Harvard's announcement on Dec. 10th that it will provide financial aid to families making as much as $180,000 per year, echoed today by Yale, has been greeted with nearly universal acclaim. (The only detractors seem to be those who didn't get in.) The move sets a new standard for all private universities to include students of all economic backgrounds.
But while private colleges pile on to the idea of expanded scholarships and grants, state schools increasingly exclude students in the middle class who they were intended to support.
They do so through student loans. Across the country, states provide state loans to students through non-profit corporations that are accountable to no one and increasingly corrupt. In Iowa, the Iowa Student Loan Liquidity Corp. is one of the worst offenders, under investigation by the attorney general for pursuing aggressive loan tactics and giving colleges incentives to steer business their way.
Meanwhile, students attending the private University of Iowa graduate with an average of $20,234 in debt, below both the national and state averages. The idea that public colleges leave middle-income graduates better off financially than public ones is simply wrong.
The solution is to do away with government student loans completely. What makes Harvard's plan so lauded is that it is a "no loan" policy, like Princeton's, Amherst's, and Williams'. It relies on straight grants and scholarships. A student from a household earning $120,000 to $180,000 will pay 10 percent of their income per year. A student from a household earning $60,000 per year will pay nothing at all.
Of course, Harvard has a $35 billion endowment. State governments can't be expected to tap into similar funds to provide free rides for students who deserve them. Or can they? If the corrupt state lenders in Iowa, Missouri, Pennsylvania, and Florida -- all under investigation -- were eliminated, the government would be able to give deserving students free rides and private loan corporations would pick up the slack for those with incomes too high to qualify.