Rethinking federal student aid

Let’s Rethink Federal Student Aid, writes Jeff Selingo in a Chronicle of Higher Education commentary.

The higher-ed establishment in Washington spends most of its time trying to protect the status quo on student-aid programs, all the while arguing for more money to help pay higher tuition prices. But if we’re headed for an age of at least some austerity in the federal government, then the higher-ed associations are going to need a new playbook.

Selingo throws out some ideas, starting with allowing colleges to limit loan eligibility so students don’t borrow well more than the cost of tuition, live off the extra cash and find themselves unable to repay their loans. That’s more of an issue at low-cost colleges and universities.

He also suggests linking aid to measures of student success, such as graduation rates.

Nearly 60 percent of high-school graduates from the bottom income quartile entered college in 2009, but only 7.3 degrees went to students from the lowest quartile. In part, that’s because low-income students tend to choose colleges with a low sticker price — such as community colleges — and low graduation rates.

Needy students and their parents don’t realize the net price of colleges is much lower than the sticker price, says Andrew P. Kelly, a research fellow at the American Enterprise Institute.

If low-income families knew more about the net price of a college, Kelly maintains they would be better able to balance cost with the likelihood of success. Rather than just go to the cheapest college, they might pick a slightly more expensive one with a higher graduation rate.

In addition, Selingo writes, “colleges that fail to graduate a reasonable number of low-income students, whether those on Pell Grants or with sizable loan burdens, should be banned from the federal student-aid programs.”

That could hit community colleges hard:  Pell Grant recipients’ graduation rates are low.