Where this was said
The Origin Story: 'Our Greedy Colleges,' February 18, 1987
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Cory Turner traces the intellectual lineage of today's loan cap policy to a single, remarkably specific date: February 18, 1987. That day, Education Secretary William Bennett — Ronald Reagan's equivalent of Linda McMahon — published an op-ed in the New York Times titled 'Our Greedy Colleges' [1] — Cory Turner "On February 18, 1987, Education Secretary William Bennett published 'Our Greedy Colleges' in the New York Times. He argued that federal stu…" 09:01 . His argument was deceptively simple: federal student aid gives colleges the financial cushion to raise tuition above inflation, because students can borrow more to cover whatever is charged. Economists soon named this the Bennett Hypothesis. The op-ed cited tuition increases of 6% to 8% as evidence, and the claim was framed compellingly. The problem, as the episode will show, is that Bennett made the argument without any real data to back it up — it was, at that point, an untested assumption.
A study of Texas graduate programs found that when federal Grad PLUS loans allowed unlimited borrowing in 2006, schools raised prices by 64 cents for every extra dollar students received. The researchers call it causal. This is the study that Republican policymakers cite most often to justify loan caps.
