“My name is _________________” and as a college student I am writing to bring your attention to the problem of how Federal Student Aid exhibits inequities. Financial aid is an attempt to address a contemporary social problem of college affordability. Governments can directly subsidize education by allocating grants, funding, and tax breaks to universities, or governments can give students help with paying for their education through financial aid, and let money be allocated to schools where students choose to attend. But our system fails to address the rising cost of higher education.
Most of the rapid increase in the higher education price index (HEPI) came between 1980 and 2010, three decades when the HEPI generally went up faster than the consumer prince index (CPI). From 2010 and 2019 the higher education price index averaged 2.2% in annual increases, which was close to the CPI. In the most recent five years, the HEPI was significantly lower than the CPI in 2022 and 2023, and only very slightly higher than the CPI in 2020, 2021, and 2024. Federal aid has decreased over the past decade, with total federal grant aid decreasing by 7% (in inflation-adjusted outlays) and Pell grants specifically decreasing 5% (inflation adjusted) between 2014 and 2024 (Trends in College Pricing). State funding for public universities has also declined (in inflation-adjusted terms) since 2000, and public universities have covered the loss of state funding with increased tuition, especially in the years between 2001 and 2016.
The increase in relative costs of university and the decrease in federal and state funding for colleges and for grants to students has caused a student debt crisis. This crisis is experienced more painfully by families with fewer assets, as they are forced to borrow and use debt to cover the cost of education, whereas families with more wealth may use some of their wealth to pay for college or may secure better rates on loans for college. Since wealth, like income, is a factor that influences how much education a student can affords, inequalities in wealth exacerbate inequalities in college debt. Disparities in income are well-known: Black households had median incomes that were 60.5% the incomes of non-Hispanic white families, while Hispanic households had incomes at 77% of non-Hispanic white households (Census Income Report). But the wealth gap is much more: The Census Bureau reported that in 2024 Black householders have a median wealth of $24,520, which is only 10% of the median wealth of White households ($250,400). Thus, to the extent that funding for financial aid and universities cause access to higher education to be highly influenced by issues of who can afford the expense, the inequities related to wealth and race will shape access, and inadequate funding for financial aid will perpetuate income and wealth disparities rooted in historical discrimination and oppression long after the blatant discrimination and oppression are removed.
The key sections I will be covering deals with the contemporary social problem of Federal Student Aid and how historical foundation’s structure inequity, cultural norms, policy and institutional mechanisms.
The GI Bill (1944) after World War II, was made to benefit World War II veterans with their transition back to civilian life, including tuition assistance for education. However, African American veterans had limited access to higher education because the racial inequality in the GI Bill has created wealth gaps that impact FAFSA eligibility applicants today (Hunter, 2015). The GI Bill's preferences for White applicants gave advantages in lifetime earning and wealth accumulation to White veterans, and limited the ability of many Black veterans to build generational wealth through education and homeownership. This results in fewer assets to pass down, leading to lower incomes and wealth for many Black families today. The FAFSA determines eligibility by a formula that includes information about family assets, but those calculations to not consider the value of non-liquid assets such as a student's primary residence (the home owned by a student's parents) ore retirement accounts. Yet, the main asset that White families tend to have, and Black families are less likely to have, is ownership of a primary residence. In 2021, 70% of White householders had equity in their own home, but only 39% of Black householders had home ownership assets (Census Bureau report on Wealth).
Another policy that sounds fair but ended up being unfair in practice, for example, is the Every Student Succeeds Act (ESSA). It sounded fair because it was known for demonstrating equality, but it ended up doing the opposite in practice by shifting power and decision-making away from the national government to individual state governments (Black, 2017). States have historically failed to direct educational assets to improve the educations for poor and racial or ethnic minority students, and the federal government's role in promoting efforts to equalize educational investment and outcomes across class and racial groups was terminated in the ESSA.
Today White Americans receive more financial aid then African Americans and Hispanics due to their having more financial privileges and higher education resources (e.g., private schools). For example, Dr. Shermer (2022) raises the issue that the Federal Student Aid application does not ask about retirement savings or home equity. Caucasians are more likely to have retirement savings and home equity than African Americans and Hispanics; by not asking those two questions, financial aid is providing more aid to Caucasians than African Americans and Hispanic students. Making it more likely for African Americans and Hispanic students to either borrow money for college and or not attend college at all. Schools and the justice system add to Federal Student Aid inequality also by only accepting students with strong academic records. Dr. Shermer (2022) mentioned states have certain levels of aid policies that show racial inequality by accepting students with strong academic records. Accepting students with strong academic records is a disadvantage for African Americans and Hispanics who may have a weaker high school grade point averages because they’re less inclined academically.
Student debt is another way African Americans and Hispanics experience economic inequality. They frequently take out student loans to pursue higher education for better job opportunities. Dr. Shermer (2022) noted that by the time students graduate from college, they cannot yet escape the racial wealth gap because they struggle with loan repayment which hinders their ability to build financial stability. This leads to long-term consequences that prevent economic mobility.
For example, I have an African American family member who has personally encountered this problem. As an adolescent, I saw my brother struggle to find an HVAC job after graduating from college. He was denied by multiple HVAC companies because he did not have two years of experience. His argument was “I have the degree; how do you expect me to get experience if you will not hire me?” After my brother was denied the job, he uprooted his life, and moved to Orlando, Florida where heating and cooling businesses thrive. However, he experienced the same hardships as he did in Illinois. He accumulated more than $20,000 dollars in debt due to our parent’s income reflected on his financial aid. Now he has moved back to Springfield, IL and works as a bus driver for Sangamon Mass Transit District.
My brother continues discussing how out of all fifteen classmates (3 African American and 12 Caucasian) nine Caucasian students received internships and jobs, while the three African American students did not receive internships or jobs. My brother later found out that the same job he for which he was denied was offered to one of his Caucasian classmates with no experience, and his White classmate was hired a few weeks later. From my viewpoint, the job was hiring based on race rather than qualifications, which is considered illegal racial discrimination. Not only did my brother experience discrimination, he is also experiencing student debt, which is keeping him within his wage gap. Dr. Shermer (2022) mentioned Economic inequality is still around because African Americans and Hispanics are still relying on student loans and experiencing debt after graduating from college, which keeps them in their racial wealth gap.
Changing policies within the United States could help make a difference. I believe Every Student Succeeds Act (ESSA) needs to change. ESSA has weakened equity standards by failing to address societal issues that contribute to educational inequality, such as racism, poverty, and school funding, according to Derek W. Black (2017). This makes it difficult for African Americans and Hispanics to access and succeed in college. The policy should stat that disadvantaged students receive the necessary resource regardless of their district’s local tax base (implement weighted student funding).
Sincerely,
References
Black, D. W. (2017). Abandoning the federal role in education: The every student succeeds act. California Law Review, 105(5), 1309-1374. https://www.jstor.org/stable/26577710
Hunter, L. J. (2015). The untold story of the GI Bill: The experiences of African American veterans with attaining educational benefits through the Servicemen's Readjustment Act of 1944. (Publication No. 3706461) [Doctoral dissertation, University of Massachusetts Boston]. ProQuest Dissertations & Theses Global. https://uis.idm.oclc.org/login?url=https://www.proquest.com/pqdtglobal1/dissertations-theses/untold-story-gi-bill-experiences-african-american/docview/1695261565/sem-2?accountid=14554
Shermer, E. (2022, March 28). “Indentured students”: Higher education and the student loan crisis [video]. Kaltura. https://uis.mediaspace.kaltura.com/media/ECCE+Speaker+Series+-+Indentured+Students%3A+Higher+Education+and+the+Student+Loan+Crisis/1_biewu0gj
This was supposed to be a paper explaining a policy or program in a fairly neutral way. I guess the problem you were examining was inequalities in college funding for making higher education affordable to people, and you were pointing out that one of the policies that attempts to make college education more affordable (student loans) is perpetuating easier access to college for households with equity in a home that they own, and since White families are almost twice as likely to be home-owners, this gives White students an unfair advantage. You are also saying that past programs to encourage education (the G.I. Bill) also unfairly distributed benefits in a way that privileged White students.
An interesting point is the problem with college admission standards being tied to high school academic performance or scores on standardized tests. Systematic differences in K-12 educational outcomes that disadvantage Blacks and Hispanics will be repeated at University level, because universities want to admit students who have a demonstrated likelihood of succeeding (retention and graduation rates are used to determine the quality of a university). Admitting students who are unlikely to return for a second or third semester, or who are unlikely to ever graduate, will become a long-term problem for a university, although such admissions strategies may unethically boost admission and fee revenues in the short-term.
Is there any argument to increase financial aid or change the way it is awarded? Is there any innovative argument to abolish federal financial aid? Policies could fund universities directly, and allow universities to lower the costs they charge to students. That is, governments could fund higher education so that a year of school with housing and meals that costs $30,000 to provide might be priced at $2,000 or $3,000, and little or no financial aid would be required. On the other hand, government funding for higher education could be eliminated so that universities charged the full $30,000 for tuition and fees, and instead of funding the universities, each person could apply for $26,000 in federal student financial loans for any five years of their lives at any point between the age of 17 and 77. Is one approach to higher education subsidy better than the other?
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