Affordability

By Art Hauptman

Current arrangements for providing financial support to college students and their families in this country are not meeting many of the objectives for which they were intended. The Spellings Commission summed it up well in its final report: "The entire financial aid system - including federal, state, institutional, and private programs - is confusing, complex, inefficient, duplicative, and frequently does not direct aid to students who truly need it." As a result, the Commission and a number of other groups with wide ranging political agendas have recommended that "the entire student financial system be restructured". But what would that entail?

Since first established in the 1960s, the federal student aid programs of grants, loans, and work-study - in concert with state, institutional, and private efforts - have provided access to a postsecondary education for millions of Americans who otherwise might not have had enough funds to attend. More recently, federal tax offsets against current tuition expenses and tax-preferred incentives for college savings serve as an important source of financial relief for hard-pressed taxpayers from a range of incomes who worry that they will be unable to pay the constantly mounting bill for tuition and other expenses.

Myth: An individual mandate would force families to forgo other necessities in order to buy health insurance.

Fact: All existing mandate-centered reform plans include subsidies for low-income people to ensure affordability, and insurance reforms to make health insurance markets work for all Americans.

Over the last several months, the student loan industry and its allies on Capitol Hill have led a campaign to persuade the news media and policymakers that Congress went too far last year when it cut taxpayer subsidies to lenders that participate in the Federal Family Education Loan (FFEL) program. The lenders and their friends argue that the subsidy cuts and tightening credit markets now are leaving students in jeopardy of losing access to federally guaranteed student loans. Don't believe it.

Recent announcements by Harvard and Yale universities to expand financial aid are good news for the small number of students helped, but do little to dispel the impression of an ivory tower still removed from regular people.

Here’s a primer for those who may have missed the flurry of media coverage on the Ivory aid plans. Harvard’s plan, announced in December, would spend $22 million to cap parental contributions at 10 percent of income for all students coming from families making between $120,000 and $180,000 a year. Yale’s new policy, released on Monday, is slightly more complex, using over $24 million to cap parental income contributions to less than 10 percent for families making $120,000 or less, while significantly reducing expected contributions of families making between $120,000 and $200,000. The Yale plan would result in reductions of one-half to one-third for affected families.

Yesterday, a key Congressional education committee took a groundbreaking albeit modest step on a top flight concern of parents and students - ever escalating college tuition.

For years, the federal government's main role in higher education finance has been to…

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Responding to our coverage of last week's higher education reconciliation bill, Cato's Neal McCluskey asks, "How can you love an auction because it supposedly uses market forces, while simultaneously supporting the gargantuan market distortion that is the overall federal student aid system?"

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

The U.S. News & World Report's annual ranking of colleges and universities, "America's Best Colleges 2008," was published last week with typical fanfare. High school students and their parents likely flipped immediately to the "top schools" ranking, where they found-gasp!-that Princeton University earned the top spot…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

The New York Times has Higher Ed Watch reconsidering our thinking on why college tuition is going up. Our hypothesis had been that skyrocketing tuition is driven by the combination of: (1) declining state support for higher education, and (2) an "arms race"…

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Over the next couple of weeks, Higher Ed Watch will offer Congressional Democrats, Republicans, and the Bush Administration political and detailed policy advice on how to increase college affordability. We begin with a political lay of the land, because it's where policy begins and ends.

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Bush Signs Bill Limiting "Eligible-Lender-Trustee" Kickback Scheme

On Saturday, President Bush signed the Third Higher Education Extension Act of 2006, H.R. 6138, into law. The extension bill authorizes programs in the existing law until June 30, 2007.…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.