Yesterday scholars met at the American Enterprise Institute to discuss reforming financial aid. But how much can financial aid really fix college affordability?
According to an article at Inside Higher Ed:
The American Enterprise Institute joined the fray on Monday with several research papers on rethinking grants, loans and the student aid system as a whole to focus on college affordability.
The papers, which centered around a theme of “The Trillion-Dollar Question: Reinventing Student Financial Aid for the 21st Century,” focused on a range of subjects — from “promise programs” that aim to help students plan and prepare for college to alternative approaches to student loans and repayment — but aimed to increase institutional accountability, as well as effectiveness for students. They included a look at the historical context for federal financial aid programs as well as the return on investment for federal student aid, and generally emphasized the importance of a research- and evidence-based approach as Congress reevaluates financial aid programs.
It’s called a trillion-dollar question because that’s roughly the total burden of student loan debt in America.
There were nine papers, ranging from one that suggests the importance of improving the “knowledge base” on the effectiveness of federal student aid policies, to another that looks at technology’s role in helping students apply for financial aid, to a third that recommends “moving all student loan subsidies into the Pell Grant program and making the Pell Grant program a true entitlement.”
Some of these reform proposals look interesting, but it seems unlikely any of the ideas can really have much impact on the total burden of student loans, which stem ultimately from the difference between what colleges charge students and what students can actually afford.
When Pell grants, which provide money to help low-income students attend college, were named for Sen. Claiborne Pell of Rhode Island in 1980, the maximum award was $1,750. The average annual cost of a full course load at an American public college that year was $5,600. Today the maximum annual award is $5,645, but the average cost of a year at public college is more than $8,000. The total cost, including room and board, will set a student back more than $17,000 a year. That’s a serious structural problem. “Making the Pell Grant program a true entitlement” won’t fix it.
The problem is that all of this thinking is basically an attempt to reform at the margins of a big problem. It’s true that financial aid under the current system doesn’t work to make college costs clear and keep college affordable for American students, but the reason for this doesn’t really have anything to do with financial aid per se; the problem is the real cost of college is just too high.