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Winter for Higher-Ed
Financial Aid Puts a Squeeze on the Middle Class

Defenders of the higher-ed status quo are fond of defending sky high tuition by noting that “almost nobody pays full price for college.” This may have been true, but at many public schools “almost nobody” is beginning to cover an an increasingly large group of people. Although the concept of “set-asides,” where tuition rises on wealthier students to subsidize financial aid programs for poorer ones, is nothing new, cutbacks in state aid have decreased the money available to schools to the point where students of increasingly modest means are being asked to pay for these subsides. And as the WSJ reports, parents are becoming incensed:

“It’s an additional tax, and it’s hidden,” said Fred Eshelman, a member of the Board of Governors at the University of North Carolina, where the cost of set-asides has tripled to $1,724 in 2012 from $535 in 2006, according to university officials. “If folks are paying full boat and supporting others without knowing it, I don’t think that’s right.” […]

Mr. Twedt earns about $90,000 as a manager in an insurance office, and his children don’t qualify for federal aid. He estimated the set-aside program would cost his family about $20,000 through four years of college. He expects each of his children will graduate with about $25,000 in student loan debt.

This is a difficult problem. Nobody wants a school system where it is impossible for the poor to go to college, yet it strikes many as deeply unfair that only slightly better-off students who are struggling to pay for college themselves are being asked to subsidize their education. Sadly, there are no easy solutions: more than anything, this is a sign that the current trends in the higher-ed market are simply unsustainable. Costs will have to come down.

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  • Andrew Allison

    ACA is even worse. Our AGI is just over the limit for subsidies and we would pay twice as much as somebody making about $1000 less.

  • Corlyss

    “almost nobody pays full price for college.”
    That’s extremely amusing. There’s almost no one who doesn’t pay when the universities are awash in public monies of one kind or another.

  • Fat_Man

    “cutbacks in state aid have decreased the money available to schools”

    Enough with this lazy prose. The schools set their own budgets. If state subsidies go down, they are not compelled to raise tuition by some law of nature. They could cut costs. Of course the $2 million president and the $4 million dollar football coach view their pay as sacrosanct and the taxpayers and students money as negotiable.

    • anamax

      If your football program isn’t paying its way and then some, you’re doing it wrong. (Stanford’s football program is a big profit center.)

      • dwpittelli

        Well then, most are doing it wrong.

        • richard40

          Actually at most of the colleges that pay coaches well, when you combine ticket sales, TV revenues, and alumni support, the football program normally is indeed a net revenue producer. If you want an even better target for gross waste, I would cut the diversity administrators, who bring in nothing.

  • lhfry

    If these “setasides” were personal donations to a charity that supported tuition for poor college students, the donors would at least get a tax deduction out of it.

  • Thad Puckett

    Doesn’t it seem that any time a third-party is payer for any service, the consequence is a bubble?

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