Financial Aid in Theory and Practice

Why It Is Ineffective and What Can Be Done About It
  • Andrew Gillen


The current financial aid system is broken in many respects. The most widely recognized flaw is that a convoluted application and distribution system prevents those who need aid the most from getting it. As a recent study from the Center for American Progress (Goldrick-Rab and Roksa 2008) noted, the “primary difficulty with current federal financial aid policy is that it is poorly understood by nearly all of its constituents.” This is indeed true, and reforms to address this issue are needed. But I believe that there are problems that are much more fundamental in nature, and that these problems lend considerable support to the view, as articulated by Ronstadt (2009), that “financial aid has morphed into a ‘debt for diploma’ system that fosters ever-rising tuitions, fees, and room-and-board charges.”


Price Discrimination Student Loan State Appropriation High Tuition Tuition Revenue 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Altig D (2009) Will tax stimulus stimulate investment? Macroblog. Accessed 7 Jan 2009Google Scholar
  2. Bianco A, Rupani S (2007) The dangerous wealth of the Ivy League. Business Week, 29 NovemberGoogle Scholar
  3. Associated Press (2008) $6M Illinois tutoring center assists only athletes. 29 NovemberGoogle Scholar
  4. Basken P (2008) Financial rescue plan, in shift, could aid student loan providers. Chronicle of Higher Education, 13 NovemberGoogle Scholar
  5. Bennett W (1987) Our greedy colleges. New York Times, 19 FebruaryGoogle Scholar
  6. Bernstein F (2002). Dorm style: gothic vs futuristic sponge. New York Times, 20 NovemberGoogle Scholar
  7. Brainard J (2009) The biggest campus paycheck may not be the president’s. Chronicle of Higher Education, 27 FebruaryGoogle Scholar
  8. Carey K (2006) College rankings reformed: the case for a new order in higher education. Education Sector Report, SeptemberGoogle Scholar
  9. Carey K (2008) Transformation 101. Washington Monthly, November/DecemberGoogle Scholar
  10. Delta Cost Project (2008) Trends in college spending Delta project on postsecondary education costs, productivity, and accountability. Delta Cost Project, Washington DCGoogle Scholar
  11. Douglass J, Keeling R (2008) The big curve: trends in university fees and financing in the EU and US. Center for Studies in Higher Education, NovemberGoogle Scholar
  12. Doyle J (2009) UC admits misleading public about buyout-taker. San Francisco Chronicle, 9 FebruaryGoogle Scholar
  13. Duffy E, Goldberg I (1998) Crafting a class. Princeton, Princeton, NJGoogle Scholar
  14. Dynarski S, Scott-Clayton J (2008) Complexity and targeting in federal student aid: a quantitative analysis. NBER Working Paper 13801, FebruaryCrossRefGoogle Scholar
  15. Easterly W (2009) Everyone should be responsible... (except the aid agencies). Aid watch. 26 January. Accessed 26 Jan 2009Google Scholar
  16. Ehrenberg R (2001) Tuition rising: why college costs so much. In: Devlin E, Meyerson J (eds) Forum futures-exploring the future of higher education: 2000 papers. Jossey-Bass, San Francisco, CA, pp 87–100Google Scholar
  17. Ehrenberg R (2002) Tuition rising: why college costs so much. Harvard, Cambridge, MAGoogle Scholar
  18. Fried V (2008) The $7,376 “Ivies”: value-designed models of undergraduate education. Center for College Affordability and Productivity Report, AugustGoogle Scholar
  19. Geiger R (2004) Research and relevant knowledge: American research universities since World War II. Transaction, New Brunswick, NJGoogle Scholar
  20. Goldrick-Rab S, Roksa J (2008) A federal agenda for promoting student success and degree completion. Center for American Progress Report, AugustGoogle Scholar
  21. Hansen W (1983) Impact of student financial aid on access. Proc Acad Pol Sci 35:84–96CrossRefGoogle Scholar
  22. Hilliard J (2008) Cost of college president’s garage tops $191,000. MetroWest Daily News, 12 DecemberGoogle Scholar
  23. Kane T (1995) Rising public college tuition and college entry: how well do public subsidies promote access to college? NBER Working Paper 5164Google Scholar
  24. Krugman P (2009) How I work. Accessed 26 Jan 2009Google Scholar
  25. Long B (2004) How do financial aid policies affect colleges? J Hum Resour 39:1045–1066CrossRefGoogle Scholar
  26. McPherson M, Schapiro M (1991) Keeping college affordable: government and educational opportunity. Brookings Institution, Washington, DCGoogle Scholar
  27. McPherson M, Schapiro M (1993) Paying the piper: productivity, incentives, and financing in US higher education. University of Michigan, Ann Arbor, MIGoogle Scholar
  28. McPherson M, Schapiro M (1998) The student aid game: meeting need and rewarding talent in American higher education. Princeton University Press, Princeton, NJGoogle Scholar
  29. Ohio State University, Department of Recreational Sports (2009) Recreation and physical activity center fact sheet. Accessed 26 Jan 2009Google Scholar
  30. Rizzo M, Ehrenberg R (2003) Resident and nonresident tuition and enrollment at flagship state universities. NBER Working Paper 9516, FebruaryGoogle Scholar
  31. Ronstadt R (2009) Don’t fix the student aid system-kill it. Chronicle of Higher Education, 27 FebruaryGoogle Scholar
  32. Singell L, Stone J (2003) For whom the pell tolls: market power, tuition discrimination, and the Bennett hypothesis. University of Oregon Economics Working Paper 2003–12Google Scholar
  33. Soares L, Mazzeo C (2008) College-ready students, student-ready colleges. Center for American Progress Report, AugustGoogle Scholar
  34. Stampen J (1980) The financing of public higher education. AAHE-ERIC/Higher Education Report no. 9Google Scholar
  35. State of New Jersey Commission of Investigation (2007) Vulnerable to abuse: the importance of restoring accountability, transparency and oversight to public higher education governance. Accessed 7 January 2009Google Scholar
  36. Ward D, Douglass J (2006) Higher education and the spectre of variable fees: public policy and institutional responses in the United States and the United Kingdom. OECD, Higher Education Management and Policy Report 18-1Google Scholar
  37. Wilkinson R (2005) Aiding students, buying students. Vanderbilt University Press, Nashville, TNGoogle Scholar
  38. Winter G (2003) Jacuzzi U? a battle of perks to lure students. New York Times, 5 OctoberGoogle Scholar
  39. Wolfram G (2005) Making college more expensive: the unintended consequences of federal tuition aid. CATO Institute Policy Analysis No. 531, JanuaryGoogle Scholar

Copyright information

© Springer New York 2010

Authors and Affiliations

  1. 1.Center for College Affordability and ProductivityWashingtonUSA

Personalised recommendations