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Study challenges financial aid practices
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by Lee Lowenthal
Wednesday, February 16, 2005
A recent study published by a Hillsdale College professor is challenging financial aid programs in higher education.
The study reports that the number of qualified financial aid applicants has risen from 7 million students to 11 million since 1996.
To try and match this influx of aid-seeking students, the Bush administration will spend nearly $73 billion in an attempt to assist college students attend school in 2005.
The study, titled “Making College More Expensive: The Unintended Consequences of Federal Tuition Aid,” suggests that because a larger volume of students are eligible to attend college through increased financial aid programs, the overall price of college tuition has been forced to rise.
“By giving money to kids who wouldn’t otherwise be able to afford tuition, [colleges and universities] have essentially bid the price of tuition up,” Gary Wolfram, the professor who published the report, said. “If [colleges and universities] would only give to certain people, the price would go down. We should examine all the unintended consequences that may occur [because of financial aid].”
Through his study, Wolfram said he ultimately wanted to create debate before the re-authentication of the Higher Education Act, which is federal legislation intended to provide financial assistance to college students
“Financial aid certainly brings in more students,” University of Wisconsin assistant professor Sara Rab of the Educational Policy Studies department said. “[However, the rise in tuition] is not necessarily just because of financial aid.”
Rab said many other factors must be considered when trying to determine why tuition may increase at a certain school.
“A demographic shift would drive a cost change. Construction of a new gym would increase costs as well,” Rab said
As a response to the increasing cost of college tuition, Wolfram proposed a variety of ways to gradually decrease such lucrative tuition prices.
Wolfram’s principal proposal is a “human capital contract system,” in which an investor pays a student’s tuition, and in return, the student pays dividends to the investor by giving away a portion of his or her post-college earnings for an assigned period of time.
However, Rab said though Wolfram’s idea is creative, it does not reflect how higher education operates.
She said if students had to pay back such high tuition bills, they “would feel the need to get lucrative jobs, discouraging them to do what they truly want to do.”
Another of Wolfram’s ideas suggests the federal government should have no role in making decisions on matters of tuition.
“If you get the federal government out of the system, the market will efficiently [balance out],” Wolfram said.
Rab said relying on states for funding is a bad idea.
“We can’t leave it up to the [discretion] of the states,” she said. “Wisconsin doesn’t have any money, thankfully we have the federal government to give us [aid].”
