Friday, October 03, 2008

Spellings Last Stand

By Richard Vedder

A few months ago, Charles Miller and I met with Under Secretary of Education Sara Martinez Tucker in DC to discuss a radical revision in the federal student aid program. The senior officials of that department decided they were going to fight to the end for what they perceived to be a improved system of higher education in this country. I applaud them for their effort.

In July, Secretary Margaret Spellings, along with Sara Tucker, announced a plan to simplify and improve federal student aid, and a couple of days ago Spellings laid out the plan in greater specificity. First, the hated FAFSA form would be shortened by 75 percent. Financial aid decisions would be based on adjusted gross income and family size, and all the questions about family assets and liabilities would be dropped.

Also, families would be given information on their expected financial assistance before the beginning of the senior year in high school, allowing for more intelligent college searching. Both of these moves are welcomed. Whether they will ever come to pass, who knows, although the FAFSA simplification idea is very popular politically, and I don't see how people can argue against earlier notification. However, I sat in on a meeting in DC this summer on the FAFSA form where the educrats and financial aid types fought hard to keep most of the stupid questions on that form that has done more to reduce college access to the poor than anything else in America. The Establishment yields little ground without fighting.

More important, a ton more could be done. It would be comparatively easy to eliminate the FAFSA form, albeit with some IRS cooperation that might require congressional action to compel. The consolidation of more than a dozen different federal aid programs should happen now. Above all, the Pell Grant should morph into a full fledged scholarship (voucher) program which should have three characteristics: it should be progressive(more money going to poorer students), student-centered (money goes to kids, not to schools for distribution), and should be performance-driven (money gets cut off after a reasonable time period, and poor academic performance leads to fund reductions). Indeed, I think every single federal program should be rolled into one.

Of course, I really believe that in the long run the Feds should get out of the business of funding students. The greatest growth in student college participation in the U.S. came early, without significant federal involvement, and I believe the era of massive federal student aid has contributed significantly to the rise in college costs and the growth of university arrogance and inefficiency. But, in her own modest way, Secretary Spellings and Under Secretary Tucker have taken a good step in the right direction. Let us hope the momentum continues with the new administration.


seriously? said...

You kill me.

What do you want more? Dollars to go to those who are truly needy, or a simpler aid application process? Unless you have enough dollars to meet all need and then some more, you can't have both. Simpler application, while it does reduce some access obstacles, provides loopholes galore for people who are not needy to qualify for need-based aid. With limited funding, a simpler application replaces one (surmountable) obstacle to access with another (insurmountable) one.

What do you want more? Greater access to higher ed or less government assistance? Unless private funding someday meets all need, you can't have both. Regardless of the cause of the cost disease (which I concede exists), government aid is key to increasing access.

Of course, this is all a moot point to you, right? You don't believe in externalities of higher education, so access shouldn't be an issue.

I know this is just a blog, but is your thinking really this internally inconsistent?

Cowboy said...

Regarding the FAFSA, there are very,very few instances in which so much personal financial information must be disclosed in such detail. I don't think OGA's even require as much info as the FAFSA from recruits. So, I would agree that cutting the FAFSA is a good thing.

Government loans to students should also be phased out. When the government takes taxpayer's money and dumps it into a (cess)pool the size of Texas, it doesn't take a genius to see that the message to Higher Ed is, "Hey you guys! You can keep raising your tuition!" While those taxpayers providing the funds get squeezed harder and harder. I would argue that this is nothing less than government intrusion into the private sector - as some of the hand wringing politicians and taxpayers like myself are doing right now over the matter of a little BAILOUT.

College lending should be left to private enterprise.

Should lending in the form of student aid be needs based? Absolutely not. For one, that would be discriminatory. For another, It would be an unsound business practice.

As a lender, for every loan I make to a person who is at a financial disadvantage, I would want to make one or more loans to some rich kids to mitigate my comprehensive risk as much as possible. So in this case, I do believe you can have your cake and eat it too.

And as far as I am concerned, the FAFSA could be done away with altogether. Colleges should probably not be in the loan administration business at all.

capeman said...

seriously, of course what the Doc really wants, as he says forthrightly, is (like cowgirl) for the federal government to get out of higher education. And of course, this is nothing but his private fantasy, even if the Republicans somehow manage to avoid the coming electoral debacle.

But I think there is a good case to be made for simplifying the fafsa form.

Of course, if the world economy collapses, which seems a good possibility, all of this will seem very otherworldly.

Except, the government will probably want to use higher education as a means to warehouse the vast number of newly unemployed young adults. Sort of like an updated WPA.

Cowboy said...
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