The Real Cost of College Aid

I’ve been giving a lot of attention to the Student Aid and Fiscal Responsibility Act lately (including in this new interview and Monday’s daily podcast) because it is the biggest thing going on in education right now. Even more important, it is a revolting example of bankrupting, political business as usual that is flying below most peoples’ radar.

Touted as miracle legislation that will reduce the deficit and create or expand numerous government programs – including increasing Pell Grants at a rate faster than inflation –  CBO estimates show that SAFRA would actually end up costing taxpayers tens-of-billions of dollars over the next decade. And now, it turns out, even those estimates may be too conservative.

Today, Inside Higher Ed reports that buried in the OMB’s “mid-session review” – the document released yesterday predicting a record-destroying $1.6 trillion federal deficit for FY 2009 – is the projection that Pell Grant funding will cost $27 billion more over ten years than predicted just a few months ago.  That’s based, importantly, on big recent increases in college enrollment that could very well decline as the economy recovers. But with President Obama pushing to get more and more people into college, it offers yet another, powerful reason to conclude that far from saving taxpayers money as the bill’s supporters claim, SAFRA is going to cost them bundles.

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