Other People’s Money

By Kevin Kiley. Questions of fairness have always permeated discussions about admissions and financial aid.
Is it fair to consider financial status in admissions? Is it fair for colleges to admit students who can’t pay? Is it fair to charge students different rates for the same class?
A new fairness debate has cropped up in several states this year and is beginning to change policy in Iowa.
Last month, the Board of Regents of the State of Iowa, which oversees the University of Iowa, Iowa State University, and the University of Northern Iowa, eliminated their policy of earmarking 20 percent of in-state tuition revenue for financial aid purposes. In doing so, the board launched a plan to reduce the sticker price of attending the three universities by $1,000 a year. The tuition cut would be contingent on an increase in funding for the universities and for a new state need-based grant program.
The move puts Iowa at the forefront of this emerging policy debate that higher-education researchers say has been decades in the making: whether it is fair for public colleges and universities to earmark tuition revenue from high- and middle-income students for the purpose of supporting low-income students.
Such policies, used widely by private universities, evolved at public universities over the past few decades as a way to ensure institutional objectives – enrolling both low-income students and high-achieving students – when institutions saw the distributed decision-making framework responsible for funding and providing access break down. The universities in Iowa, which is the only state not to have a state-funded grant program for students at public universities, began the process in the 1980s.
These institutional aid policies are now under scrutiny, particularly because they’re viewed as driving up the cost that middle-class and wealthy students must pay, an assertion that one can argue is both true and not. More...