Financial Aid:
Welfare for the Rich, the Poor, and Schools?

Return to Education Libraries 8/9/22  
 

For the Wealthy

Four year American Opportunity Tax Credit
for qualified higher education expenses apply to most taxpayers.

Eligible student include individuals and a spouse or dependent claimed
as an exemption on a tax return.

Maximum annual credit of $2,500/student for those with modified adjusted
gross individual income of $80,000 or less and $160,000 or less for married couples
filing a joint return.

The credit is phased out for taxpayers with incomes above these levels.

Forty-percent is refundable so taxpayers not owing taxes can get up to $
1,000 in cold cash or hot cash depending on you outlook.

$2,000 tax credit for qualified education expenses paid for all students enrolled in eligible educational institutions with no limit on the years so this is particularly helpful to graduate students, students who are only taking one course and those who are not pursuing a degree. Did this extend the traditional bachelor's degree from six years to seven, eight ...?

Some students are attending school for the money and quickly drop out and keep the grant money. Only the academically gifted and ambitious earn complete a degree. Others stay enrolled for something to do and spending money with little chance of failing because teachers have many reasons for not flunking them.

In  2010 USA Today reported that between 2004 and 2008 states apportioned $6.4 billion to institution for the education of students who had not returned for their sophomore year. In addition, state and federal grants of $1.4 and $1.5 billion dollars went to students who did not return for their sophomore year. Federal Supplemental Education Opportunity Grant of $100 to $4,000 are administered by approved schools depending on need. Work Study is hourly work administered by schools.

For the Not Wealthy

Lake County CC in Leesburg Florida reports.
1) Pell Grants for the needy were $5,500 per year. ($6,895 in 2022)
2) Fulltime tuition was $92 per credit x 24 credits = $2,208/year.
3) Balance was $3,292 was available for student expenses.

After teaching and selling Quick Notes Programmed Textbooks
at both two and four year colleges I knew that about half
of the the students bought new book. Some didn't use books.
Others were eventually dismissed for lack of attendance.

By 2015, tuition was up $360 while PELL grants were up $275.
In addition, Lake County CC was Lake County State College.
I also asked if there were other grants.
Answer, yes, our state also has mostly need grants.

PELL Grants of up to $5,775/year
for those with Financial Need

Grants Not Well Spent
It is an outrage that we saddled several million students with loans to enroll
in untested online programs, that seem to have offered no labor market value.

It is an outrage that our lending programs  encourage schools like USC to charge $107,484 (and students to blithely enroll) for a master’s degree in social work (220 percent more than

the equivalent course at UCLA) in a field where the median wage is $47,980. It’s no wonder many borrowers feel their student loans led to economic catastrophe.

The federal government  gutted accountability rules; treated online programs as if they were the same as traditional brick-and-mortar schools; extended credit to students and parents well in excess of financial need or ability to pay; and raised and then eliminated limits on loans to parents and graduate students, allowing many to accumulate eye-popping, unpayable amounts.  The government allowed—and often encouraged—people to make bad choices.

A better way to provide relief to student loan borrowers 4/19

Obama Wants to End VA Exemption from 90/10 Rule.

The VA  announced that 17 for-profit colleges have failed the 90/10 rule, which states that for-profit colleges may not derive more than 90% of their revenues from federal student aid programs such as Pell Grants and direct loans (collectively called “Title IV” funding). Violators of the rule for two consecutive years will lose access to Title IV.

The Department of Veterans’ Affairs and the Department of Education found that including veterans’ benefits in the restriction would increase to 200 the failing for-profit colleges. The 90/10 rule applied to all colleges would provide a useful safeguard against schools relying on government programs  to finance academically and motivationally average students. Lobbyists be able to stop this Obama proposal.

With again increasing scrutiny of the for-profit school industry, the 90-10 rule has again become controversial. Many advocates are pushing efforts to modify the 90-10 rule.

Few Graduate from AA Programs

BS Success Rate Gets Better as Students Get More Academic

Include Military and Veteran Benefits in the 90-10 Cap

Efforts to make this change continue. In November 2015, Senator Dick Durbin [D-IL] introduced legislation to include military and veteran benefits in the 90-10 cap. The bill remains stuck in the Senate Health, Education, Labor and Pension Committee.^[13]

President Barack Obama expressed support for the bill shortly after its introduction.^[14]

In 2015, Secretary Hillary Clinton expressed support for the inclusion of military and veteran education benefits in the 90% cap.^[15]

Reduce the 90-10 Cap to 85-15

If military and veteran benefits were included in this lower cap, the Center for Investigative Reporting found that an additional 292 schools would fail this lower standard.^[12]
 

The change was included in the stalled Protecting Our Students and Taxpayers Act of 2015, introduced by Senators Dick Durbin, Jack Reed, Elizabeth Warren, and Richard Blumenthal.^[13] 

In his 2017 Budget proposal, President Obama requested that the cap be lowered from 90% to 85%.^[16]
 

The Ball is now in President Trump's court.

Economic Rewards Low for Many Graduates

Epilogue  Those in favor of governments programs have no interest in cost effectiveness.