Revisiting Bennett’s Hypothesis: The Unintended Effects of Student Financial Aid on the Cost of College

As higher education strives to be more inclusive, escalating tuition costs pose a significant barrier to accessibility. Government efforts to increase federal financial aid aim to mitigate this issue, but according to William Bennett’s hypothesis, such interventions may inadvertently increase college costs. This study investigates Bennett’s Hypothesis with the latest cross-sectional data from the National Center for Education Statistics. Focusing on 2-year and 4-year U.S. public and private nonprofit colleges, the study examines the effects of government and institutional financial aid on the cost of attendance. The analysis is structured around financial aid packaging institutional, charging variances, and financial aid determinants that provide evidence supporting Bennett’s Hypothesis, revealing a correlation between financial aid and rising tuition costs across different types of institutions.