If you got a $9000 voucher to help pay for a $16000 school, then it would only cost you $7000.
This sounds good, except that most private schools will just turn right around and raise their tuition by $9000.
Being unaffordable is kinda the point of many private schools. If they were affordable, then anyone could go there. <shudder>
Given that most elite privates have admissions percentages around 10%, and could probably double their rates as a result, I cannot agree with this.
The Tier 1 privates in the DFW area actively recruit among the poor and minority communities with over 1/3 of their student bodies coming from the bottom quartile economically.
They also do not accept many bright kids whose parents have tons of money.
If a school is built to handle 600 students, and is already near capacity, then they have two choices:
1) Build.
2) Keep enrollment at 600.
If they build, they need money for construction, which they would easily raise and justify through increased rates. And the parents wouldn't care, because it's not coming from them, it's coming from the state. Sure, a lot of them would be disgruntled that the savings weren't being passed on to them, but if you were already committed to paying full tuition before the voucher, oh well.
If they keep enrollment the same, then assuming they're a for-profit, they can raise profits based on simple supply and demand fundamentals. There is an increased demand for their services thanks to vouchers, there is still a limited supply of 600 seats, and they'd be stupid not to raise rates.
If they keep enrollment the same, but they're a non-profit, then they can still raise rates based on supply and demand, only they'd use that money to upgrade technology, take more field trips, and pad the salaries of the people running the place.
I'm having a hard time coming up with a reason why schools wouldn't raise rates at least somewhat if a boatload of money was suddenly thrown at them. And it's a time-tested economic effect in tons of markets throughout history... the US housing market being the most recent example.
Sure, this only works if you're near capacity. If you're a school built to hold 600 and you've only got 100, this isn't necessarily an issue. But since the free market has a way of punishing businesses who operate this inefficiently, I think you'll find they're the exception, not the rule.
