Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream

Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream

by Sara Goldrick-Rab

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If you are a young person, and you work hard enough, you can get a college degree and set yourself on the path to a good life, right?
Not necessarily, says Sara Goldrick-Rab, and with Paying the Price, she shows in damning detail exactly why. Quite simply, college is far too expensive for many people today, and the confusing mix of federal, state, institutional, and private financial aid leaves countless students without the resources they need to pay for it.
Drawing on an unprecedented study of 3,000 young adults who entered public colleges and universities in Wisconsin in 2008 with the support of federal aid and Pell Grants, Goldrick-Rab reveals the devastating effect of these shortfalls. Half the students in the study left college without a degree, while less than 20 percent finished within five years. The cause of their problems, time and again, was lack of money. Unable to afford tuition, books, and living expenses, they worked too many hours at outside jobs, dropped classes, took time off to save money, and even went without adequate food or housing. In many heartbreaking cases, they simply left school—not with a degree, but with crippling debt. Goldrick-Rab combines that shocking data with devastating stories of six individual students, whose struggles make clear the horrifying human and financial costs of our convoluted financial aid policies.
America can fix this problem. In the final section of the book, Goldrick-Rab offers a range of possible solutions, from technical improvements to the financial aid application process, to a bold, public sector–focused “first degree free” program. What’s not an option, this powerful book shows, is doing nothing, and continuing to crush the college dreams of a generation of young people.

Product Details

ISBN-13: 9780226404486
Publisher: University of Chicago Press
Publication date: 09/01/2016
Sold by: Barnes & Noble
Format: NOOK Book
Pages: 368
Sales rank: 273,316
File size: 1 MB

About the Author

Sara Goldrick-Rab is coeditor of Reinventing Financial Aid: Charting a New Course to College Affordability and has written on education issues for the New York Times, the Wall Street Journal, and the Washington Post. She is a recipient of the Early Career Award from the American Educational Research Association and the Atlantic, Slate, and NPR have covered her work. She founded the Wisconsin HOPE Lab, the nation’s first research laboratory aimed at making college affordable, and is a noted influence on the development of both federal and state higher education policies. Dr. Goldrick-Rab is professor of higher education policy and sociology at Temple University. Follow her on Twitter @saragoldrickrab.

Read an Excerpt


Possible Lives

A public debate is raging about the future of financial aid, with experts often trying to blame financial aid recipients rather than the system. Data on their academic performance have been used to question whether they belong in college in the first place. Data on their use of student loans have been used to question their financial literacy and how they live their lives. Data on their degree completion rates have been used to question whether the Pell Grant Program is a waste. Some even ask whether, since college credentials result in increased earnings, we should subsidize college participation for anyone. Let those who can afford it get ahead, while the others remain behind, they argue.

Amid this national furor, students from lower-income families are simply trying to make a better life. In this chapter you'll meet students in the Wisconsin Scholars Longitudinal Study, including the three men and three women who serve as focal points throughout much of the book. But first, let's take a look at the original plans and designs of financial aid and what happened to them over time.

College Then and Now

In the 1960s, when federal financial aid policy was first formulated, the nation was in the midst of a period of economic growth and security, declining poverty, and great social change. Women, African Americans, immigrants, and working-class white people were all clamoring for a shot at middle-class jobs and the American dream, and politicians in Washington wanted to help. From President Lyndon Johnson on down, many policymakers believed that helping people improve their education and skills levels would in turn help the nation. Providing access to higher education was a clear and seemingly fair way to do that.

Passage of the Higher Education Act of 1965 dramatically increased federal investment in higher education and provided grants and loans for students attending public and private colleges. In 1971, the U.S. Senate Subcommittee on Education debated a bill introduced by Senator Claiborne Pell that took things a step further, establishing as a policy of the federal government "the right of every youngster, regardless of his family's financial circumstances, to obtain a postsecondary education." His actions followed those of the Truman Commission, which in 1947 recognized that college costs impeded the nation's ability to double the number of college goers (from 2.3 million in 1947 to 4.6 million by 1960). While that commission took steps to create more affordable institutions of higher education — most critically, the nation's community colleges — Senator Pell and his colleagues believed that it was also important to indirectly subsidize the costs of college. The bill provided $1,200 annually for each student to use as a voucher to lower the amount of tuition they paid at the college or university of their choice. In 1972, the bill passed, and the Pell Grant was born.

The creators of the current federal student aid system knew that college degrees brought real opportunities. The architects of the financial aid system did not, however, envision college as the only route out of poverty. During the same period, Congress invested in jobs programs, a safety net for those left behind, and Head Start for the children of poor families. The emphasis was on college as one option, one possible pathway, and the Pell Grant Program was organized to support that. The grant could be taken to any college or university in the nation participating in the federal student aid program, providing students with a wide range of options, and policymakers hoped that the higher education marketplace would respond by ensuring that opportunities were of the highest quality.

The creation of the financial aid system followed more than a century of investment in public higher education, beginning with the Morrill Act of 1862 and continuing with the GI Bill (1944), the Truman Commission (1947), the National Defense Education Act (1958), and the California Master Plan (1960). By the time the Pell Grant was created in 1972, 80 percent of American college students were enrolled in public colleges and universities. Historian Roger Geiger described the scene this way: "American states poured enormous resources into building public systems of higher education: flagship universities were expanded and outfitted for an extensive research role; teachers colleges grew into regional universities; public urban universities multiplied and grew; and a vast array of community colleges was built." Economists Claudia Goldin and Lawrence Katz have linked these major investments in public education to a growth in human capital that enabled the United States to thrive as a global economic powerhouse. These results would not have occurred if only the wealthiest or even only the highest-achieving students went to college.

Despite these overt commitments to higher education as a public good, not everyone shared Claiborne Pell's vision for how to bring more equality of opportunity into the American system. In fact, the "system" of higher education has never been much of a system at all. It is instead a loose conglomeration of government institutions (at the local, state, and federal levels) and both public and private educational providers that share some similar interests but hold many different ones as well.

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. In the words of the Truman Commission: "For the great majority of our boys and girls, the kind and amount of education they may hope to attain depends, not on their own abilities, but on the family or community into which they happened to be born or, worse still, on the color of their skin or the religion of their parents."

The children of wealthy families are still most likely to complete college, followed by students from middle-income families. Students from low-income families are the least likely to graduate. Should breaking the link between family income and degree attainment be a public priority supported by taxpayer dollars? In the late 1960s and 1970s, states including California, Florida, Michigan, and North Carolina said yes and invested resources in their public colleges and universities in order to keep the prices charged to students low, while also creating state need-based aid programs to complement the federal Pell. State fiscal support for higher education nearly tripled from $3.56 per $1,000 of state personal income in 1961, to $10.42 in 1979.

Other states disagreed. Massachusetts, New Hampshire, New Jersey, Pennsylvania, and Vermont, among other states, appropriated little money to public colleges and universities and instead relied on private institutions to offer opportunities. Rarely do state expenditures per student come anywhere close to matching the federal investment in the Pell Grant. Even the states that initially spent heavily on public colleges and universities reduced their support as more and more people went to college. Beginning in 1981, state appropriations began to decline, from $10.18 per $1,000 of state personal income in that year to $9.24 in 1990 to $7.52 in 2000 to $6.32 in 2010. Today, the share of state resources invested in higher education is about the same as it was in 1966 (about five dollars for every $1,000 of personal income).

Wisconsin, the focus of this book, is among the states that reduced support to higher education the most. Perhaps this was a reaction to signals that college was now sufficiently accessible — after all, demand was rising — or perhaps competing needs (such as Medicare costs) simply required the funds. Or, as many have argued, disinvestment in higher education may be the direct result of shifts in political priorities. Whatever the case, no federal authority requires that states make college affordable, and tuition and other costs grew rapidly, even at public colleges and universities. Had states been required to maintain a reasonable level of commitment (say, the ten dollars or so per $1,000 of personal income provided in 1981), the total amount states contribute to higher education today would be about $146 billion, instead of the $81 billion contributed in 2015. That commitment would have likely prevented the rapid increases in tuition and fees in public higher education (see fig. 1) that fueled the declining purchasing power of the Pell and the need for so many middle-class families to turn to student loans. As figure 4 illustrates, the federal commitment to higher education has long been smaller but steadier. What has changed is state behavior — and this is what drove changes in the prices paid by individual Americans directly from their wallets (as opposed to collectively, through their taxes).

But the federal financial aid system is virtually silent on the role of colleges and universities in keeping the price of higher education reasonable. It also does little to ensure that the education delivered is high quality, and it says nothing about which colleges should admit which students. It does not mandate that institutions create their own need-based aid programs or direct resources to support economically vulnerable students. There are no requirements that the Pell Grant vouch for a meaningful amount of the cost of attending that college. A college that charges $60,000 a year can receive $5,000 Pell vouchers just as easily as a college that charges $6,000. The revenues available from the Pell, along with the array of other federal programs under Title IV of the Higher Education Act including student loans, flow into the coffers of colleges and universities without extracting any accountability for keeping costs affordable. For-profit colleges and universities benefit substantially, pocketing billons in federal student aid each year while producing degrees that employers value far less than community college degrees, often equating them with high school diplomas. The rapid growth of federal spending in that sector is one reason why the entire Pell program is being reexamined today. But some nonprofit private colleges and universities, and a few public flagships, benefit as well, making extensive use of Pell Grants even as they construct mammoth endowments worth billions of dollars and hoard opportunities for the wealthiest students.

Over the past fifty years, America built a financial aid system with lofty ambitions and few teeth. That was fine, perhaps, at a time when a college degree was nice but not required. When the Pell program began, Pell Grants subsidized more than 80 percent of the cost of attending the average public university and all of the costs of attending a community college. Things are different now. Today the maximum Pell covers less than one-third of the cost of attending a public four-year college or university and barely 60 percent of the cost of attending a community college. Figures 5 and 6 illustrate the problem. Spending on the Pell program has lagged behind growth in the number of recipients for decades. These trends, along with rising college costs, have resulted in the significant erosion of the Pell purchasing power.

At the same time, economic restructuring and political decision making has rendered higher education the singular option for getting ahead in America. The spectacular dropout examples, like Bill Gates, are, like some exotic, endangered species, vanishingly rare. Today, the American vision of success runs this way: good parenting and hard work leads young adults to college, college attendance (both for young adults and midlife back-to-school students) leads to better jobs, stronger families, happier marriages, and healthier and longer lives. College is supposed to grant entry to (or at least keep you in) the middle class and certainly more or less guarantee you earn enough money to make ends meet.

If only this were true. Colleges and universities are populated by students and governed by policies — and over time changes in both the students and the policies have altered the meaning of American higher education and limited what our nation's colleges and universities have the capacity to achieve. Against a backdrop of widening inequality in both income and wealth, the number of Americans living in or near poverty has grown. Today 22 percent of the sixty-seven million children in the United States live under the federal poverty level. Many researchers think that the federal poverty level understates the level of income families really need in order to subsist with a modicum of decency. We do far less to support impoverished children and their families than we once did, withholding cash assistance, food stamps, and affordable housing unless or until we are convinced they work hard enough to be "deserving" of help, requiring not only drug tests and jobs of parents, but often frequent reapplications and jumping through multiple bureaucratic hoops as well. At the same time, we pressure their schools and teachers to educate students, regardless of the disadvantages they face in their homes and communities. The K–12 system is required to graduate most students and move them on. What then?

Fifty years ago, many of these students could have gone on to production and manufacturing jobs, often with unions and benefits, and some of them could have made it into the middle class.

Twenty years ago, even, most would have moved straight to the workforce, trying their hand at unstable, low-wage jobs, with some finding their way into more reliable blue-collar work with protections offered by unions. Working-class white men, in particular, continued to find some opportunities that way, even in the post-Reagan era.

Today, those jobs are much harder to find, unions are weaker, and high school graduates are more convinced than ever that their only viable option for a better life is higher education. Higher education is no longer seen as a choice or a luxury — it is viewed as the only available next step and, indeed, the only hope.

Of course, America's hopes for higher education can overstate what college today tends to achieve. Some think that because a college degree brings higher wages, better chances of full-time work, and jobs with benefits, increasing the number of people who attend college can decrease economic inequality. This is a false hope. The social mobility offered by higher education, the opportunity to climb from one rung on the ladder to the next, is not accompanied by any assurance that others higher on the ladder aren't also moving ahead at an even faster rate. There is no guarantee, in other words, that college-educated people from low-income families will not be left behind. And in American higher education, a vicious cycle of exclusion and adaptation in which resources are unequally distributed in ways that preserve privilege helps to ensure that people from lower-class backgrounds stay behind.

The process is quite effective. For people born in the early 1960s, prior to the first Higher Education Act, the odds of bachelor's degree completion (conditional on college entry) for a low-income individual lagged 31 percentage points behind that of a high-income person (see fig. 7). But for those born in the late 1970s, when the financial aid program was in full swing, that gap was 45 percentage points. Despite making some gains in accessing college, the poor are simply running in place.

Furthermore, the average financial benefit of college degrees — the bonus that appears evident when you compare the earnings of a person who holds a bachelor's degree to those of a high school graduate — does not accrue equally for everyone. The returns on investing time and money in college are uneven and unstable since they depend on opportunities in the ever-shifting labor market — a market rife with uncertainty and ongoing change and, too often, discrimination to boot. People who grow up in economically fragile circumstances often continue to live in economically fragile communities, even after they attend college. They are better off than their peers who do not go beyond high school, but they remain far behind most Americans.

All this means that college alone will not conquer inequality. But this doesn't mean we shouldn't be doing more to realize the ideals of meritocracy and equal opportunity that launched the federal Pell program. As figure 8 illustrates, today the likelihood of earning college degrees is still tied to family income. Tracking America's spring 2002 high school sophomores, the U.S. Department of Education found that, among students with similar performance on math tests, students from higher-income backgrounds were vastly more likely to complete college degrees than student from middle-income backgrounds, who were in turn much more likely to graduate than students from low-income backgrounds.

Why is this happening? Students from working- and middle-class families who hit the books in high school and are academically prepared for college are turning away from higher education because they cannot afford it. Those who do make it in the door are leaving without degrees at higher and higher rates. Those who remain in college take longer to finish their degrees, racking up additional debt along the way. This is even truer today than fifty years ago. As members of the Truman Commission wrote, "The democratic community cannot tolerate a society based upon education for the well-to-do alone. If college opportunities are restricted to those in the higher income brackets, the way is open to the creation and perpetuation of a class society which has no place in the American way of life."

The "class society" the Truman Commission feared is now very much a reality, and income inequality is starker than it has been at any time since the Gilded Age. The economic successes of the twentieth century were propelled by investments in education. Now the expected benefits of attending college are increasingly outweighed by both the perceived and real costs, especially over the short term. For people from fragile economic circumstances, the short term is the only future they know they have.


Excerpted from "Paying the Price"
by .
Copyright © 2016 The University of Chicago.
Excerpted by permission of The University of Chicago Press.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Table of Contents

1          Possible Lives
2          The Cost and Price of a College Education
3          Who Gets Pell?
4          Making Ends Meet
5          On Their Own
6          Family Matters
7          Making the Grade
8          City of Broken Dreams
9          Getting to Graduation
10        Making College Affordable
Appendix 1. Wisconsin Scholars Longitudinal Study: Methodology
Peter Kinsley and Sara Goldrick-Rab
Appendix 2. Overview of Wisconsin Higher Education
Drew M. Anderson and Sara Goldrick-Rab

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