It’s Hard Out Here for a Student

Over at Ways to End the World, Mike Meginnis notes ever-escalating college tuition and the problems with students on merit-based scholarships under performing and suggests that all college aid should be need-based. Without merit aid, students wouldn’t be insulated from their university’s tuition increases, and so the universities would be loath to raise costs. Also, only students with real financial need would receive aid and their would be no gaming of the scholarship system by rich(er) students. Some thoughts of mine:

Merit Scholarships
It’s true that merit scholarships are problematic, but in defense of my (relatively privileged) class, they can be extremely helpful in situations where the government and one’s parents disagree about how privileged they are. I remember showing mine the “expected family contribution number” and getting laughs (justifiably, I’m not sure where they were supposed to get that much money).

As a student, you’re caught between your parents and your school’s financial aid department and, without leverage over either, are left to make the ends meet yourself. Which often means loans. Now, I don’t think policy should be written around the concerns of upper middle class folk, I’m just pointing out the problem with eliminating such scholarships. The fundamental problem here is that merit scholarships are not supposed to be the safety valve for kids who don’t get enough money from either their parents or the government. This is a tangent that has to do with how financial aid is awarded (discussed further down).

The problem with merit scholarships that Mike describes is basically moral hazard. Students get awarded scholarships based on high school performance, and it’s hard to lose once you have. (At the private school I attended, if you were below a 3.0 at the end of the year, you went on probation for a year. If, at the end of probation, you were still below 3.0, you lost your money.) Also, employers don’t pay that close attention to one’s GPA, and rarely request an official transcript in any case. This means that students don’t have very strong motivation to earn high grades in college. In fact, without a scholarship, they would be more motivated to earn high marks so that they could earn a scholarship for later years.

A better system would award scholarships based on performance. If your GPA is 2.0 say, you pay full price. At 4.0 (or 3.8 more reasonably), you pay nothing. In between, some straightforward linear interpolation can figure out your award. This is like a performance-based contract in sports. Of course, like in sports, the best students would want to be guaranteed a scholarship beforehand, and would avoid schools who wouldn’t do that.

Awarding Aid
Students shouldn’t be screwed because their parent’s can’t afford (or just won’t contribute) what their aid report says they must. Rather, if our country really thinks parents should pay X amount for their kids education, let’s not make it optional; incorporate it in the tax code. Paying $10,000 a year in school tuition is equivalent to being taxed 10k for education funding. Of course we don’t want to skyrocket the tax burden of the middle class, which shows why the “expected family contribution” is bunk. It’s way too high for many, many families. Better to just have all education paid for by a progressive income tax system. Oh for 70% bracket of the 70s!

Static Tuition
Once a student is admitted their tuition should not rise for at least four years. It’s tantamount to extortion (given the difficulties in transferring) for a school to raise its price once someone’s locked in.

Changing Schools
Colleges are not truly competitive. Yes, they ruthlessly go after high school seniors, wooing them with all the marketing skill they can muster, but then the romance stops; they know they have you. Transferring involves huge amounts of time — researching, applying, moving, and spending extra semesters in school to catch up (because there’s no way all your classes would transfer across usefully). Few students will do it.

So I’d like to see policy that made it easier to move between schools without aggravation or penalty, and possibly encourage some actual competition over quality of education, not just branding. This would remove the incentive schools have to spend on extremely visible signs of vigor (stadiums, health centers), and give the boring stuff like class availability, teacher quality, and low cost more value.

UPDATE: Corrected Mike’s name. I would have sworn his blog said “Matt,” but then, url’s don’t lie.

5 comments to It’s Hard Out Here for a Student

  • Cool comments. I only wish my name was actually Matt — although, weirdly, almost everyone makes that mistake once. I’m going to think on this a little before I say much in response, but static tuition is a MUST — as are policies affecting money in general. I could afford to go to my school this year because I was lucky, but had I *started* this year I’d be screwed by my senior year. A number of people are having to drop out because of terrible policies that affect their finances.

    Another point is that the aid system as it stands has a lot of weird gaps — parents often have weird expected contributions. A friend of mine who lived in poverty for most of his life was expected to contribute a lot more than me, even though I’ve never really lived in poverty — I was just poor. He was expected to contribute more because his parents owned some land. Well, maybe the land was worth something, but what were they going to do, sell it and move into the city?

  • Similarly, my parents had much income dedicated to a house payment. While one could argue that less of their money should have been spent on a house, acquiring a more affordable domicile was not a real option.

  • […] my server hiccuped and I lost the post. So let’s try it again. Fellow youthful scamp Quixote comments at his joint on my post about school finances with several policy proposals, some better than others. I’ll […]

  • Dear sir respected sir as i catanct before iwant to make more information for you about me iam Abdihakin mohamed muse iam one of the student in camp refugee of sheder(eastern Ethiopia)iam flea from the civil war existed in somalia my age is 18 there is difucult sitution for me becouse of what? I orphan my father died in somalia 2006 and my family are poor and my mother doestnt afford to paid school fees or universal fees in this time iam the oldest child in my family we are 9 children others are smaller than me and my mother confused how to adminstring that family with difucult sitution if i continue my problem it is very difucult for me to live in this camp becouse sometimes ifeel illness when i chacked my health the doctors answered that you are good but you cant adapt the climate of this camp so we are advised to change this climate so that one my greatest problem that i my self confused so iam requesting schlorship in abroad and that one of my problem and iam requested sclorship agensy to suport for me how to manage with my vulnerable family and also in my future. I my self ilike education and iwant to gratuate up to university i realy want to study in canada,usa,finlandorother europe.And ihave good result from begining of my school up to now in my grade 10 igot national exam of ethiopia 85% my grade 11 igot 86% and ihope in my grade 12 much better result. So iam requesting again and again to supor me how to suport my youngerchildren icant conclude my problem so iam requesting again and again to give me sclorship apportunity as a kindly and brotherwoodly if you supor me God will suport you so response us much as posible.. By and good lucky yours Sincerly.

  • estoy interasada en el carro NANO fabricado por tata motors que salio al mercado con un precio de 2500 dolares aproximadamente y si es posible me envien las direcciones o telefonos de los consecionarios en Colombia o para cuando estaria llegando a Colombia.agradeciendoles, atentamente, sandra c. vargas s.

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