NJ1)
A quarter of a century ago, then Secretary of Education William J. Bennett made waves by declaring: "If anything, increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase." From that point forward, the notion that increases in financial aid cause increases in tuition has gone by the moniker of the Bennett Hypothesis, and its validity has been hotly debated ever since. Many within higher education view the idea as preposterous. At the same time, many observers of higher education view it as an accurate depiction of reality. Scholars have found evidence that contradicts the notion, but they have also found evidence that confirms the idea, which has allowed both opponents and supporters to claim vindication. In this paper, the author argues that all the mixed evidence and subsequent controversy is a consequence of an overly simplified view of the Bennett Hypothesis. Tweaking the concept to account for a more realistic view of who receives financial aid, the actions available to colleges, and the nature of competition in higher education leads to predictions that are more consistent with the data than the original hypothesis or its antithesis. The three refinements are: (1) All Aid is Not Created Equal; (2) Selectivity, Tuition Caps, and Price Discrimination are Important; and (3) Don't Ignore the Dynamic Story. These three refinements not only help explain the mixed empirical evidence, but also provide a better understanding of the relationship between financial aid and tuition. (Contains 8 figures, 1 table, and 55 footnotes.)
Center for College Affordability and Productivity. 1055 Thomas Jefferson Street NW Suite L 26, Washington, DC 20007. Tel: 202-621-0536; e-mail:; Web site:
Publication Type: Reports - Descriptive
Education Level: Higher Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: Center for College Affordability and Productivity (CCAP)