Paying the Price of a Broken System

By Anastasia C. Wilson

Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream by Sara Goldrick-Rab. Chicago: University of Chicago Press, 2016.

In Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream, sociologist Sara Goldrick-Rab goes beyond the aggregated numbers to show the financial hardships faced by first-generation and workingclass college students. The book draws on data from the Wisconsin Scholars Longitudinal Study, which tracked students in need during the 2008 financial crisis, and from surveys of and personal interviews with Pell Grant recipients. This approach humanizes the college cost problem and raises a question: with a broken financial aid system and rising college costs, and with economic pressure to attend college simultaneously increasing, who is really paying the price?

Students are. And often, those who can least afford it.

In debates about whether a student debt crisis exists or whether college costs are too high, many look only at the numbers and miss the real hardships faced by students, including food insecurity and homelessness. Some observers have recently argued that the average student loan debt—roughly $30,100 for 2015 graduates—is comparable to a new car loan, with more manageable terms and the possibility of debt forgiveness. Or that the tax credits for college are enough to make public institutions affordable. Or that in the long run the costs are nothing to worry about for either the economy or these now-privileged BA holders. One economist, writing in the Journal of Economic Perspectives, even argued that credit-constrained students may not be borrowing enough. Many of these analyses are based on neoclassical economic theory, which assumes that students perfectly optimize their choices over their lifetimes, but theory is not the same as reality.

So how do students actually get by on a shoestring budget, making an increasingly uncertain bet that a degree is their ticket to economic security? What are the real costs that students have to bear?

Goldrick-Rab shows the financial catch-22 in which many students find themselves: choosing between working to cover expenses and keeping up with academic work, between being able to afford college in the present and investing in their futures. Even if they receive a generous financial aid package, students still have to come up with several hundred or even several thousand dollars to close the gap between aid and tuition, leading many to drop out or to take on additional work. If working to earn money for college causes a student’s GPA to slip, it can result in big losses in financial aid awards. Data collected in the Wisconsin Scholars Longitudinal Study about the lottery-based Wisconsin Scholars Grant show that awards covering the gap between financial aid and tuition can improve student achievement by reducing the time students need to work. Goldrick-Rab and her research team used the study to compare the outcomes of grant awardees to those of students who were in a similar financial situation but were not awarded the extra grant funds. It turns out that a $900 per semester Wisconsin Scholars Grant can significantly improve student outcomes.

The financial aid system is not designed to account for the particular situations of working students and those from the lower half of the income distribution. As Paying the Price shows, even financial aid packages that fully cover the cost of attendance sometimes fail to account for the possibility of a negative family contribution. The Free Application for Financial Aid (FAFSA) is used to calculate, based on income and other factors, how much a student’s family can contribute to college expenses, but it overlooks entirely the possibility that a student’s parents and other dependents may rely on the student to earn some of the family’s income. When the student goes to college, that income is forgone; not only can these families not afford to contribute to tuition costs, but they are also losing the income of the student. For a struggling family, these forgone earnings are a crucial opportunity cost. Similar mishaps in financial aid calculations can happen when students receive enough aid to get by in the first year but, after working and earning more in the following year, experience an unexpected reduction in aid. Even work-study programs, which Goldrick-Rab argues are crucial to helping students and should be expanded, often fail to meet student need.

Paying the Price demonstrates that, as college costs rise—and especially as austerity makes public institutions increasingly unaffordable—the financial aid system becomes more inefficient, leaving the most financially vulnerable students paying an ever-rising price. Not only is the financial aid system time-consuming and frustrating to navigate, but its hodge-podge of bureaucratic and antiquated programs also leaves many students in over their heads. Goldrick-Rab illustrates both the opportunity costs of going to college and the transaction costs of navigating financial aid and institutional resources.

One weakness of Paying the Price is its lack of an explicit discussion of how the structural inequalities of race, gender, and sexuality compound the difficulties of dealing with college finances. While the Wisconsin students in the study all had financial need, their backgrounds and struggles were vastly different. We know, for example, that for many minority students at predominantly white institutions, prejudice and discrimination on campus can cause immense stress and negatively affect achievement and experiences.

Because the book focuses on students at Wisconsin public colleges and universities, it does not address similar issues at more expensive institutions, including private colleges and universities, or the particularly precarious financial situations students can encounter at for-profit colleges. Further, while many students in the study were at times debtaverse, the book does not consider the difficulties for students who do take on debt—from those who have small debt balances but were unable to complete a degree to those with larger balances who did graduate. Repaying these debts in both scenarios has been especially daunting since the 2008 recession. Goldrick-Rab reminds us that debt is a symptom, not the disease. Still, it is a symptom that will affect many current and former students and their families for decades to come, and the longterm impacts should be studied.

Paying the Price concludes with a bold proposal for an incremental approach to free universal college that would begin with free tuition for the first two years of college. This “first-degree-free” approach would allow students who would otherwise drop out after two years at a four-year institution to earn at least an associate’s degree. Much of Goldrick-Rab’s research makes a strong case for grant aid for working-class and first-generation students as well as finish-line grants for those struggling to complete their degrees—an idea proposed recently for Massachusetts public colleges and universities. Finish-line grants, combined with a “first-degreefree” approach, would push the United States toward a free universal K–16 system in which higher education would be considered a right rather than a privilege.

Paying the Price captures the experiences of students affected by rising college costs and an inefficient financial aid system remarkably well. The book weaves statistics into the narratives of the students in a way that makes it approachable to anyone interested in understanding the shortcomings of college financial aid. Ultimately, Paying the Price shows that without reform and reinvestment in higher education, working students and their families will continue to pay the price—in more ways than one—of a broken system.   

Anastasia C. Wilson is a PhD student in economics at the University of Massachusetts Amherst with research interests in the political economy of education, including higher education and student debt. Her e-mail address is [email protected].