Table of Contents
Financial Aid
(Topics: Children ⇒ Education | Back to Home)
Doing anything costs money. That should be self-evident, but it's worth a constant reminder. And if the thing you are doing is offering an education, you will need a budget to do it. Checks must be written to build buildings, pay teachers, purchase equipment, and so on.
In most forms of commerce, if you want something, you pay for it. And if you can't afford it, then you don't get that thing. That's the whole story. The price is the price, and if you can't come up with the money—tough luck.
Except when it comes to education. Which is extremely weird.
How Much You Got Pricing?
In the world of ridiculously expansive enterprise software, an old joke says that the price of the product is based on how much the customer can afford to pay [1]. And that's pretty much how financial aid works. Philip Greenspun, a proto-internet-essayist, puts it this way:
| Suppose you got a brochure from United Airlines listing the fare from Boston to San Francisco as $1 million. However, the brochure stated that “because of our commitment at United Airlines to ensuring that every American gets the transportation that is his birthright, we offer financial aid.” The brochure comes with forms in which you list every scrap of money that you have. You are instructed to send this into United Airlines along with a certified copy of your tax returns so that they can evaluate your need. A few days later, United Airlines writes back: “Great news. We have evaluated your financial situation and have determined that if we take more than $1,000 out of you, you'll be reduced to the homeless shelter. So we're awarding you $999,000 in financial aid and you only have to give us $1,000 to fly from Boston to San Francisco. [2] |
Nothing else works quite like this. Sure, lots of things are means-tested (like welfare.) But when it comes to education, we talk about it being a universal right unless you want really good education, in which you need to shell out the big bucks. Or get a subsidy.
Getting There From Here
We're not in the magic wand business here. As much as I would like all education at every level to have no direct cost to students, this isn't going to happen without a lot of discussion and policy work over the course of many, many years. But it does benefit all of us to take a quick look at the numbers.
- $700B is the amount that colleges and universities spend per year to operate [3]
- $145B is the amount that students receive in financial aid (grants, not student loans) [4]
There you go. About 20% of the cost of higher education is paid for by the rest of us in grant programs. [5] Our task is to figure out what that number means and where to go next.
The Models Exist
There are schools that do not charge tuition [6]. One interesting example is Berea College, which is basically free for every student [7]. Yes, they do get some state money and do fundraising, but about 75% of the school's operational costs are covered by the income from a gigantic endowment.
Can every school be like Berea? Definitely maybe. But no one who wants to educate themselves should be thinking about the money. They should be studying hard to become the person they need to be in the world—and the world needs them to be.
[1] Beautifully discussed in an old Joel Spolsky piece.
[2] He's an art photographer too, so before you click, a minor content warning.
[3] https://nces.ed.gov/fastfacts/display.asp?id=75
[4] https://research.collegeboard.org/trends/student-aid/highlights
[5] This is massively simplified, but it proves the point. And of course I'm not mentioning all of the K-12 programs, trade schools, and so on that charge tuition but also have financial aid.
[6] Some of them.