Tags: Vedder | federal | aid | college

Richard Vedder: Federal Financial Aid Programs Make College Too Expensive

By    |   Friday, 10 April 2015 07:00 AM

It has become clear to most everyone that college has become unaffordable for many, if not most, Americans.

So what's the cause of this sorry state of affairs? The federal government's financial aid programs, says Richard Vedder, director of the Center for College Affordability and Productivity.

"Federal student financial aid has permitted higher tuition fees and helped finance an academic arms race, where universities have hired small armies of bureaucrats, given professors low teaching loads so they can write articles on obscure topics that no one reads and led to a building boom of ever more luxurious facilities," he writes in an article for Forbes.

Other factors are at work too, Vedder says, including the rising cost of intercollegiate athletics at many schools and costs imposed by increased governmental regulations.

"But until we radically rethink and downsize federal student aid programs, the burden of a college education is not going to start falling substantially," Vedder states. "New financing ideas, like income share agreements where students sell equity, not debt, in themselves, may be part of the solution."

Meanwhile, Wall Street Journal reporter Josh Zumbrun offers an interesting analysis of other areas with rising costs — food and housing.

The Labor Department's latest consumer expenditure survey explains why rising food and housing prices present a major problem for many Americans, even though inflation is very muted overall, he writes.

The reason: "low-income Americans spend a disproportionate share of their money on food and housing," Zumbrun says. Consumer prices were unchanged in the 12 months through February.

The Labor Department report shows that those of us in the bottom 10 percent of income allocate 42 percent of our spending to housing and 17 percent to food. But the wealthiest 10 percent of us devote only 31 percent of our spending to housing and 11 percent to food.

"This underscores one reason that inflation feels different household to household: people spend their money in such different ways," Zumbrun explains.

Perhaps the best solution to this problem would be to raise the income level of all Americans, so those at the bottom of the wealth totem pole don't have to worry so much about increases in food and housing prices.

Most of us would surely agree to this prescription, but on the issue of how to achieve it, reaching a consensus would be very difficult.

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It has become clear to most everyone that college has become unaffordable for many, if not most, Americans.
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Friday, 10 April 2015 07:00 AM
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