Increased federal student aid, especially to middle-class families, is contributing to the rising cost of higher education, a report by the Center for College Affordability and Productivity says.

The report concludes that federally backed loans should be offered to only low-income families, not expanded to help more middle-class families, and that “the expanded tuition tax credits in the 2009 stimulus bill are probably a step backward.”

The reason, says Andrew Gillen, the report’s author and the center’s research director, is that colleges are engaged in an “arms race” to outspend one another, and any extra money that comes in from federal student aid only encourages them to spend more. Right now, colleges have access to students’ financial information from Free Application for Federal Student Aid forms, so they know how much each student can afford to pay and can therefore charge each student the highest amount possible without causing that student to have to drop out.

Colleges do this, Mr. Gillen says, because higher spending often helps them raise their prestige through rankings such as U. S. News & World Report ratings that are in part based on spending per student.

Mr. Gillen makes several suggestions. First, he writes, the government needs to determine student need in a simpler way than it does now and without telling colleges what it finds. It then should determine the cost of educating a student — the Delta Project recently concluded it costs about $10,000 at a community college and $15,000 at a four-year college — and the student should be given a “super Pell” grant that makes up the difference.

Colleges would then have an incentive to keep costs closer to the $15,000-per-year range, leading to more students’ being able to afford college without federal aid. —Megan Eckstein