Financial aid is a crucial part of the national college
education equation, serving as an investment in the future by
allowing students from all backgrounds to attend even the most
expensive and prestigious universities. Now, its mission is
threatened: The federal aid system is operating on outdated schemes
which allocate funding to wealthy and powerful institutions while
denying funding to more needy schools.
According to The New York Times, a variety of aid programs offer
universities money for matriculating students on financial aid.
This money is used to help cover the costs associated with
students, including room and board. However, the federal programs
do not allocate the money using a uniform formula. According to The
Times, if a student at Sarah Lawrence University receives a Pell
grant, the university receives $2,000 to help pay for costs
associated with the student. However, if a Princeton student
received the same Pell grant, the university would receive over
$5,600.
This difference is not based on the universities’ costs or
ability to pay for the students. According to The Times,
Princeton’s endowment is 100 times larger than the endowment
at Sarah Lawrence. Even more surprisingly, tuition costs at Sarah
Lawrence are higher than those at Princeton.
Why then should Princeton receive more money per student than
Sarah Lawrence?
The answer, based on current funding rules: Princeton is better
connected and has a history of receiving high levels of aid
funding.
This policy not only is inherently unfair, it makes little sense
fiscally. Princeton and other well-compensated universities have
huge endowments, with Harvard and Yale exceeding $10 billion. With
multi-billion-dollar endowments, it is hard to see how a few
thousand dollars for a relatively small number of aid-eligible
students makes a crucial difference in the wealthy
universities’ programs.
Other universities, however, might see a larger impact if the
aid were directed toward them. For example, the University of
California budget was cut by $410 million for 2003-2004. Students
have been asked to shoulder much of the cuts in the form of fee
increases ““ and only 40 percent of the fee increases will be
covered by financial aid programs. If the UC had access to
Princeton’s level of federal aid funding, that uncovered
percentage might be substantially smaller.
The federal government has long offered aid to both low-income
students and institutions which accept low-income students.
However, that aid has been distributed unfairly, based on
principles and standards which do not reflect reality. Large,
state-funded, local universities and colleges are most likely to
need funding support and accept low-income students. These
institutions are the ones which should receive the lion’s
share of federal aid ““ not old, well-connected institutions
which could buy and sell the colleges that actually need the
money.