Student aid raises tuition

Pell Grants Flunk Out

 Excerpt:

Started in 1972 to help poor kids pay for college, Pell Grants are now so broad that more than half of all undergrads benefit. In the 2009-2010 school year (the most recent data available), 60% of all college students received a grant—a total of 9.6 million students. Between 2008 and 2010, the number of Pell grantees increased by almost 50%, roughly doubling taxpayer cost.

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Because the amount of a Pell Grant for full-time study depends on both a student's financial straits and the cost to attend school, better-off students often receive the large Pell Grants and apply them to more expensive schools. According to Ms. Robinson and Mr. Cheston, in 2009-2010 20% of Pell grantees from families making over $60,000 opted to take their federal checks to schools that cost $30,000 or more per year. That luxury wasn't available to students from lower income families, who attended ritzy schools at a much lower rate.

Universities learned long ago how to capture the extra cash and adjust their price schedules accordingly. While Pell Grants and other student aid are intended to make college more affordable, they're contributing to the ever-higher tuition spiral. Write 100 times on the chalkboard: Student aid raises tuition.

Comment: Another government created bubble.