Julian Adorney

However, even here the picture is muddled, because students who enroll in college and don’t graduate aren’t helped, and low-income students are disproportionately less likely to graduate. Spotlight on Poverty points out that among low-income college students, only 25 percent graduate. Students who get Pell grants and don’t take out any loans but don’t graduate are only out the time and wages they would have earned if they’d been working instead.

But low-income students who take out federal loans to attend a college they don’t graduate from still have to pay those loans back. They’re saddled with debt, but don’t have a degree that might help them pay it off.

But even they are not the whole picture. Federal financial aid hurts many other students. Most student aid is means-tested, meaning it goes primarily to poor recipients. According to CNN, Pell grants, the most direct form of federal aid, go primarily to families making under $45,000 per year. While families making more than this can receive federal loans or other aid, it’s rarely enough to offset the higher tuition driven by this aid in the first place.

Let’s say that Peter’s family makes $50,000 per year, rendering him probably out of luck when it comes to Pell grants. Peter wants to attend University of Maryland, whose tuition has been driven up by federal aid by (say) $4,000 per year. Federal aid then hurts Peter to the tune of $4,000 per year. He can offset some of this with loans or other aid, but it’s a poor substitute. That might force him to go to another school, with lower tuition but also lower quality staff. Or it might force him to take out more loans to pay for school. Either way, the negative effects are significant.

The second group hurt by federal aid is, paradoxically, some poor students. Many are deterred by the high sticker price of college. Pell Grants and other aid are available to students who know how to get them, but as Cottom points out in The Atlantic, the process is a bureaucratic maze. “Poorer students need financial aid to afford college, but are more likely to come from schools, families, and communities that cannot guide them through the process.” Moreover, Cottom argues, “the questions often require parental help, which can hurt poorer students whose parents are in jail.” (http://www.slate.com/articles/life/counter_narrative/2013/11/fafsa_federal_student_aid_benefits_go_to_the_middle_class_not_the_poor.html). Federal financial aid burdens the poor with higher tuition, but often doesn’t provide the aid to offset the burden.

(this would be where you talk about dropouts with debt)

As tuition continues to rise and graduate’s earnings decline, the college bubble is moving towards a painful burst (http://online.wsj.com/news/articles/SB10001424052702303933104579302951214561682). The solution isn’t more financial aid, which drives up tuition and hurts more families (even low-income ones) than it helps. What’s needed is a free market in higher education to lower tuition prices and truly help students.


Julian Adorney

Julian Adorney is a Young Voices Advocate and is majoring in English and Advertising at the University of Colorado at Boulder. Julian’s written for the Foundation for Economic Education, the Ludwig von Mises Institute, Junior Scholastic magazine, and Speak Liberty Now.