A Failing Financial Aid System Keeps Students Out of College

Of course, that's tragic for the individuals. In today's credential-crazed workplace, those job seekers lacking a college degree will have trouble getting anything but low-paying, dead-end jobs. But, more important, it's a disaster for the nation, which needs an educated workforce to sustain its economy against bigger or hungrier competitors around the globe.

Limited options. "Families are under pressure. Heating, food, transportation bills are up," even as state budget cuts and stock market troubles are pushing more colleges to hike tuition, says Marilyn Cargill, president of the National Association of State Student Grant and Aid Programs and director of Vermont's financial aid programs. The only way many families paid tuition bills in recent years was with loans. But the credit crunch has wiped out many families' ability to get a second mortgage or private educational loan, she notes. As a result, some low- and middle-income families may be running out of college funding options. "I have worked in this field for 24 years, and I don't know that it has ever been worse than it is now," she says. "It is scary."

What's scaring parents, students, and college officials ought to concern all Americans, says William Kirwan, chancellor of the University of Maryland system. "I hate to sound apocalyptic," he says. "But the proportion of students who need financial aid is rising at a rate faster than we are responding as a nation. We are going to have huge economic and social problems if we don't do a better job of financing higher education."

When it came time to pay for college, Orenthious "OJ" Hill fell through the cracks. His father was never around much, and his mother left him with his grandfather in Gainesville, Fla., when he was 7. His grandfather kept him in school and encouraged him to pursue his dream of becoming a history teacher. Hill enrolled at University of Florida, but since dropping out for financial reasons in 2003, he's been working full time and taking what classes he can afford. Now he can't even get a federal student loan for school because none of the adults in his life will fill out the Free Application for Federal Student Aid, the single most important form that qualifies students for the vast majority of loans and grants. Now that he's 24, he can apply for need-based aid on his own. If he had been able to at least get some student loans earlier, he figures, he'd be a teacher by now. At this rate, the soonest he'll get into a high school classroom is 2010.

"You hear parents and churches saying, 'Go to college!' But they never really say anything about how to fund college," Hill says. "I didn't know what a Pell grant or that stuff was until my first semester in college." And his grandfather is still suspicious of Hill's desire to take out federal student loans.

Fine print. Research by the American Council on Education indicates there are more than 1 million students like Hill across the country who may very well be eligible to receive aid but are not getting it. One reason: Many don't understand why or how to fill out a FAFSA. And no wonder. The form, with 145 questions, is longer and more eye-crossing than the standard tax form. University of Michigan economist Susan Dynarski estimates that it takes the average applicant about 10 hours to gather all the documents—W2s, tax returns, etc.—and fill out the form. For parents who don't speak English well or who don't want to reveal such exhaustive financial information to the government, this form can be insurmountable. Indeed, Secretary of Education Margaret Spellings says the application is so convoluted that "it is as if we are trying to keep people out of college."

Those who make it past the FAFSA then have to make sense of the fine print surrounding many government, school, and charitable aid programs. Some college financial aid officers, for example, are balking at helping students apply for the new federal $4,000-a-year "TEACH Grants," which are supposed to help aspiring teachers pay for college. The reason: Despite the name, they are not grants. They are loans that will be forgiven only if the student gets certified as "highly qualified" and works full time teaching a "high-need" subject at a federally designated, low-income school for at least four years within eight years of graduation. Those who don't jump through all those hoops could see $16,000 worth of "grants" turn into a $24,000 bill after interest charges. That's one reason Ted Malone, head of financial aid for the University of Alaska, won't process TEACH Grant applications for underclassmen, even though he knows many need the money. "Virtually all of the financial aid officers I know would bleed for our students," he says. "But we have to administer programs that have insane rules."