For the first time, a majority of undergraduates — 57 percent — are receiving Pell Grants and other federal student aid, reports Libby A. Nelson on Politico. In addition, 41 percent are taking out student loans, up from 35 percent four years ago.
“Federal grants and loans help students realize the American dream,” said U.S. Education Secretary Arne Duncan, who noted that Pell Grants are going to twice as many college students.
But “increasing federal student aid alone will not control the cost of college,” he added, calling on state policymakers and colleges and universities to hold the line on rising college tuition. “Together we can take collective action to help make college more accessible, affordable, and attainable for middle class Americans across the country.”
Increasing student aid enables colleges to increase tuition, economists argue. “Colleges often deliberately raise their prices when aid is available, in essence ‘capturing’ the aid,” wrote Robert Martin and Andrew Gillen in 2011.
Pell Grant spending has skyrocketed, notes Politico.
About 41 percent of all students received the grant in 2011-12, a 14 percentage point increase. Congress expanded the grant program several times between 2007 and 2009. As the economy faltered and incomes fell, spending on Pell grew from $12.8 billion in 2007 to $35.6 billion in 2011 before falling slightly last year.
For-profit colleges enroll many low-income, minority and adult students who are reliant on federal aid.
More than three-quarters of students at for-profit colleges granting associate or bachelor’s degrees received federal student aid. And an additional 10 percent of students at for-profit colleges granting bachelor’s degrees received veterans’ benefits — a higher proportion than at public or private nonprofit colleges.
Including state aid and college scholarships, 71 percent of students receive help paying for college. Colleges use some scholarship money to help needy students, but just as much goes to academically strong students from affluent families, the report found.
Under pressure from historically black colleges, the Obama administration made it easier for parents with shaky credit histories to take out Parent PLUS loans, notes EduBubble.
Kelly Field at the Chronicle of Higher Education calls this a “victory.” And it is, for the colleges. But what about the students sucking down the outrageous amounts of debt? What about their parents?
These high-interest loans are not a good deal — especially for parents who’ve had financial problems in the past and have kids going to colleges with low graduation rates.