How are you paying to attend UR? With full costs approaching $50,000 annually, it’s probably a mix of savings, help from the family, scholarships, aid and loans – depending who you are, a lot of loans.
I’ve been struggling with money lately, so one of my friends was kind enough to put an ad out on Facebook for me: “seeking WIFE.” The idea was to marry rich, or marry poor and game the aid system. It was a good plan, too – until two girls got into a little disagreement over just who I was going to spend the rest of my life doing the dishes for, and I tried explaining to a potential girlfriend that just because I was getting married didn’t make her a mistress/third wheel/I wasn’t really paying attention while she talked. Sue me.
So I pulled the plug on that experiment and went to do some research on the U.S. financial aid system, because I’d rather spend the rest of my life filling out paperwork in a soul-munching DMV waiting room than deal with woman trouble.
Here are the factors in aid, using Sallie Mae’s straightforward breakdown: 1) Dependency Status, 2) Sources of Income, 3) Available Income and 4) Student and Parent Assets.
I could explain them, but since I’m sure you’ve already gotten your daily fun dose of tax code reading in, I’ll move along. What it really comes down to is this: the system is a well-intentioned mess. You’ve got the 1944 G.I. Bill, the 1958 National Defense Loan Program, the 1965 Higher Education Act and the Pell Grants in ’72. Toss in a multitude of smaller programs, tax-based plans like 529s and IRAs, and at the end of the day, even the government itself isn’t sure just what its impact is on the education market (and don’t forget for a moment it’s a business. See just how far you get if you forget to send in next semester’s check to the school). Every so often, Congress patches a hole with a new program that addresses some immediate shortfall and makes the whole system even more confusing down the line. Alternative Minimum Tax sound familiar? Same problem.
Barry Burgdorf and Kent Kostka, who work in the University of Texas system, recently wrote an issue paper for the Secretary of Education pointing out the inefficiencies caused by this complex system. Specialty programs are underused by target populations who don’t know the programs exist, conflicting definitions and standards sometimes cause results contrary to intent and time and cost of the administration of so many separate programs is inherently inefficient to both the government (i.e. taxpayers) and to users (students). There also exists no overarching strategy for the deployment of a very hefty national aid program and, to make matters worse, no built-in evaluative feedback system to help legislators and administrators understand what works and what doesn’t.
Fundamentally, there are three types of aid: grants (the kind we all want), loans (the kind we all have) and tax incentives (the kind we wish we made enough money to use).
Outside studies have shown that tax-credit and incentive plans are the least effective of these in helping students with access issues enroll in college. No one wakes up one morning and says, “I’d save $500 on my taxes this year by spending $15,000 on college. Hello, SUNY!” At the same time, those who can’t afford college aren’t likely to be facing a tax bill large enough to single-handedly make school unaffordable. Yet, this has been the bulk of government aid changes during the past 15 years, again according to Burgdorf and Kostka, while grant and low-interest loans are tweaked to keep pace with inflation – forgetting that tuition costs regularly increase by double the inflation rate. The people who need help are not getting it, even though a lot of good ideas are floating out there to make the system better without making it more expensive.
The conclusion: businesses have business plans, schools have strategic plans, economists have long-term outlooks and the government’s financial aid programs, estimated to be north of $60 billion per year, have squat. Like Burgdorf and Kostka recommend, it’s time to stop patching an ineffective system and do the studies necessary to redesign our financial aid system to make it as accessible and effective as possible.
Eisenberg is a member of the class of 2010.
