How Pell Grants are Like Health Insurance

Started in 1972 to help poor kids pay for college, Pell Grants are now so broad that more than half of all undergrads benefit.

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.

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.

Source: Wall Street Journal.

Comments (3)

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  1. Alex says:

    Its getting easier and easier to scam the system.

  2. Devon Herrick says:

    Student aid and student loans both contribute to rising tuition. Student loans also saddle many unsuspecting students with school-related debt they have a hard time repaying. Even law students, who’ve attended well-known universities, have increasingly come to realize they have debts they can hardly pay. There are also diploma mills and vocational institutes, whose students qualify for education loans, conferred degrees and certificates that are not valuable enough for students to repay the loans taken out.

  3. Cindy says:

    It’s unfortunate that sticker price on universities is so high. Diplomas shouldn’t put students so far into debt that they graduate with the equivalent of a home’s worth of debt. It puts them off track to invest in other things that they should be able to buy.