A call to increase financial aid awareness

A call to increase financial aid awareness

A call to increase financial aid awareness
May 30
16:07 2017

By Preston Mitchell

Another semester awaits for nearly 85 percent of college students. This means another semester of dealing with the Free Application for Federal Student Aid – affectionately known as FAFSA.

A 2016 analysis from NerdWallet found that recent high school graduates lost out on $2.7 billion in Pell Grant money due to “incomplete or unsubmitted” FAFSA forms. While these forms take an average of 30 minutes to complete, according to their website, there is still work to be done on their end to ensure students are consistently informed about financial aid.

While economists can point out deadlines and errors – two legitimate ways that students miss out on aid – the lack of awareness encouraging college enrollment is a definite fault on the fiscal crowd. Although every U.S. citizen is eligible for FAFSA, the disproportionate means by which applicants receive aid is an ample cause for concern.

Enter “the Bennett hypothesis,” which originated in a 1987 New York Times column by William Bennett, President Reagan’s education secretary at the time. The piece laid his skepticism of financial aid increases bare, believing that they “enabled colleges and universities blithely to raise their tuitions, confident that federal loan subsidies would help cushion the increase.” Bennett’s observations of “our greedy colleges” partially stemmed from the rise of college tuitions “that exceeded inflation” in 1980.

So why is this hypothesis still hotly debated three decades later? Because no one has been able to disprove it. In fact, a July 2015 report from the Federal Reserve Bank of New York found a credible link between financial aid and tuition increases.

Since the availability of credit was expanded for homebuyers before the Great Recession, home prices were inflated “above their worth” as a result. This influenced revisions of Federal Direct programs and Pell Grants between 2006 and 2008 to limit such inflation. According to USA Today, “yearly student loan originations grew from $53 billion to $120 billion between 2001 and 2012” because of the revisions. “Average sticker-price tuition rose [by] 46 percent” within the same time frame.

Therefore, the increased expenses of attending college necessitates proper financial aid awards. Increased expenses discourage many high school graduates from applying for FAFSA in the first place. A July 2016 study from the National College Access Network surveyed 150 low-income high school graduates between the ages of 17 and 20, finding that half of them had not applied for aid. Based on their data, most non-applicants were “misinformed or uninformed about what financial aid [was].” In turn, they weren’t going to deal with something they didn’t fully understand.

Now it falls on educators and politicians to expand financial aid information. Many high school graduates live without college from a lack of economic awareness, and many college students drop out from overwhelming loan debt.

Truth be told, FAFSA makes college more affordable for U.S. citizens. But without further enlightenment from our Department of Education and beyond, plenty of young brilliant minds will never undergo a four-year college experience. Even worse, universities will be more incentivized to jack up tuition costs and discourage those minds from beginning or completing a higher education.

Featured Illustration: Samuel Wiggins

About Author

Preston Mitchell

Preston Mitchell

A fan of pop culture, Preston loves everything from political think pieces to action blockbusters. He is also the Opinion Editor of the NT Daily and an Integrative Studies senior at UNT.

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