by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Andrew Gillen writes for the Martin Center about ways to stop student aid from driving up college tuition costs.
The Department of Education’s method for awarding college students financial aid has many perverse effects. It contributes to rising tuition, keeps students in the dark about their aid eligibility for too long, gives some colleges unfair special treatment, and does not incentivize colleges to improve.
But a small tweak would address those problems: replacing the Cost of Attendance (CoA) with the Median Cost of College (MCoC). The Cost of Attendance is determined by each college based on its estimate of the total cost of attending that particular college.
Currently, the government uses the CoA to calculate how much aid a student will receive. The government subtracts how much it thinks the student can afford to pay (the student’s Expected Family Contribution) from the CoA. This calculation yields the student’s financial need.
Schools use aid programs (such as Pell grants, federal student loans, and university scholarships) to try to meet each student’s financial need, subject to aid program caps. In general, the larger the CoA, the larger the need, and the larger the financial aid packages for students. This means that students at colleges with a higher Cost of Attendance are generally offered more aid than other students, which gives colleges a reason to set their CoA higher than otherwise.
To prevent such gamesmanship, the Median Cost of College should be used for determining aid eligibility instead of the Cost of Attendance.