The Case against Student Aid

[Draggingtree]

Ludwig von Mises Institute :

The Case against Student Aid

 

Mises Daily:Tuesday, May 08, 2012 by Aaron Smith

 

For decades, Federal Financial Aid (FFA) programs have been implemented and expanded to make higher education "affordable" for students. The ostensible merits are obvious: loans, grants, and work-study schemes allow students to purchase education without much need for cash or other sources of private funding — a supposed benefit to students who otherwise might not be able to pay for college.

 

However, as Bastiat instructed, "It almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa." Surely, to the credulous eye, the immediate consequences of FFA have solidified its standing as a model of successful federal intervention. Virtually all students who are admitted to college qualify for FFA, which has helped fuel a substantial increase in matriculation rates. This illusory victory is but a distraction from the later and disastrous consequences that Bastiat warned of.

 

The unintended consequences of FFA are numerous, indeed. Skyrocketing tuition, high default rates, and pathetic graduation rates — to name a few — are all byproducts of a system that incentivizes inefficiency, largess, and misguided decisions. Oddly, while many students aren't legally permitted to take a sip of alcohol, they are systematically encouraged to contract into years of, essentially, indentured servitude. It is evident that the aggregate result of FFA is net harm.

http://mises.org/daily/6020/The-Case-against-Student-Aid

 

[Draggingtree]

Time to Phase out Student Aid

The U.S. Senate and House this past week passed a student loan bill that ties interest rates on federal student loans to 10-year Treasury notes. But Cato scholar Neal McCluskey argues that the bill only delivers minor tweaks to a system that needs elimination. “If the evidence shows us anything,” says McCluskey, “it is that federal student aid is largely self-defeating when it comes to prices, and likely hurts low-income people more than anyone else.”

http://www.cato.org/publications/commentary/now-lets-try-real-student-aid-reform