Government Aid Subsidizes Wealthy

From inside academia, leading officials are starting to admit that government aid to education is increasingly going to the well-off. “At the state and institutional level, need-based aid experienced relatively modest increases while merit-based aid, which is not means-tested, has virtually exploded,” the chancellor of the University of Maryland wrote in the fall 2006 issue of The Montana Professor. “According to a recent study by Donald E. Heller, from FY 1996 to FY 2004, merit aid on college campuses grew 212%, while need-based aid grew by only 47%.”

Heller completed his study for the University of Pennsylvania. UMD chancellor William E. Kirwan is also the CEO of the university system of Maryland.

“For the most part, the rise in merit aid has had the effect of subsidizing students who are already college-bound, while holding down the growth in aid for truly needy students,” Kirwan writes. Dissident economist Richard Vedder has made much the same point, to the chagrin of the higher educational establishment.

Kirwan goes on to indict a program or activity state officials routinely promote as the most egalitarian means of supporting spending on higher education. “For example, in Georgia the vast majority of expenditures on the HOPE scholarship program go disproportionately to white students and to students who likely would have attended college without the assistance,” he notes. “To make matters worse, many of these HOPE-like programs are funded through state lotteries, which have been proven to be a regressive ‘tax’ on the poor.”

“So, in effect, we have a morally indefensible situation where low-income families are subsidizing the higher education of youth from middle and upper income families.” (Incidentally, when the mob ran the same type of game, they called it the numbers racket.)

“Already, students coming from families in the lowest quartile of income have less than a five percent chance of earning a degree, whereas students coming from families in the top quartile of income have greater than an 80 percent chance of earning a degree,” Kirwan avers.

This trend, Kirwan points out, comes at a time when the poor, who lawmakers of yesteryear allegedly designed federal and state education aid for, can least afford it. “At the typical flagship public institution in America, the academic cost of attendance (mandatory tuition and fees) is now in the range of $5,000 to $7,500, or about 11 to 17 percent of median family income,” Kirwan writes. “Those figures are up from 1 to 5 percent of median family incomes in the 1960s.”

Not too surprisingly, Kirwan, like most education officials, would actually like more aid, although targeted differently. What is surprising is the virtual mea culpa he delivers on the failure of college administrators to hold down costs.

“Educational expenditures at many colleges and universities across the country are rising about 4.5% to 5 % annually,” he writes. “In a nation with an entrenched 3% inflation rate, this is not sustainable long term no matter what our sources of revenues.”

“Along with this fiscal reality comes the fact that we have little hope of regaining public support for increased investment unless we are seen as more effective cost-conscious stewards of public funds.”

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