Friday, November 25, 2011

Imagine getting money you are not qualified to have

The cover story in today's USA Today should be an eye-opener for anyone who has a son or daughter in college (or about to go) and who uses financial aid.

Here are the key excerpts, in my opinion:

Universities and colleges are giving $5.3 billion in aid this year to students who the federal government says don't need financial help, according to figures from the College Board. ...

Elite universities such as Harvard, Yale and Stanford give aid to families earning as much as $200,000, which less-selective schools say puts pressure on them to also offer grants to higher-income families. Education experts say such subsidies mean less help for lower- and middle-income students, who fall deeper into debt to pay tuition. ...

Families with incomes up to $180,000 also get tax breaks toward tuition under the American Opportunity Tax Credit. The credit cost $14.7 billion in 2009, the most recent data available — twice what it cost in 2008. ...

One reason universities do this, according to financial aid directors and observers, is to vie for applicants with good grades and high test scores, who often come from affluent communities with top-rated school systems.

"If they want to increase their rankings in U.S. News & World Report, an easy way to do that is to bribe high-scoring students to come to your university with non-need-based aid," said Richard Kahlenberg, a specialist in education at the Century Foundation.

The critical question surrounding financial aid is this -- should need be determined based on need or merit? How you answer that question affects your response to the USA Today report. 

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