Posted on 04/07/2009 1:57:42 PM PDT by BuckeyeTexan
Nanny-state student-aid programs significantly contribute to the ballooning cost of college tuition. So says a report out this month from the Center for College Affordabilty and Productivity.
Financial aid programs are supposed to improve access and affordability in higher education. The effectiveness of these programs is increasingly being questioned as college attainment figures stagnate and the financial burden on students and families continues to climb year after year. This report identifies the main culprit for this unsatisfactory state of affairs as a misunderstanding of the effect of financial aid on schools.
Currently, financial aid programs take costs per student as a given, and attempt to offset some of those costs. However, costs are not given. In fact, it is widely acknowledged that colleges and universities are engaged in an academic arms race. Thus, when financial aid programs make more money available to schools, this money is spent and results in higher costs per student. The end result is more costly higher education, generally accompanied by higher tuition, which has negative implications for access and affordability.
Financial aid that is restricted to low-income students (allowing them to pay current costs at their school) will not materially contribute to the arms race. The effect of such aid will be to improve access, affordability and equality of opportunity. However, when aid is made available to students who can already pay the current costs, the schools are likely to capture the aid money and spend it – which contributes to the arms race.
Thus, to avoid providing fuel for the arms race, financial aid needs to be well targeted. Current finan- cial aid programs generally do not meet this requirement. State appropriations and other lump sum payments are particularly bad in this regard, as are the federal tax credits. When income limits on federally backed loans exist, they are generally too high. The only large program that does not contribute to the arms race is the means-tested Pell grant program.
This report therefore argues for the elimination of most current financial aid programs (including state appropriations) and for the creation of Super Pell grants. A revised student loan program would likely be needed to fill any funding gap.
Read the full report here.
I take it fore and aft for working and succeeding, and so do my children. There are many enterprises, educational, governmental, and private, they will have to avoid working for because of the new white glass ceiling.
Getting mad as hell.
I believe that the viewpoint of the article is wrong. The reality is that tuition costs are set to a level of “all the market will bear” plus delta. The expectation is that a large portion of the student community will receive some form of aid or “discount”.
Consider that when you apply to a university they expect you to list all your available resources. Then the actual bill is adjusted based on your ability to pay. The whole billing structure is based on Marxism; i.e., from each according to his means.
Would you buy from a car dealership which required you to provide a list of all your assets prior to negotiating with you?! [Actually, it comes close given that they require enough information to run a credit check unless you plan to get your own financing.]
I work in a Financial Aid office. Total cost of attendance last year was 16,800 for instate students, out of state 28,000. Thanks to the TOTUS full Pell Grant has increased 1000 dollars and they raised the minimum EFC 1,000 (making more people eligible). This years total cost of attendance came back... 1000 dollars higher. Did I forget to mention that the national Pell grant deficit (program shortfall) should reach 8 billion dollars this year.
Should be easy to fix just print more money...
If you subsidize it, you will get more of it at a higher cost.
The article addresses the points you raise and factors them into its consideration and conclusion. I provided only the executive summary. The full report is at the link.
Direct and to the point. Excellent summary!
before student loans, the cost at arizona state was $250 dollars a semester for in-state. also they didn’t charge fees except for parking.
29 years later, (and student loans) the cost is over 3000 per semester, with lots of “fees” tacked on.
i have a relative who attended a private university in phx, a very good one. however, she was obtaining a BS degree that could not fully be utilized until she obtained a master in the subject.
graduates with the BS degree could expect to make around 20K per year. the cost of the degree was 40k.
i see a problem with that.
If you pay more in income tax than the tuition, forget about financial aid. Study the financial aid requirements carefully because the college/university will look at you net worth and cash flow. Go into debt, buy a big house and a new car and reduce any assets which can be turned into cash. They let your child apply to the school. He most likely qualify for aid. (I am not sure about the new car now.)
The only exception is when you have two or more children going to college at the same time. Even MIT recognized that you would need some support.
But my point is that it is not the student aid which pushes tuition costs, the tuition costs are pegged artificially high with the full expectation that the price of tuition will be discounted by student aid.
The universities are playing both ends against the middle. By setting the price of tuition really high, they can bilk as much money as possible from each incoming student. Then, they can turn around and bilk foundations, the government, and do-gooders to “make up the difference”. Higher education is a scam!
Nothing costs less than the amount it is subsidized for.
Easy credit ends up raising prices, since there is no accountability or reason to control costs.
Tom Paine is exactly right. Liquidate cash assets, both parents and students(important). Decrease your AGI. the less capable of being self sufficient you are the more the government wants to help you remain that way.
Bounce financial aid questions my way I will do my best to help you.
They also need a steady stream of empty brains to feed to the gender-bisexual-africanamerican-queer-latino studies departments to justify their existence and salaries.
Most importantly, they need the dumbest to enter the Schools of Education so they can propagate their dumbness and leftist prop to the next generation.
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