Increasing Financial Aid Hurts Education, from a full pay student
- williammarcvs
- Aug 30
- 12 min read
Recently (at the time of this blog), Princeton University announced a change to its financial aid system where it provided students basically full rides for incomes up to $15,000 USD a year. That allowed students to attend Princeton at a lower cost than their local schools (except for some students, particularly those from certain parts of New Jersey). This change hasn’t been new for prospective applicants to universities like Princeton, as other schools in the Ivy League conference and some others, such as the Massachusetts Institute of Technology, have also made similar financial aid announcements, albeit not to the same extent as Princeton. One of them I remembered was from Harvard University. Harvard has a policy of financial assistance that allows students with family incomes of less than $100,000 USD per year to attend Harvard tuition-free. However, Princeton’s new financial aid policy enabled students, especially those from certain parts of California, to reconsider attending Princeton.
I don’t attend Princeton University or Harvard University. I brought that up because it was an extension of the long-running topic of increasing financial aid for students from highly selective and prestigious American universities. I initially thought that the Princeton announcement was significant for people living in high-cost-of-living areas. It’s far more ambitious than Harvard’s financial aid and all the other financial aid plans experienced in the United States. It can make Princeton University a more viable option compared to some University of California schools, which require parents to pay full price in the same income bracket. However, the other part of me was that Princeton didn’t expand its incoming class or transfer class further; instead, it focused on selling itself better. I thought that if Princeton made its university more affordable, it would decrease its total cost of attendance, specifically tuition (although Princeton does provide significant housing and food accommodations for most students).
Let’s discuss financial aid.
Financial aid refers to the amount of assistance provided to help cover the costs of attending an educational institution, typically a college or university. It specifically refers to the system of financial aid available to United States residents and citizens. If you’re neither a US citizen nor a resident of the United States, this article generally doesn’t apply to you. Although some institutions, such as Princeton and Harvard, offer substantial financial aid to admitted students, not all do. But generally speaking, studying in the United States is a difficult path for anyone not a US resident or citizen, due to immigration visas, the requirement for reapplying, and occasionally lying (for probably good reasons not going to be mentioned in this article), and finding ways to afford these costly universities, like Stanford University (Princeton and Harvard don’t consider your family financial circumstances, regardless of one’s nationality).
The best way to explain my thoughts on financial aid is to outline the reasons why we need to discuss financial aid, and specifically why the increasing amount of financial assistance is problematic.
If you’re neither an American nor a resident of the United States, then the majority of this article doesn’t apply to you. Generally, tuition and living expenses are lower, and the government heavily subsidizes the costs of actually attending a university. The government has more control over the educational system, allowing admission to be straightforward (although it may be a different kind of challenge), and prices to be affordable for students (even Swiss citizens don’t have to pay exorbitant prices for their top universities). In the United States, there’s no standardized form of education, except for the Department of Education, which sets goals and budgets (although this may change in the coming months and years). It meant that there were no standard prices for higher education, with high variations in prices between universities. Generally, higher education in the United States is expensive, and there are various ways for students and their families to manage the cost. Financial aid is one of the most significant ways to make a university education more affordable, as it is income-based. It’s one of the ways that serves as a double-edged sword. On the one hand, it allowed students to finally afford a university education, something that would become more important in the later days of their lives. On the other hand, university education remains incredibly expensive, and it likely will continue to do so due to the intense demand for obtaining an undergraduate degree and the fact that most high-paying jobs require a bachelor's degree, along with extensive work experience.
Financial aid does make sense for some families but it could do more by making it cheaper.
However, the problem was that these universities didn’t change their net price point. For millionaire and especially billionaire families, price points don’t make a tremendous difference, and they can take a broader look at the overall fit of the campus and the career prospects for their children's prospective careers. Low-income families often struggle to afford university education and must seek financial aid from various sources to help cover the costs. For this article, these universities offer more than generous amounts of financial assistance to allow students to attend seamlessly. Everyone else must pay a certain amount of money to attend such an institution, which can easily put them in the supposed situations of upper-class families, like the millionaires. Depending on the family situation, students must take a certain amount of student loans and work part-time jobs (universities don’t allow students to work more than 20 hours a week to maintain full-time status, and maybe a bit more to sustain part-time status) to pay for university. And the amount of student loans can be ridiculous, especially for something as big a risk as attending a university with career circumstances as uncertain as flipping a coin. So, the high price point of universities doesn’t make finances any easier. It’s a high point that forces students and especially families to reconsider their university choices.
Here are some reasons why I don’t support increasing financial aid from the most highly selective and prestigious universities (to an extent).
Firstly, not adjusting the cost of living while increasing the eligibility for financial aid gave universities leverage over students. Similarly, you would be accepted to a university and commit to it under certain conditions, such as maintaining a specific number of credit units to complete your degree, achieving a certain grade point average, and fulfilling other requirements, like working a specified number of hours on campus. Those things can help you attend university, but depending on the concentration or major, it can become very challenging. Low-income students often lack the time to participate in events like networking events or outings in other parts of the city, often due to work-study commitments and a lack of financial resources. Although low-income students learned how to budget properly due to financial constraints, there is no question that it prevents them from freely saying yes to everything possible. At an institutional level, they face a problem in which they cannot afford to attend without significant financial aid from the university. Given that the aid wasn’t something granted to them, it gave the university considerable leverage. So, if the university loses any funding for whatever reason, especially during the time of this blog, the student wouldn’t be able to afford university. Granted, only wealthy universities, such as Harvard and Princeton, have the kind of financial resources needed to fund the education of other students and to absorb any losses in funding. So, it would inevitably lose a significant number of students, in fact, a substantial percentage. My university doesn’t have a large percentage of low-income students, around 20 percent, but it is relatively larger than most universities of a similar caliber. As a result, it may lose thousands of students due to significant funding cuts. I’ve also heard reports from social media that students are discouraging others from applying to some graduate programs, as the university no longer provides funding for specific programs, such as PhD programs. My university cuts some undergraduate scholarships, forcing students to pay a larger share of their income to make ends meet. What I’m saying is that increasing financial aid gave universities more power over individuals in circumstances like financial need. Therefore, the student would be more pressured to perform well, but would be at risk of losing that much aid for no reason other than financial loss to the university.
Number two, increasing financial aid to students without decreasing the net cost of attendance would require a larger percentage of revenue to be cut from the the university. For starters, most universities have used tuition and endowment to fund their operations. For wealthy universities, such as Harvard and Princeton, tuition money doesn’t make up a large percentage of their income. Indeed, you could argue that some students have to pay full price to fund these large financial aid operations for low-income students. Low-income students make up a significantly smaller portion of the student body at the most highly prestigious universities, so allocating more funds to support low-income students can be achieved by increasing the tuition of some students. However, I would disagree with that statement. First of all, the net cost of attendance hasn’t decreased at all. The threshold for financial aid is far higher in these highly selective universities. Even when low-income students can receive more assistance from some full-paying students, the majority of these highly selective institutions barely provide enough to attend university for free. It sounds great,, but itis worth considering that these degrees don’t guarantee jobs. Students must utilize their time and resources to attend events, internships, and volunteer, among other means, to secure a job without incurring debt. Second, as more and more low-income students make up a larger percentage of these highly prestigious universities, there’s more to allocate the amount of money to them. So, allocating more financial aid doesn’t generate a significant amount of revenue. Therefore, it would be more beneficial to decrease the net cost of attendance to mitigate the issue.
Number three, increasing financial aid at the most selective and prestigious universities would bring the number of universities in the United States to only them and them alone. The United States has thousands of colleges and universities with vastly different qualities of life, education, and opportunities. Indeed, these most selective and prestigious universities appeal to individuals who aspire to work in highly prestigious and sought-after jobs worldwide.
However, there are several fields where a degree from these highly selective and prestigious universities is not beneficial at all, and instead relies on a variety of factors, such as work experience, personal projects, community contributions, and others. The former will always exist, but the latter may decline and fall as more and more colleges and universities shut down and get destroyed (more on that at the end), losing much of their history and the moments associated with it, and forcing some highly selective and prestigious universities to take over these kinds of opportunities. I mean, there are some highly selective and prestigious universities that do a great job at careers, not overly relying on a prestigious undergraduate degree, due to the accessibility to job opportunities, research, access to faculty, and so on. However, there are some that put a barrier in their way due to the sheer number of applicants from the student body and the overly ambitious students who strive that exist in a small university space. So, increasing the amount of financial aid from the most highly selective and prestigious universities makes the statement that they are better than ever and gives them an edge that most universities cannot match.
For prospective students, like many high schoolers trying to apply to university, it's best to improve your stats, as these highly selective and prestigious universities can be very competitive. It may be that these highly elite universities, such as Princeton and Harvard, and some large state universities with prestigious sports teams, may be the only options for many students, not just low-income students. If you don’t like going to Princeton or Harvard or the university I’m currently attending (more details at the end of the blog), you’re probably screwed. And I’m not convinced that people with wealthy parents would want to send their kids to anything other than the most prestigious and expensive universities, due to the desire to be associated with these brands and the resources available to train them to compete globally. So, that’s the biggest drawback of increasing financial aid without also decreasing the total cost of attendance.
Lastly, it doesn’t improve the state of the country. We all know that the rich are getting better and obviously richer at things, and the poor are getting poorer. We don’t need to delve into the extent of issues like brain drains, corrupt leadership, big companies taking over smaller companies, and outright purchasing them, and all that kind of stuff. Princeton’s announcement of increasing financial aid to families making up to $200,000 USD a year is no exception. Does it help Princeton University? Yes. But does it help low-income families to attend Princeton? To be honest, it depends on the individual. However, for the most part, only a small fraction of these low-income families will attend these highly selective and prestigious universities. In my case, the vast majority would be those with very little to no aid coming in, especially for those coming from the most profitable parts of the state.
So, those points were the reasons that came out of my head as to why increasing financial aid, like Princeton’s case, didn’t improve college affordability for a good number of students, especially me. I felt that it did nothing to promote the public good, or whatever the definition was for the local community and nationwide, in helping to reduce university tuition. It was one of the ways that made Princeton, Harvard, and other highly prestigious and selective universities so special, compared to the vast number of universities in the United States. As most people are aware, most students don’t attend wealthy universities. They attend an enormous number of universities elsewhere, mostly local ones that accept them with the most financial backing, typically with much less readily accessible resources to assist students in their education. Most colleges and universities lack sufficient financial resources to support themselves, let alone provide adequate financial assistance to low-income students, especially to private liberal arts colleges. Therefore, it would be more challenging for most students to support themselves financially.
I want to discuss how it affects me, because I don’t attend Princeton or Harvard University.
I’ve personally lost financial aid due to decreased funding, but I can still afford the university without the aid. I’ve paid full price to the university I currently attend and will will likely do so again for subsequent years. But I’m not in a position to argue with the university due to financial aid reasons. So I wouldn’t be too affected even if financial aid didn’t exist at my university. I’m very grateful to have received this much aid in my first year at university. However, it would make my university a bit less attractive to most students living in the area, primarily due to better offers from Princeton and other highly selective and prestigious universities that offer much more aid and likely have more stable financial backing as well (though there are some exceptions). So, it makes no difference at the individual level.
All in all, Princeton University’s increasing financial aid package definitely entices some students to start applying to the university, only for Princeton to accept some 2000 students (about 3-4% of its applicants). However, it contributes to the trend of wealthy universities increasing aid to incentivize students to invest money in the hope of being accepted, only to face fewer options once rejected due to poor financial aid offers. And it doesn’t help the situation of the United States, particularly its position in the class division we live in every day. So, if you’re a student at Princeton University, congratulations on probably securing your first official whole ride and reduced pricing. It’s excellent for Princeton to have something like 99% of its students receiving some form of financial aid, and more than half of its students receiving full rides. But on the flip side, be careful of where you’re going if you’re interested in applying to an undergraduate university. Even if Princeton University is generous, you'd better lock in, improve your stats, and share your experiences and personal stories to stand out, to have a chance of receiving a need-based full ride. And if you’re accepted to Princeton University, be prepared for what’s coming up next.
Note: I am currently attending the University of California, Los Angeles (UCLA) and studying Electrical Engineering. Lately, I’ve been having fun watching a lot of college decision reactions because it reminds me of some stories from my own university application experiences. I personally never used to attend Princeton or any universities in the Ivy League. They’re too expensive for me to attend, that’s why. For those informed, the university has lost funding for the past couple of months, resulting in devastating effects. One of the greatest mathematicians of all time literally had to speak out on these funding cuts.
There are a certain number of colleges and universities located in areas where few Americans live, especially in the Midwest. As a result, many colleges and universities must pivot their strategy to offer things that local colleges and universities don’t provide. One weird example happens in California. Getting into a good public university in California has become increasingly difficult, to the point where it's a matter of chance. I know there are people upset of UCLA rejecting influencer, Nicole Laeno, (lowkey don’t really understand why because Laeno doesn’t seem to have the academic rigor or activities outside of the classroom even to stand a chance, considering the kinds of universities admitting her). Still, the University of California Merced has to find more and more talented students to cover, due to so many students not getting into many University of California schools. I know one who had to attend community college (an excellent option for people hoping to transfer to a University of California school), and I’ve heard of some who had to attend an out-of-state public university.
California, so far, has gotten into a weird financial vibe (a situation that relies far more on personal feelings than the research needed for such a topic), due to to the 2008 recession and the COVID-19 pandemic. The current governor wants to implement a unique financial policy that would allow the state to provide funding to some University of California schools, but it requires them to enroll an increasing number of California residents (a much-needed change). I’m not the biggest fan of this change because the schools enacted are the ones with the worst acceptance rates, especially mine, and they’re already dealing with problems with housing (thank you NOT IN MY BACKYARD wealthy families), and literally cramming students into tiny dorms. I have concerns about about whether I can get a job in the future due to the hyper competitiveness and the vast number of students at my university.
I haven’t written a blog post in a while due to coursework and other commitments. It feels good to be back here, writing for something I’m personally interested in and something to share with a few of you who have stuck around. Anyway, thank you for reading.
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