Richard Vedder of the Center for College Affordability and Productivity shares with National Review readers disturbing news about the impact of federal tuition-support programs.

A political storm is brewing in Washington over the consequences of rising college costs, but few politicians are talking about the causes of the problem, particularly since a major perpetrator of it is Washington itself. Using his exquisitely honed rhetorical skills, President Obama panders to his political base by suggesting that the solution to ever-mounting student-loan debt lies in easing repayment terms; Senator Elizabeth Warren proposes lowering interest rates for many past borrowers.

The reality is, however, that the single biggest cause of this financial problem, and a contributor to many other weaknesses in our economy, is the dysfunctional, byzantine system of federal financial assistance for college students. College-aid programs have grown rapidly over the last several decades, with annual federal assistance in the form of grants, loans, tax credits, and work-study now totaling $170 billion a year, compared with about $10 billion (in today’s dollars) in 1970. These programs were designed to make college more affordable for all and to increase the proportion of college graduates coming from lower-income groups. On both counts, they have failed.

Vedder goes on to spell out eight problems linked to the federal financial aid system.

  • The programs “have contributed significantly to rising prices and costs.”
  • They have “failed to increase the proportion of college graduates from low-income backgrounds.”
  • They have “contributed to severe underemployment and unemployment of recent college graduates.”
  • They have “imposed enormous financial burdens on students, borrowers, and taxpayers.”
  • Financial aid has “lowered the quality of instruction.”
  • It has “probably reduced household formation and birth rates.”
  • Federal lending programs “suffer from high delinquency rates, partly because colleges have no ‘skin in the game.'”
  • Assistance “may have contributed to declining personal savings in the U.S.”