Harvard University recently announced it would make tuition free for students from families earning below $200,000—but for middle-class students not lucky enough to receive a Harvard acceptance letter, college tuition is still far too expensive. As a solution, many have proposed significant increases in taxpayer-funded financial aid to reduce or even eliminate tuition for many students. This notably includes the movement to double the federal Pell Grant, which advocates claim has lost its “purchasing power” over time.

This narrative is misleading. In fact, policymakers have made financial aid programs such as Pell Grants far more generous over the last 30 years. But according to new research from the American Enterprise Institute, these new investments haven’t yielded the desired results.

In the 1989-90 academic year, the average college student received an annual financial aid package worth $1,700 (in today’s dollars) from sources outside their institution, including the federal government, states, and private scholarships. By 2019-20, however, the average financial aid package had tripled, to $5,300. The neediest college students—those with family incomes below $50,000—receive more than $11,000 per year in noninstitutional financial aid.

The intention behind these financial aid increases was to make college more affordable. Yet net tuition prices, rather than falling as anticipated, continued to climb.

In 1989-90, the average student paid $4,900 in tuition (in today’s dollars) after subtracting all grant and scholarship aid. By 2019-20, net tuition had nearly doubled to $9,400—despite the generous increases in taxpayer-funded financial aid over that time period.

Rather than passing those increases in financial aid awards such as Pell Grants and state grants along to students, colleges simply absorbed them by charging higher prices. In 1989-90, colleges collected $6,600 in revenue from the average student (out-of-pocket tuition payments and financial aid from external sources combined). But by 2019-20, colleges collected an average of $14,700 per student.

High underlying costs, rather than insufficient aid, are the culprit for the steep net tuition prices that American students pay. Colleges’ underlying spending per student—on salaries, facilities, and administration—is higher in the United States than any other large country in the developed world.

To be sure, net tuition might have been even higher today if lawmakers hadn’t made financial aid more generous over the last 30 years. But it’s likely that when they voted for more generous aid packages, lawmakers were expecting net tuition to fall. Yet despite three decades’ worth of financial aid increases, net tuition today is much higher than it was in 1990.

These facts—financial aid packages have swelled, while net tuition hasn’t come down—raise an interesting question. What if colleges had frozen tuition in real terms at 1989-90 levels and allowed subsequent increases in financial aid to fully pass on to students?

Recall that in 1989-90, colleges collected an average of $6,600 per student (in today’s dollars) in out-of-pocket tuition payments and external aid put together. If college revenues remained frozen at the same level in 2019-20, rising only with inflation, the average external financial aid package of $5,300 would have pushed average net tuition down to just $1,300 per year.

Among public four-year colleges specifically, the average student attending one of these institutions would have free tuition today. Lower-income students would be able to apply a big chunk of their Pell Grants to living expenses rather than tuition. Progressives’ dream of free public college would have been realized, if only universities had kept tuition costs under control.

Financial aid to help lower-income students attend college is good. But generous financial aid increases over the last 30 years have not solved the problem of college affordability—not even close. The fault for high tuition does not lie with a stingy financial aid system, but with colleges that have allowed their costs to rise relentlessly above the rate of inflation. Runaway college costs have steered those rises away from students and towards colleges’ bottom lines.

Policymakers should therefore approach plans to dramatically increase aid in the hope of bringing down tuition with caution. Instead, they should pursue policies to bring down the high underlying costs of college, such as reining in administrative bloat, limiting federal subsidies to high-cost colleges, and opening up the higher education market to more competition. If these policies bring tuition down, existing financial aid will cover a greater share of it—achieving the goal of college affordability that has so long eluded us.