Changing the way federal financial aid for college students is determined would lead to important improvements in higher education.
Key points:
- Eligibility for federal aid for college students should be determined by the median cost of college rather than the cost of attendance.
- Adopting the median cost of college would improve the financial aid process.
- It would enhance the competitive landscape and hence improve accountability, encourage cost containment, and, in some cases, lower prices.
- It would reduce the inflationary effect of aid on tuition (neutralizing the Bennett hypothesis).
- It would provide an incentive for colleges to measure and improve quality.