What We’re Reading: New Thinking on Financial Aid

November 30, 2011 | Blog

Welcome to another new miniseries of the Education Optimists. Once in awhile we get a chance to sit and read– it’s rare, but when it happens it’s crazy fun. Here’s a taste of what we’ve liked lately.

For those pondering the reform of financial aid programs, I want to draw your attention to two papers–one very new, and one a year old.

In Postmortem for the Current Era: Change in American Higher Education, 1980-2010, Penn State historian Roger Geiger cogently tackles the many dismal trends of the last several decades. Among my most favorite of his observations is the following:

“The four vectors of the current era—-the financial aid revolution, selectivity sweepstakes, vocationalism, and research intensification—all bear an underlying signature by invoking private, as opposed to public or social, interests. They do not necessarily contradict public interests. On the contrary, to significant degrees, financial aid has allowed students with limited means to pursue postsecondary education; the selectivity sweepstakes has sorted students by academic ability so that the most able benefit from the most ample educational resources; vocationalism has prepared students for productive employment; and academic research has helped to revive and sustain the competitiveness of U.S. industry. Rather, these worthy social purposes have operated through incentives to private advantage. Thus, although public policies are involved to a greater or lesser extent, these vectors have derived their force from the market preferences of individual actors. But market relations can bring unplanned and sometimes unwelcome consequences.”

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Second, a new paper from a young economist just entering the job market, who tackles a critical question: how much Pell are students REALLY getting? In other words, to what degree are Pell dollars being supplanted and/or supplemented by institutions through a kind of crowding out? Leslie Turner tackles these questions, and more, in The Incidence of Student Financial Aid: Evidence from the Pell Grant Program

On average, Turner finds that colleges and universities reap the benefits of about 17% of Pell grants–but that the institutional variation is wide, and some schools are actually supplementing Pell with additional dollars, seemingly to attract more low-income students.

Both papers are worth a read in full. Enjoy!

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