Liberal arts: financial aid which rewards social detrimental behavior should not be funded

National Review, Jan 29, 1996 by David Mastio

Federal financial aid is a fetid swamp of destructive and contradictory social incentives -- rewarding divorce, deadbeat dads, out-of-wedlock childbirth, and cohabitation. Not to mention driving education costs ever higher.

As Republican plans stand now, financial aid for needy college students is to be hacked back by as much as $10 billion over the next few years. Liberal analysts predictably whine that as many as a quarter of a million will lose all financial aid and hundreds of thousands will pay even more for college; many will be forced to drop out.

But the problem is not the cuts. It is the destructive incentives in the system -- which, after the cuts, still remain.

The program granting financial aid for college students from poor families recognizes the sound principle that parents should help their children pay for college before the taxpayer does. But buried in the bureaucratic system that governs the program are rules that thwart that idea.

When a man divorces his wife and leaves his children behind, the Department of Education doesn't even attempt to find out his financial status when those children head off to college. Daddy could make a million, but if mommy is poor, as many women become after divorce, the children will receive federally funded financial aid. Daddy becomes a federally approved and taxpayer-funded deadbeat dad.

According to Department of Education statistics, undergraduates who receive financial aid are 50 percent more likely to have divorced parents than students who are refused. Hundreds of thousands of students are receiving financial aid without having their need compared fairly with students whose parents remain married.

And if you are a divorced or unmarried woman with children nearing the age at which they head off to college, God forbid that you plan to marry. The government will expect the children's stepfather, whether he adopts them or not, to ante up. Nary a thought will be given to the children's real father.

Among graduate students, the Department of Education encourages cohabitation rather than marriage. If a graduate student lives with someone who is working, the government doesn't care. However, if the two get married, then the graduate student's spouse's income may disqualify him or her from receiving financial aid.

The government also exempts students who have children from reporting their parents' income. Now, married students and those over 24 are already exempt, and students whose parents are poor already qualify for aid, so whom does this rule help? Middle- and upper-class unwed mothers under 24. Rather than ask their parents to help, the government steps in and helps pay for their college despite the fact that their parents could pay.

And how much do we spend subsidizing all that silly behavior? Well, just take one program -- Pell Grants -- which makes up about one-third of federal need-based financial aid. There are 3.7 million students who get Pell Grants, averaging $1,500. Of those aid recipients, 35 percent have divorced or never-married parents. That adds up to about $1.8 billion yearly in grants to college students whose need has been measured without counting the highest-paid member of their family -- their father.

Which brings us to the formula that determines the size of a student's aid package. Essentially, the more expensive the school you choose to attend, the more likely you are to get aid and the larger your aid package will be. Thousands of students are receiving financial aid to go to expensive private schools when if they chose to go to their state school the Federal Government would give them nothing -- a subsidy to send middle-class kids to the Ivy League on the backs of the taxpayer.

The incentives for the schools outside the Ivy League aren't any better, because the more they charge, the more aid their students will get. Across the board, higher education has seen massive inflation for the last two decades. Since the 1973 - 74 school year, the cost of attending a public university has almost quadrupled, from $1,700 to $6,700; at private universities the cost has rocketed from $3,700 to more than $20,000. In fact, every year for more than a decade, the cost of higher education has increased faster than general inflation.

As Republicans go about cutting the budget, they should try to look beyond the numbers -- and see if the programs really do any good.