The Government Must Spend More on Grants

Mark Kantrowitz is the publisher of Fastweb.com and FinAid.org, Web sites about planning and paying for college.

UPDATED MAY 12, 2012, 11:14 PM

The solution to the college debt problem is to increase government grants, especially to low- and moderate-income students. But unfortunately, federal and state governments have been cutting their investment in higher education.

Congress cut $8 billion per year out of the Pell Grant program last year and an additional $2 billion or so from the program this year. States cut their appropriations for postsecondary education on average by a record 7.6 percent in 2011-12, according to the Illinois Grapevine report. Those state cuts are the primary driver of public college tuition inflation.

Some students have responded to these cuts by switching from four-year colleges to two-year colleges. This had led to fewer low-income students getting bachelor's degrees, as noted by a report from Congress’s Advisory Committee on Student Financial Assistance. Inadequate need-based grants are responsible for about half of the decline in bachelor's degrees by these students.

Finally, some students opt out of college entirely because they can’t afford the cost.


An analysis by Mark Kantrowitz of the 2007-08 National Postsecondary Student Aid Study from the National Center for Education Statistics.
The net cost of a bachelor’s degree represents more than half of total family income for low-income students, compared to almost a quarter for middle-income students and less than a sixth for high-income students, according to an analysis of data from the 2007-08 National Postsecondary Student Aid Study.

Cutting government investment in higher education is short-sighted. Not only do bachelor's degree recipients earn 70 percent to 80 percent more than high school graduates, they also pay more than twice as much in federal income tax. The grants are paid back by increased tax revenue within a decade. Since most people have a 40-year work life, that’s 30 years of pure profit to the federal government.

An investment in higher education is not just an investment in the future of the individual student, but also an investment in the future of the United States. There is no better investment for the federal government than investing in our greatest resource, our people.

(http://www.nytimes.com/roomfordebate/2012/05/12/easing-the-pain-of-student-loans/the-government-must-spend-more-on-grants)