Jordan Weissmann points out that, if the government slashed aid to private colleges, it could “cover the tuition bill at every public college in the country”:
With the money that’s either going to private colleges, or or being paid to the public sector in a roundabout way via tax breaks, we could probably make tuition at public institutions — which educate about 76 percent of American undergrads — either free, or ridiculously cheap.
Daniel Luzer pushes back:
Any attempt to move all federal aid directly into state universities would result in a vast and angry outrage (and lobbying efforts) from America’s private universities (not to mention for-profit companies that offer higher education).
“You’re cutting off aid to poor students,” they’d complain. And they’d be right. The reality is that while Princeton or Amherst could continue to exist fairly well without federal financial aid, University of Phoenix would go bankrupt. Also destroyed under this plan would be a huge swath of small private colleges that educate many middle and working class Americans.