Here are the facts, according to a recent study as summarized by cnnmoney.com:
Oh, and
And we wonder why tuition is skyrocketing?! Rises in aid have caused rises in tuition have caused rises in aid. Anyone else perceive a terrible, dangerous, never-ending cycle??
If I ran a college I would increase tuition every year, too. Why not? There's no danger of demand decreasing--in fact it is sure to continue to rise. As the population grows and as more jobs require a college education, the college degree will only become more mandatory and ubiquitous. Usually when that happens to a product or service, prices go down. Consider the normalization of cell phones, computers, stockbrokers, and air travel.
Universities are somewhat different because of very high barriers to entry and other factors, but still: imagine the impact if the US government had decided that laptops were so important that everyone should be able to have one. They pledged to provide grants to anyone who really couldn't afford one, and they voted to subsidize special loans for those who needed help affording one. Guess what would have happened to the price of laptops? They would still be going up! My old Dell might well have cost $10,000.There's no danger of pricing people out of the college market because the government has promised to pay for anyone who can't afford it!
So what do we get? Well, John, you've won a lifetime of rising tuition costs that far outpace inflation, BUT THAT'S NOT ALL! You'll also get a lifetime supply of increasingly higher tax rates in order to pay for it!
Universities do have one problem though: trying to figure out how to spend all that tuition money...they already spend millions on landscaping each year, have technology rivaling our government agencies, provide sports equipment and facilities that rival a unique combination of the Olympic Games and the worlds' finest resorts (and that's for the non-athletes), spend millions on marketing, have dozens of dining and retail options, and have littered the campus with state-of-the-art libraries/galleries/museums which are seldom (if ever) entered by the majority of students. I wouldn't be surprised if solid gold statues and diamond encrusted school logos start popping up.
We need to take a serious look at the government's involvement with higher education. Federal aid in any form is supposed to be for a small minority of people who really need it: the impoverished, the disabled, etc. If three out of every four students can't afford college tuition, then it's ridiculous for the government to be keeping those prices high by providing aid for everyone! I guarantee that schools would find a way to lower tuition in order to maintain a thriving student population if the government gradually lowered federal aid availability.
October 22, 2007
Financial Aid for College = Higher Tuition Costs
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12 comments:
"Two out of three students received federal grant aid" Please cite that source better. I clicked the article, and it didn't seem to say that at all. I'd be surprised if that were true.
What are you suggesting here? Do you think federal aid is a bad idea? I'm not sure I get your point.
I work at a private college and we are not rolling in dough trust me! Just wait until 2012 when the class size drops on undergraduate students, a lot of colleges will be going deep into the red.
The money is in online graduate degrees, the undergraduate degree is break even costs.
The first sentence of the 7th paragraph is "About two-thirds of full-time students receive grant aid." That paragraph is about "total federal grant funding," and goes on to discuss trends over the last few years.
I am suggesting that the fast majority of current federal aid is a bad idea. Obviously there should be aid available in certain circumstances, but I think those circumstances should be more strictly defined and issued under strict parameters.
For instance, very poor students who have made good grades in high school AND who have demonstrated aptitude for college level coursework should be able to apply for aid if they have very limited financial resources.
But aid should only be given along with requirements such as maintaining certain grade levels, staying out of the judicial system, graduatin in a timely manner, and taking a certain course load, for instance.
You might think such parameters exist, but they do not. When I went as a freshman to my university's administrative building to collect my first tuition invoice, I noticed that I had received a one-time grant of around $2000. BUT I NEVER APPLIED FOR ANY FINANCIAL OR SCHOLARSHIPS AID WHATSOEVER.
You don't seriously believe the cost of college is growing much faster than inflation because of government grants.
Please tell me I read this wrong and you're being sarcastic.
I do believe that federal aid has been a major source of tuition increases over the last two decades. It's not the only factor, but it's a big one. I have personally talked to admissions office representatives who admit that a primary part of their jobs is to make sure that they qualify for and receive the maximum amount of federal funding possible. An easy way to do that is to make sure that a high percentage of your applicants cannot afford tuition.
As I reported above, I received a grant from my school when I 100% did not need it or ask for it. I was paying for college in cash! I had already written the tuition check! They DEDUCTED the grant money from what I'd already paid and I was actually issued a REFUND. I wonder how many other students had a similiar experience...that's a lot of tax dollars
My bad, I didn't read the article carefully
I still think that statistic is bogus (i googled looking for a different source and found much lower numbers), but you are right, it is there.
Are you certain your grant was a federal one? Pell grants are not easy to qualify for. There are income limits.
Also, my sister did bad her first year of college, and was not able to receive any federal loans for several semesters until things improved. In fact, she still may be out of luck.
It's nice to hear different thoughts, but I disagree so completely!
Do we really WANT people to be "priced out" of college, especially bright students? How will the USA compete with other nations?
sjean,
The problem is that students ARE being priced out of college because of rising tuition rates -- with the added burden of higher taxes when they start working. As long as aid keeps rising, colleges will raise tuition. Already today much of the middle class is priced out of top-tier expensive schools. Mainly rich kids and a few token poor kids get to go.
Here's another idea. Rather than cut federal aid, how about we make it available only for state schools at in-state tuition rates. Nobody *needs* to go to MIT and pay $40,000 a year for an undergrad degree.
Since state tuition rates are already supported by states themselves, how about we make state schools free and give them no legal authority to charge tuition. That way the only way to raise more money is to get tax payers to agree to it. The federal portion could be indexed to inflation.
Very interesting post meg!
lol! I just commented on piggybank blues about this argument... I got in a heated argument with someone who took your position. I respectfully disagree with you and with the guy I argued with. It's a compelling post and argument, but I don't think it's right. I agree with other commentors that subsidies and loans need to be available to students in order to keep higher education accessible. If it were me, I would crack down on the universities business practices. They are after all, mostly non-profit agencies. If they're raising tuition and lavishly spending the money, then perhaps (like many other people say), they should be checked out. They also get massive tax breaks that may not be warranted. Of course, each university is different and there are most likely good actors and bad actors. Regardless, I know that universities have enjoyed a lack of regulations that most businesses would envy, so comparing them to the general market is a bit like apples and oranges, in my opinion.
Great post!
Sjean-If 3/4 of all students get aid for college, then the majority of people HAVE been priced out of it--and we as a nation are collectively picking up the slack. The problem is that no one is looking at the cost and deciding whether or not it's reasonable like an individual or family would. Instead the government has issued a blank check to schools and just pays whatever bills roll in.
And no I'm not sure what kind of grant I got-but I bet if my school was handing them out it was directly or indirecly funded by the government. No rational entity or person ever gives away money for nothing.
Jon-thanks for your comments! I like the idea about only giving aid to public schools; I've rolled some version of that idea around myself. I don't know exactly what could be done or what needs to be done--my goal is just to get people talking about new ideas. The current system just isn't fair and it isn't going to keep working indefinitely.
Ms. M&P-I totally agree with you that universities should be highly regulated (or at least somewhat regulated, for a start) if they are going to receive such significant tax breaks and subsidies. But the problem is that our enormous, bureaucratic government isn't very good at regulating, well, anything. I think people are always better at spending their money than a government agency. And after all, that premise is the foundation of our American system.
I also agree with you that universities aren't like other businesses and can't really be analyzed as such. They don't really operate in a free market due to all the government subsidies and tax breaks--and yet they are allowed to set their prices as they wish, like any capitalistic business. That's ridiculous, and it's why tuition will only continue to go up without reform.
Are you sure you're not confusing grants from the colleges with grants from the federal government? The grant you got, for example, definitely didn't come from Uncle Sam--to get one of those, you have to fill out a ton of paperwork, and there are strict income limits.
Colleges are not really accountable for their tuition increases. I suspect that there is a lot of frivolous spending involved but no one ever focuses on this so they continue doing it.
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