Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream by Sara Goldrick-Rab
My rating: 4 of 5 stars
Soaring rhetoric about the value of hard work obscures the fact that family money has long been one of the best predictors of college success.
Among the so-called developed nations, the United States is unique in many respects, not least in higher education. Whereas going to university is either free or quite cheap in most of Europe, in America college can often be a serious financial burden. Admittedly, America also has many of the best universities in the world, so perhaps the extra cost is justified for the small fraction of students who attend these elite institutions. But costs are also high in public universities; indeed, even our community colleges are expensive by European standards.
This book is not primarily concerned with why the cost is so high. Instead, sociologist Sara Goldrick-Rab focuses her attention on how students go about paying for it. To do this, she conducted Wisconsin Scholars Longitudinal Study, in which she and her team followed 6,000 low-income students from 2008 onwards. The study involved many surveys and much statistical work, but also in-depth interviews of selected students. Her aim was to find out how the various forms of financial aid—grants, loans, work-study—affect graduation rates. With such a wealth of evidence, Goldrick-Rab can speak with quite a bit of authority about the challenges faced by low-income students.
The picture that emerges is of a complicated and often ineffective financial aid bureaucracy, which allows too many low-income students to fall through the gaps. Much of this is due to financial aid being outpaced by the rising cost of college. Consider the Pell Grant, the primary economic subsidy provided by the federal government to low-income students. When it was passed into law, in 1965, it covered 80% of an undergraduate degree. Nowadays, however, a Pell Grant covers less than 1/3 of that price. Meanwhile, contributions by state governments have steadily dropped off, leaving students with ever-higher tuition costs.
Federal loans have arisen as a way to bridge the gap between the rising price of attending college and the decreasing purchasing power of grants. Though better than private student loans, even the federal loans cannot be discharged through bankruptcy. To qualify, the student must fill out a FAFSA application every year, which determines what types of loans the student qualifies for, how big a loan, and the “expected family contribution”—the amount the government expect the student’s family to be able to pay.
In Goldrick-Rab’s telling, there are many ways in which this system fails. One obvious difficulty is the expected family income. Most obviously, even if a student’s family has the available money, they may not be willing to pay; and of course the government cannot force families to make the expected contribution. What is more, the formulas used by the government to determine how much a student’s family can pay are not always realistic. They do not account for the reality that, rather than being financially supported by their families, many students financially contribute to their families while they are studying.
Basing financial aid on last year’s tax returns can also subject students to sudden shifts in their aid. If a parent gets a new job, for example, a student may suddenly find that they no longer qualify for grants or subsidized loans, and that their expected family contribution has drastically risen. To take an example from my own life, FAFSA also factors in whether a student has any siblings in college; and the graduation of a sibling can also cause a dramatic reduction in financial support.
The call for increased financial aid has sometimes been met with the response that students ought to work more in university. But this advice is misguided for a multitude of reasons. For one, students are already working a great deal. But the days when students could pay their way through college by stacking boxes during the summers are long gone. The students in this book did work, often for long hours, making the minimum wage of $7.25 an hour. At that salary, it is difficult to even make a significant dent in the cost of attending college (the average debt of a graduating student is about $37,000).
Working while in school presents other difficulties, too. Scheduling is an obvious example. Most college classes are during normal work hours, which forces many of the students in the study to work night shifts and weekends. Time spent working is time spent not studying, and often time spent not sleeping, which hinders academic progress. The requirements on loans and grants only compound the problem of balancing work and study, since many forms of financial aid require a minimum GPA and full-time enrollment. This can result in a double-bind, since if a student drops one class to focus on the others, she may switch from full-time to part-time; and if she keeps all her classes, her GPA may suffer.
The Federal Work-Study program provides financial assistance to students working on campus, and according to Goldrick-Rab is a beloved program. However, the rules for applying to the program are somewhat confusing. Many students assume that acceptance into the program means that they will be given a job. But this only means that they can start applying to jobs that are covered under the program. Aside from this, work-study depends on the amount of funds and work available at a given moment, and so has not proved to be a reliable way for most students to pay for college.
College is meant to be a stepping-stone to a greater life. But for many of the people in this book, their time at university became a weight around their neck. As low-income students struggle to balance family, jobs, and study— negotiating a complex financial aid system that relies heavily on loans—they often found themselves unable to keep up with their classes and unable to pay for even basic living expenses. Indeed, since there is no university equivalent to subsidized school lunch programs, many of the students were literally too hungry to focus.
Worst of all, if a student decides that they cannot complete their studies, then they do not only lose the opportunity of a degree: they are saddled with debt, without the job opportunities to pay it off. As a result, the decision to study in university carries considerable financial risk in the United States, especially for low-income students. If a student succeeds in graduating, they will have significantly better job opportunities than their peers; but if they fail, they will be significantly worse off than their peers who did not even try.
To me it seems clear that the American system for funding higher education is not working. Student debt is the fastest growing type of debt, and the second highest private debt category in the country, after house mortgages. This was not true twenty years ago. Collectively, $1.5 trillion is owed by 45 million students—about 7.5% of America’s GDP. Roughly one in ten students defaults on their loan payments within three years, and, unsurprisingly, default rates are three times higher among students who did not complete their degrees. When you consider that education has one of the highest returns on investment of any government expenditure, our failure to support it is especially baffling.
Why has higher education become so outrageously expensive? I am still unclear on this, and it is not the main focus of this book. But we are not powerless to change it. In so many other countries, the decision to study in university is not nearly so fraught with financial peril. Indeed, the phrase “Student Debt,” like “Medical Debt,” is virtually unknown here in Spain. Of course, this is not an isolated problem. Even if we fixed financial aid, students from poorer neighborhoods would still be at intense disadvantages, not least because American public schools are funded by property taxes (and so reflect a neighborhood’s wealth). But making higher education affordable and financially risk-free would go a long way in bolstering the economy and widening opportunity.
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