“Maybe breaking these programs is not an unfortunate side effect that might happen. It’s actually the intended goal, to cause disruption.” That was Judith Scott-Clayton, a professor of economics and education at Columbia University’s Teachers College, telling the Chronicle of Higher Education that she was worried the Trump administration’s cuts to the Department of Education could be purposefully intended to undermine financial aid for students. 

Recommended Stories

• Bill Cassidy holds event on expanding access to charter schools after introducing bill to cut 'red tape'
• Republicans advance federal school choice bill as part of reconciliation
• California judge requires parental notification for elementary school gender lesson

It is noteworthy that Scott-Clayton and her colleagues didn’t have the same reaction when the entire financial aid system broke down under the Biden administration. This caused massive delays and forced many students to choose less expensive options since they didn’t know what their aid packages would look like. All that was apparently a big, unavoidable mistake. 

There is no evidence that the Trump administration wants to curb financial aid for low-income students any more than the Biden administration did. However, there’s also no evidence that President Donald Trump has a plan for fixing the problem of college affordability any more than former President Joe Biden did. It’s true that Biden tried to offer billions of dollars in loan forgiveness, which, even if it had been constitutional, would have resulted only in greater incentives for students to pick more expensive college options. Why be the sucker if someone else is going to foot the bill? But Trump’s approach of simply cutting the size of the Education Department without actually changing the way financial aid is structured or distributed — that is, the way colleges are subsidized — will continue higher education on the same destructive path. 

The attempts to withhold funding from elite universities may have an effect on the radicalism on campus, but they will not fundamentally change the financial structure of higher education. 

Recent research from the American Enterprise Institute, conducted by Preston Cooper, who was analyzing data from the National Postsecondary Student Aid Study, showed that the average sticker price of college rose $13,717 in real terms (175%) between 1990 and 2020. In the same period, the average external financial aid package tripled in real terms, from $1,726 to $5,328. Interestingly, the average cost a student paid rose only $4,526 (93%), relatively on track with inflation (98% between 1990 and 2020), in large part due to this increase in financial aid, according to the study.

Cooper put it in a different way: “In 1989-90, colleges collected $6,600 in revenue from the average student (out-of-pocket tuition payments and financial aid from external sources combined). But by 2019-20, colleges collected an average of $14,700 per student.” The data suggest this increase came almost entirely from financial aid, rather than out-of-pocket expenses collected from students. 

And the issues of cost and radicalism are intertwined. The wealthiest schools tend to be among the most progressive. The large amounts of money flowing to these universities seem to insulate them from any pressure to cut back on the worst excesses inside and outside the classrooms. Much of the radicalism on campus has occurred because of the administrators more than the professors. Financial pressure on colleges will reduce administrative bloat.

If we want to drive down the cost of college for the working and middle classes, we need to rethink the structure of financial aid. As more and more people become supportive of school vouchers in K-12 education, it is time to expand the principles behind those vouchers into the world of colleges and universities. Let’s democratize how we pay for higher education, putting control of the money we spend on tuition in the hands of students and parents, rather than in the hands of bureaucrats on campus and in Washington. There has always been bipartisan support for Pell Grants, and the administration should sell this as a way of revamping the Pell program. 

First, though, we should decide, as a country, which parts of higher education deserve public support. And the answer is clear: Graduate education has to go. This is not a judgment about which parts of higher education produce the most economic impact or equip people for jobs. We want people to be doctors and lawyers and research scientists, but people who have completed a four-year degree and can get into these graduate schools will have a clear stream of income after graduation and should be able to take out private loans against that future earning potential, either from banks or employers. 

According to the College Board’s “Trends in College Pricing and Student Aid 2024” report, total financial aid for graduate students grew enormously between 2003 ($39.4 billion) and 2023 ($66.6 billion). During that period, by far the largest source of aid every year was federal loans, topping at 68% in 2009 before falling to 61% in 2023. 

It used to be that people needed only a limited education to be farmers — some basic literacy and math would do the trick. Then, as the economy evolved, it seemed that everyone needed a high school diploma. Now, we think that for most jobs in America, one needs a bachelor’s degree. That’s probably not true. Many people would benefit from a greatly expanded vocational education program. But if we want to subsidize college, we should at least do it smartly. 

It is time for Congress to revitalize and focus all of our efforts on the Pell Grant program. Originally devised in 1965 as a way for lower- and moderate-income students to afford college, it has grown from serving 170,000 students to over 7 million. Under a new plan, people below a certain income threshold would be eligible for a voucher toward the accredited college of their choice. The voucher amount, which could range between $5,000 and $10,000 per year, would not change depending on the price of the school. The vouchers could increase no more than the cost of inflation. 

One of the main reasons students find college unaffordable or get into tremendous debt while in college is that many are unable to finish in four years. They are not provided with guidance about what requirements they need to fulfill, or they get off track, switching majors, or they are not prepared for the major they want, or the classes they need are unavailable. One solution would be to limit the number of years students are eligible for these vouchers to four. Colleges that didn’t keep students on track would not be able to continue to get federal dollars on their behalf. To add incentive, we should make clear that if students can finish in three years, they can simply keep the money they would have received in the fourth year. 

This would have the added benefit of putting some meritocratic elements into the system. Students who are doing well would earn more money. Students for whom college is not working out can make a clean break. They could take that same voucher and put it toward vocational education. And they would not have to pay off loans for a degree they never got. 

Indeed, it is federally subsidized loans that have gotten students into trouble and have allowed colleges to keep raising their prices. The federal government needs to get out of the loan business entirely. Loans to parents are also a problem. It’s true that parents at least have a better sense of whether the money could be paid back, but these loans are also part of what is driving up tuition. If we want to stop this trend, subsidies for high-cost colleges will have to come from colleges themselves, private lenders, or future employers. 

HOW COLLEGES WILL TRY TO TRY TO USE RACE AS A FACTOR IN ADMISSIONS WITHOUT GETTING CAUGHT 

Won’t this give wealthier children an even more unfair advantage? It is true that unless an expensive school offers them a boatload of money, some middle- and working-class children won’t find a way to attend. But schools with significant endowments could use them to support more students. In a world in which schools say they like having socioeconomic diversity on campus, it’s time they put their money where their mouth is. Smaller, lesser-known private institutions will not be able to offer the same kind of options, but in terms of the public interest in getting students a four-year degree, there is little to recommend these institutions over their public equivalents. 

The Trump administration seems focused on significant higher education reform. If it wants to ensure lower costs and less radicalism, strategically reforming the financial aid system is the way to go. It will, of course, require significant cooperation from Congress. But unlike many of the recent executive orders or the decisions to pull funding from universities, reforms to the financial aid system could not be easily undone by the next administration. 

Naomi Schaefer Riley is a senior fellow at the American Enterprise Institute and the Independent Women’s Forum. James Piereson is a senior fellow at the Manhattan Institute.