In a new report and accompanying factsheet, authors Jason Bedrick, Jay Greene, and Lindsey Burke of the Heritage Foundation look into concerns that the recent rapid increase in private school choice programs (vouchers, tax-credit scholarships, and ESAs) in many states will exert inflationary pressure on private school tuition and risk bumping this important educational option out of reach of many families once again.
Those concerns are rooted in basic economics—subsidies in a competitive market almost always lead to higher prices—and are all but confirmed in the higher education sphere. A review of the research literature by the Martin Center in 2017 “suggests that federal student aid increases university tuition rates, perhaps by as much as 60 cents on the dollar.” As of 2017, that research concludes, the price of college tuition and fees had risen an astounding 1,335 percent since 1978. In inflation-adjusted dollars, the national average cost of college tuition and fees has risen 239 percent since 1980.
But is that happening, or likely to happen, in the K–12 sphere? In accord with Heritage’s traditional leanings, Bedrick, Greene, and Burke lean toward no.
Their tuition data come from the online clearinghouse Private School Review, whose mission is to “make private school as accessible as possible” to families by providing free and factual information about schools across the country “and the opportunities they offer.” Among this trove of data is the average overall, elementary, and high school tuition charged in each state each year. Bedrick and colleagues look at tuition changes over ten years—from 2013 to 2023—and first compare rates of tuition inflation in states that implemented school choice policies before the 2013–14 academic year against those that had no such policies until 2022–23. A second comparison looks at states who adopted new choice policies at various points within the decade.
States that had no private school choice policies before 2022–2023—there were twenty-one of these, dubbed “never choice” states—saw private school tuition overall increase by nearly 28 percent, on average, between 2013 and 2023. By contrast, the twenty states plus Washington, D.C., that had adopted school choice before 2013–2014 (dubbed “always choice” states) saw tuition increase by about 15 percent over the same period. The difference was even starker when limiting the analysis to high school tuition. Always-choice states saw high school tuition increase by about 8 percent, while never-choice states increased by a whopping 35 percent. This is simply a descriptive picture of trends, but it immediately cuts against the concern that vouchers and other subsidies will automatically increase inflationary pressure on private school tuition.
For the eight states that adopted private-school choice policies between 2013–14 and 2022–23, the researchers compared the rate of tuition increases, adjusted for inflation, before and after the policies were adopted. On average, the annual change in tuition in those states before adopting school choice was 2.1 percent, while the average annual change after adopting school choice was -1.5 percent. In other words, the rate of change in tuition actually decreased. As one extreme example, the rate of tuition inflation in Kansas prior to adopting school choice was 8 percent; after adopting school choice, that rate was -4.4 percent. This seems stunning at first glance, but read on for another take.
One additional point to consider: Even in those states where tuition continued to increase following the introduction of subsidies, the boost was generally less than the rate of inflation, which is tantamount to actually cutting the cost in terms of families’ household balance sheets. The most significant declines in tuition inflation were seen at the elementary school level, with smaller and non-significant reductions at the high school level. Bedrick and his colleagues are quick to point out that these findings do not represent schools cutting tuition in response to vouchers and other subsidies. Rather, they are indications that the competitive market pressures introduced by school choice hedge against any inflationary pressure that may result from parents’ increased purchasing power.
Simply put, this analysis indicates that the astronomical increases seen in the higher education sphere are unlikely to occur in the K–12 sphere. The researchers speculate that it’s because school choice subsidies in all forms tend to be worth more, on average, than the cost to the private school of enrolling one additional child—even where the scholarship values are less than the private schools’ average cost per pupil. When private schools get additional revenue from choice subsidies that exceed their marginal costs, it reduces their per pupil cost and allows them to keep tuition low. In higher education, there are far more tuition supports at play which add to the pressure. This is more pronounced in elementary schools (larger and more numerous, with more extra seats) than in high schools (smaller and fuller), which is also borne out in the data. The same dynamics are not at work in higher education.
But we cannot ignore several caveats shouting out here. First is the use of a single average tuition rate across a whole state. Huge variation will be seen from cities to small towns to rural areas based on supply and demand. The averages are useful to a point, but not always in accord with the sticker prices families really have to pay, ESA or not. Second is the fact that those averages include many schools that don’t take ESAs or vouchers even if they exist. Ohio is the poster state for that situation, with its priciest (and best) private schools usually not accepting voucher students due to the dollar amounts far below their big tuition bills. Third is the fact that a state “having private school choice” is likely too simplistic a metric for such an analysis. Kansas, singled out above as an exemplar of the authors’ conclusion, has only a small tax credit scholarship with minimal funding and low participation even today. A rigorous analysis cannot equate that with the far more robust private school choice landscapes in, say, Ohio or Florida.
This analysis is a start, but more and better is required to really answer the important questions raised.
SOURCE: Jason Bedrick, Jay Greene, Ph.D., and Lindsey Burke, Ph.D., “Does School Choice Affect Private School Tuition?” Heritage Foundation (August 2023).
