I read the linked to article below about federal financial aid with some interest since I am a retired chief financial officer for a small private college. I would add to what has occurred a less charitable interpretation than the Law Unintended Consequences. The following story illustrates my point.
As part of applying for participation in federal programs each year colleges prepare sets of student budgets. These then appear in the award letters. The Department of Education when analyzing the student and family data provide an expected family contribution. The difference between the budget and expected family contribution the college then attempts to fill up with grants and loans. In most cases, at least for privates, there remains an unmet need. However, students still successfully complete the school year. I analyzed this figure annually to hold financial aid people accountable for adopting standards for awards which took into account reasonable measures (they didn’t think so) of this unmet need for the next year.
Now came the American Opportunity Credit and Lifetime Learning Credit that were supposedly of direct benefit to the student and their parents. I plugged those into the figures for unmet need to require greater average contributions and lesser awards by the college. I made sure the student and their parents were conduits for and not recipients of the majority of these tax benefits.
This story illustrates how college financial people have behaved ever since the feds started throwing money at colleges. Similar information has always been part of the pervasive public knowledge available to legislators considering policies for Pell, SEOG, Guaranteed Student Loans, PLUS Loans from parents, etc. Evidently since I retired 15 years ago, politicians have hugely increased the amount students and their parents can borrow.
There was always any number of professionals who were available to testify concerning the inevitable consequences of these programs; that the major consequence would always be an unbounded increase in college costs.
Such individuals were ignored and/or never given a forum. The programs were just too attractive to assist in re-election. I would propose the LAW OF PREMEDITATED IGNORANCE to account for this phenomenon.
Federal Student Aid and the Law of Unintended Consequences
http://eagleforum.org/publications/educate/sept12/federal-student-aid.html
I agree 100% with your post. Also, in addition to federal loans there is the private student loans students and parents take out to pay the bill. Some debt is to be expected, piling loans upon loans and allowing parents to borrow almost unlimited amounts is a disaster. You would think parents would know better. We told our own daughter that we would pay up to the cost of a state school— out of our hard earned savings. When visiting schools she was encouraged to take out the max in loans and to have us do so as well. Right now she seems quite happy to be at the school that gave her a decent scholarship and kept us paying what we had agreed to. One school we visited made her feel like we were short changing her by not agreeing to pay an outrageous amount, by any means possible. But she’s now very happy where she is.
Government made money easy to get to go to college so college got a lot more expensive. The same thing happened with houses in around 2005. People later walked away from their houses but they can’t as easily walk away from their college debt.
It is pretty simple, if more money isn’t hard to get you can essentially “afford more”. More demand, higher price. This squarely lands at the feet of government and good intentions without regard to consequences.