When Someone Else Buys

When someone else is buying, it's free and why not have caviar?

In the case of higher education, the principle holds. Financial Aid, the $ paid as scholarships and grants that are not loans, have contributed to the increase in higher education costs.

This idea is not mine alone. It is well presented in a book by Richard Vedder entitled "Going Broke by Degree: Why College Costs Too Much."

Per Andrea Neal, as read in the Fort Wayne Journal Gazette, The US Commission on the Future of Higher Education reached two conclusions in 2006. College costs more due to a financing system that provides limited incentives to take aggressive steps to improve efficiency and productivity; and the aid system is complex, inefficient, and often does not direct $ to students who truly need it.

Aid is used to attract to campus the brightest students which works against the goal to attract the neediest students. In Indiana 70% of awarded aid in '05-'06 went for merit and not need.

The author Vedder suggests eliminating the tax funded aid. There are discussions underway to make the system accountable, to assure $ goes to the poorest student, and to require colleges to cut costs that consumers would demand if they themselves were paying the sticker price.

Indiana has formed groups who are studying changes. One idea would be to stop using the Federal formula and possibly limit the eligibility factor to two: family income and family size. The task is to eliminate the inflationary effects caused by third party payers.

'til later