CONGRESS RECENTLY passed the College Cost Reduction and Access Act, which will boost college aid by roughly $20 billion over the next five years by reducing loan interest rates and increasing the amount of Pell Grant awards. The media immediately declared "relief" for the hundreds of thousands of parents battling increased tuition costs, while other government officials praised the arrival of a superhero-like savior at a time of crisis.
Despite what Congress would like us to think, the act is neither a panacea for college financial aid issues nor a government gift without significant cost. The money used to finance the current act is channeled from funding cuts of $20 billion in subsidies for private loan providers, substituting greater federal aid for lesser private funds. Critics argue that this will mean a greater dependence of institutions on the government, reducing autonomy and stifling political liberty. Financial reductions must be balanced with their consequential damage to university freedom.
Financially speaking, some college loan lenders have claimed that the act will actually increase the costs of college loans for average middle-income students. Four Family Federal Education Loan Program (FFELP) lenders, for instance, wrote a letter to Congress arguing that the bills for the new act would remove $17 billion in funds previously granted to institutions that would lower interest rates and costs for middle-income students through provisions like special allowance payments.
In the statement, FFEL Program representatives, which form the nation's largest student loan provider, argued "the budget cuts would reduce the government's projected support for the FFLEP over the next five years by around 70 percent." The act, far from being a god-given answer to cash-strapped families, may in fact be disenfranchising a fraction of the population it claims to serve.
In addition to the political and economic costs, it is also important to ask what issues Congress has failed to address in enacting this legislation. While the act is attractive in its nominal funding increases, it is misguided as it provides a resource solution to a systemic, constructivist problem. According to US News & World Report, the main stumbling block to greater financial aid is not the lack of funds, but the lack of reform of an archaic formula which the government uses to calculate financial aid for families in the Free Application for Federal Student Aid (FAFSA).
The magazine takes the government's outdated financial benchmarks to task by pointing out the fact that its measure of how much a family can contribute to tuition fees is based on a family budget from 1967 -- not today. As a result, it does not adjust for changes in family spending patterns, which altered dramatically with the introduction of new technologies and surging federal costs for things like health care. Equally importantly, the system does not account for regional differences that have arisen in the last forty years between states, such as rental fees. Instead of addressing a major cause of financial aid problems, the Act glosses over this and addresses its more proximate causes.
And if proponents of the Act held up the banner of "lower-income families," they might have gotten too far ahead of themselves. The most urgent problem with low and middle income families and financial aid is not whether they receive private or federal funds, but their inability to fill out a FAFSA -- the primary document that determines financial aid -- because of its unnecessary complexity. Just last week, news wire service Reuters claimed that 1.8 million low and moderate income undergraduates did not file a FAFSA for the 2003-2004 school year, and quoted Paul Wrubel, cofounder of Tuitioncoach.com, as saying, "I am absolutely certain that the complexity of the FAFSA keeps the people who need aid the most from applying." The article contained disturbing anecdotal accounts on the hardships people faced when filing for financial assistance: from an Ivy Leaguer headed for graduate school to a second-year university student who was reduced to tears when filling the intimidating 5-page-long, 100-question document. Congress has tried to work on a condensed, two-page version of the document called "EZ-FAFSA", but the process may take over five years, which is much too long.
Colleges and universities must therefore think hard about the political and economic costs of the new act before enthusiastically embracing it. Meanwhile, the government should look into changing its "financial aid formula" to the College Board system, which is currently used by over 300 private schools and is based on government studies on what families buy today as opposed to forty years ago. Similarly, congressmen have a responsibility to ensure that the "EZ-FAFSA" legislation does not languish in Congress for too long because it deals with an urgent issue.
While the media frenzy and political hype portrays the College Cost Reduction Act of 2007 as a cure-all for financial woes, we should step back from rhetoric to understand the reality of the situation. Diverting money from one sector to another does not resolve the fundamental and systemic inequalities that undermine the fabric of education access. Rather than play up hollow legislation, we ought to take our leaders to task on the concrete issues that face members of our community.
Prashanth Parameswaran's column appears Wednesdays in The Cavalier Daily. He can be reached at pparameswaran@cavalierdaily.com.
Read More
EDITORIAL: Carla Williams deserves her seat at the table
By Editorial Board | 2 days agoLooking beyond basketball and football reveals that Virginia Athletics is, in many ways, thriving.
UPADHYAYA: The Great and not-so-Good sides of U.Va.’s 2030 housing plan
By Apal Upadhyaya | 4 days agoInstead of improving the dire state of existing infrastructure, however, the University has shifted attention away from it and chosen to expand.
EDITORIAL: Support low-barrier shelters in Charlottesville
By Editorial Board | 5 days agoInvesting in low-barrier shelters now will pay off in increased stability for the homeless, which will undoubtedly improve the safety of shelters and the community writ large.
