I would also point out some of the majors that students receiving this funding have declared. I read an article a few years ago dealing with the astronomical debt that college graduates were leaving with after their stint was over, and it blew my mind how many liberal arts majors were hitting the work force with $50,000 in college loans.
I feel that if we are going to continue to subsidize education, we need to ensure that society as a whole will benefit and maybe add some more computer/information systems based degrees as opposed to some of the useless degrees that many are graduating with.
Yes, on another education post I pointed out that Pell grant wasn't equal to work study which wasn't equal to loan, although financial aid offices treat them that way (by law).
Where I went (University of Michigan) in the mid-1980's, if you got work study, you were not guaranteed a job. (Students were not told this fact until after they enrolled) If no professor/staff member wanted to hire you, your work study grant was worthless. I always thought the aid ought to go to the student rather than the school. So if you got a $1000 work study grant, and say, 4 or 6 weeks down the road, you realized that you weren't going to get hired, you could at least get the federal portion ($750).
I also conjectured that the cost of guaranteeing a loan might be somewhere around 10%. Now with the loan program, there are lenders of last resort (too bad there aren't employers of last resort, but that's another story). So if you got a $750 grant and that wasn't enough to go to school on, you could parlay it to a $7500 loan.
However, I now realize that the cost of guaranteeing a loan is far higher than 10%. In addition to covering defaulted loans, the gov't also has to pay the interest while the students are in school plus 6 months, and then they give the lenders an additional subsidy to boot. (I assume this is at least the difference between the market interest rate and the student loan interest rate, but I could be wrong.)
So I don't know what the true cost of guaranteeing a loan is, but you would think covering interest for say 2 or 3 years would be at least 10%.