Student-aid objectives in dire need of reassessment

U of Ideas of General Interest ó June 1998
University of Illinois at Urbana-Champaign

Contact:
Craig Chamberlain, Education Editor
(217) 333-2894; [email protected]

FINANCING COLLEGE
Student-aid objectives in dire need of reassessment, professor says

CHAMPAIGN, Ill. ó Expanded opportunity for lower-income college students was what legislators had in mind when they planted the seeds for the current system of student financial aid almost three decades ago.

But itís higher-cost private schools that are reaping more than their share of the benefits ñ from federal and most state programs, in grants and especially in loans, says a University of Illinois professor, in two articles for the Journal of Education Finance.

One result is a growing disparity between private and public schools, in faculty salaries and other expenditures that influence quality, according to F. King Alexander, a professor of higher education. Itís a disparity that threatens to relegate all public institutions to lower-tier status, thereby weakening one of the strengths of American higher education, he said.

A key reason for this growing disparity, and its inflationary effect on higher education, is the ìhigh-tuition, high-aidî philosophy upon which most aid programs are built, Alexander said. They use an institutionís stated cost of attendance as a key factor in the aid formula, he noted, ìand any time cost of attendance is factored into the formula, there is an economic incentive to raise tuition.î

As a result, private campuses have taken a progressively greater share of the financial aid pie, while at the same time their percentage of students defined as low-income is actually down slightly since 1973, he said. ìDespite the massive amount of resources flowing into these programs, lower income students are still largely limited to the lowest-cost public campuses.î

In his two articles ñ one published last winter and one to be published this fall ñ Alexander notes that private institutions in 1995 received more than 56 percent of all federal Title IV direct student-aid resources, while serving only about 25 percent of the full-time-equivalent (FTE) student population.

The imbalance is not as great when it comes to federal student grants; students in private schools received 35 percent of all such funds, Alexander said. But private students received 46 percent of all grant funds awarded by states, and 62 percent of all federal loan funds.

Even more dramatic, he noted, is the growing disparity since 1971 between private and public schools in the federal loan dollars awarded per student. From 1971 to 1980, private schools received twice that of publics in loan funds per FTE, but that ratio grew to 3.4 to 1 in 1985 and then 4.6 to 1 in 1995.

The irony, according to Alexander, is that even many legislators, particularly in state assemblies, seem unaware of what the system is producing. Even while they encourage schools, and particularly the publics, to hold down costs and tuition, they allocate more money to programs that encourage the opposite ñ and especially at privates, which they cannot hold accountable. ìThey want us to keep tuition low,î he said, ìyet they keep funding programs that encourage us to raise it.î

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