The United States government's valuation of higher education

I was just reading something about the state of the union address last night that quoted the line:

“We have seen how Pell Grants help low-income college students realize their full potential. Together, we’ve expanded the size and reach of these grants. Now let us apply that same spirit to help liberate poor children trapped in failing public schools.”

This inspired in me a brief moment of hope that perhaps in the years that I haven’t been paying attention to the state of need-based aid for college undergrads we’d made some progress in funding higher education for poor students. Of course that moment of hope melted away when I looked at the current numbers. As an undergraduate at University of Wisconsin I was a work-study student worker in the financial office for two years. During that period I came to understand that, though my background disadvantaged me in certain ways, I was very lucky that my parent’s economic situation wasn’t ever so slightly better. Lots of students coming from families with incomes in the $40,000 and above range were eligible for very little federal or state need-based aid. Combine that fact with the fact that the limits on stafford loans were lower than tuition at UW and the school had almost no aid available above what was available from the government, and there were a lot of people for whom the question of how to pay for their education wasn’t an easy one.

UW is a relatively cheap school in the grand scheme of things (I know I certainly feel like I got a fantastic bargain given the quality of my undergrad education). Still let’s look at the numbers and see how things look for students at a state school (note that all the following figures come from UW’s Office of Student Financial Services). The estimated cost of attendance for a year, including tuition and basic living expenses, for a Wisconsin resident is currently about $18,000. Let’s assume for the moment that we’re looking at an extremely needy student who is eligible for all federal aid. Said student would typically be eligible for $4,800 in Pell grants and maybe as much as $2,800 in low-interest Perkins loans. There is also some available state money, but the UW finaid page doesn’t give the limits. Let’s assume for these calculations that the neediest student could get $4,000 in state aid (I think this is considerably higher than when I was there but call me an optimist). Our hypothetical student would also be eligible for work study up to $2,500 (note, though, that work study doesn’t really benefit the student any more than any other student job, though it is a boon for the employer and may make it easier for a needy student to find employment). Ok, so our hypothetical student so far is eligible for about $14,100 in aid, which is probably a generous estimate given my guess on availability of grants from the state. Let’s stop for a moment and notice a very important relationship between two of the numbers I’ve just outlined: $14,100 is less than the estimated $18,000 that it takes to pay tuition and live on campus for the year. Ok, so our hypothetical student is going to have to take out another loan. If said student is a freshman he or she is eligible for $3,500 in Stafford loan. That brings the grand total up to $17,600. Well, that’s not so bad, right? I mean this student can pick up a second job or something to make up that missing $400, right?

You’ll notice that my hypothetical student who is eligible for the max of everything at a relatively cheap state school still would not necessarily be offered enough financial aid to actually pay all their expenses for a year, even if the formula used to estimate student’s financial need determined that the parents were too poor to be expected to contribute to their education. Running those numbers and coming out $400 short may not sound so bad until you consider that much of that aid is really only available to the neediest of students. Unless the Pell program has expanded eligibility requirements dramatically in the past seven years, many students simply are not eligible for any of that $4,800.

There are too many variables (and I haven’t looked at any of the requirements in too long) for me to offer a simple income threshold where eligibility for need-based aid drops off. But I will say that in 1998 or so students coming from families with incomes above about $45,000 weren’t going to be eligible for much more than work study and stafford loans. For a freshman that would add up to a total of about $6,000. You don’t have to be a math whiz to realize that $6,000 is much less than $18,000. In fact, $6,000 is less than the in-state cost of tuition for 2007-2008.

I’m not even going to try this thought experiment for someplace like UCLA where both tuition and the cost of living are somewhat higher (estimated total cost of attendance for CA residents is about $22,000).

It’s not like any of this is new. But it’s depressing nonetheless. And it’s even more depressing to know that Bush is patting himself on the back for Pell grants and hoping to replicate that “success” with primary and secondary education. I suppose, though, I shouldn’t be surprised. After all the department of defense’s budget is almost 7 times larger than the department of education’s budget. I think that right there tells us a lot about the state of the union.

2 thoughts on “The United States government's valuation of higher education”

  1. As a UW-Madison alumni, I too have greatly appreciated the value of the education I received there and then, although that was some decades ago.
    My question is WHY has college costs continued to increase at much more than the cost of living in the past decade or so??? Why is all this money necessary?
    The comments about the defense budget versus the education budget is well made. Our government will spend about $400 BILLION dollars on defense in the next year or so, which includes the extraordinary costs for the war in Iraq. Yet history tells us again and again and again that military force and especially misadventures like Iraq rarely solve international problems.
    And we urgently need more and better educated people to build bigger and better businesses, create better international connections and, most important, develop the research programs that provide the knowledge and skills necessary to produce new products.
    Why Americans are far too afraid of economic competition and still think that our military might will “protect” us. That, very obviously, is NOT going to work in the long run. But we Americans also do not like to take a long term approach and be patient and consistent enough to stick with such initiatives until they pay off.


  2. One B IG correction in my original post. Our defense budget for this next year is about $700 billion, not a mere $400 billion!
    I wish it were only $400 billion! Just think of all the other needs that “extra” $300 billion would help met, e.g., health, education, infrastructure, better air traffic control, etc.
    Also remember than the United Nations annual budget is only about $12 billion, and the USA is only obligated to pay less than $4 billion of that total. Yet the UN represents the world’s last best hope to avoid another arms race during the 21st century; comparable to the arms race between the USA and the USSR during the 20th century.
    Why do we all have such a narrow, self-centered view of the world and its problems, especially considering the increasing interdependence of every one of the world’s 192 countries represented in the United Nations?


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