Aid to Educated Rich

Over the years, politicians and, especially, college and university administrators, have led us to believe that federal aid to education was a ticket out of poverty, but that may be just another urban legend.

“The more money a college-bound student’s family makes, the more likely he or she is to apply for federal financial aid, electronic records show,” Kara Wedekind of the Capital News Service writes. “It’s a situation that some experts say is caused by families scared off by college costs, even as the federal financial aid application deadline passed Monday.”

“Dependent students in the lowest income bracket submitted fewer federal financial aid applications in 2003 than their wealthier counterparts at 26 out of 31 four-year schools in Maryland,” Wedekind writes. “At each higher income level, more students applied for assistance, according to data from The Institute for College Access and Success, a research organization that studies higher education.”

“The dependent annual family income levels were divided into three groups: less than $30,000, $30,000 to $60,000 and more than $60,000.” The break that students can get from aid packages that include a federal subsidy is considerable, particularly when one-year’s tuition and fees can range anywhere from $5,000 to $40,000. “For schools in the University system of Maryland, a Board of Regents report notes that the federal government chipped in 61 percent of all financial aid in 2004,” Wedekind writes.

“Only rubes pay the sticker price,” Harvard economist Susan Dynarski told the crowd at the American Enterprise Institute two months ago. She backed off of this assertion a bit when an audience member took offense at the characterization as elitist.

Nevertheless, some data do show a considerable difference between the “sticker price” of college and the amount actually forked over to the front office by the student’s family, particularly when the kinfolk are well-heeled. “Everyone knows the retail price of Penn is out of sight,” Dan Akst writes on MSN.com. “But not everyone knows that three-quarters of its undergraduates get some kind of financial aid and nearly half get an outright grant (read: discount).”

“At Penn, for example, undergraduate tuition and fees this fall are $39,634,” Akst explains. “But the university says the average undergraduate gets a discount of 25 percent. And that figure only takes account of scholarships from Penn or governmental sources. If you add in private grants and the value of low-interest loans, the average price would drop even further.”

Malcolm A. Kline is the executive director of Accuracy in Academia.