Newspaper article Evansville Courier & Press (2007-Current)

College Financial Aid System Rewards Schools, Poor Students ; IN RESPONSE

Newspaper article Evansville Courier & Press (2007-Current)

College Financial Aid System Rewards Schools, Poor Students ; IN RESPONSE

Article excerpt

U.S. employers complain they can't find enough skilled employees. Then how do we explain why almost 54 percent of recent college graduates are underemployed or unemployed, even in scientific and technical fields, according to a study conducted for The Associated Press by Northeastern University researchers? The cause is more fundamental than the cycles of the economy: The country is turning out far more college graduates than jobs exist in the areas traditionally reserved for them: the managerial, technical and professional occupations.

The Bureau of Labor Statistics tells us we now have 115,000 janitors, 83,000 bartenders, 323,000 restaurant servers and 80,000 heavy-duty truck drivers with bachelor's degrees - a number exceeding that of uniformed personnel in the Army.

Was college worth it? A huge part of the problem relates to federal financial-aid programs. Annual student loans, Pell Grants, tax credits and other federal assistance totaled some $169 billion a year in 2010-11 - more than 1 percent of national output. These programs are based on two erroneous premises: that almost everyone needs higher education for vocational success and that they reduce student costs.

More than 25 years ago, Education Secretary William Bennett argued federal aid programs benefited colleges more than students. Recent studies by Stephanie Riegg Cellini of George Washington University and Claudia Goldin of Harvard University, as well as by Andrew Gillen for the Center for College Affordability and Productivity, support that.

Consequently, we have millions of underqualified college students borrowing or getting Pell Grants for college. More than 40 percent of them don't graduate within six years, and many who do have marginal academic records.

Besides leading to more underemployed college students of dubious academic quality, the dysfunctional student financial assistance programs have other pathologies

First, universities, unlike the taxpayers, suffer no financial consequences when the underqualified students they have lured into their academic programs ultimately default on their loans.

Second, students who study six years but ultimately drop out receive more financial aid than the diligent "A" student graduating in three years: We reward mediocrity and punish excellence.

Third, there is no adjustment of student-loan interest-rate terms to meet market conditions or differing risk factors relating to individual repayment prospects. That means too much money is lent, especially to high-risk individuals with little prospect for academic success. …

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