The Washington PostDemocracy Dies in Darkness

75 years of reforms have failed to fix our college financial aid system

Unfairness and complexity are part of the foundation of how we fund college

The FAFSA had its origins in the post-war period. (iStock)

Monday is the deadline for many students to choose which college they’ll enroll in next fall. That means a lot of families have been struggling with something they would rank up there with dental procedures and a letter from the IRS in terms of enjoyment: completing the Free Application for Federal Student Aid, better known as the FAFSA. Students and their families must complete this 10-page form full of complicated clarifications in small print and more than 100 questions to get financial aid.

This dreaded form became part of the process of funding higher education when Congress reauthorized the 1965 Higher Education Act (HEA) in 1992. But the FAFSA had its origins in the post-war period, when lawmakers and schools created a complex system of financing college that has been difficult to navigate and has also contributed to a student debt crisis that has disproportionately left borrowers of color, especially women, owing more.

Colleges and universities have always depended on tuition to survive. That need has sustained an age-old competition for student enrollments. To entice potential paying students — who hopefully become future alumni willing to donate — schools have offered different types of tuition assistance since the colonial era, including discounts, small scholarships, jobs and loans. Yet that strategy did not ensure that campuses would remain open, let alone be able to afford to expand as the number of applicants increased in the late 19th and early 20th centuries.

The demand for admissions continued to surpass the number of slots available for students after World War II, when 2.2 million veterans began taking advantage of the education benefits in the 1944 GI Bill of Rights. But that celebrated hand-up into the middle and professional classes for eligible soldiers actually made higher education more expensive for everyone. The federal government encouraged colleges to raise fees to cover the cost of the necessary expansion to welcome veterans by setting the GI Bill’s tuition reimbursement maximum above even what Harvard charged at the time.

This high rate made many admissions officers eager to welcome GIs to their schools. But it also meant universities raised fees for everyone, not just veterans. Few predicted how many veterans would be eager to enroll or how costly it would be to expand dorms, classrooms and dining halls to accommodate them. Local, state and federal authorities simply didn’t provide sufficient funding to help campuses deal with these exploding costs. And only eligible soldiers received federal assistance to help pay for higher fees, books and living expenses.

Costs continued to climb after the first GI Bill expired, but reporters warned that a lot of campuses seemed to be using financial aid to recruit “brains” and “jocks” instead of helping promising low-income students pay for classes.

Universities hated this competition. Administrators worried both about being outbid and about overbidding and losing potentially valuable revenue. The 150 New England and Mid-Atlantic campuses that used admissions tests beseeched the College Entrance Examination Board to help with assessing students’ financial needs. Their tests, after all, had become a vital part of an admissions process that continued to privilege the nation’s elite. The board’s new College Scholarship Service began offering financial aid services and a standardized but still complex Financial Aid Form (FAF).

Just a few years later, the Soviets launched Sputnik — a small satellite that made a big impact on higher education’s already complicated finances. Federal aid for education bills had been dying in congressional committees for a decade, usually over fights about whether money could go to segregated, private or religious schools. But as President Dwight D. Eisenhower told his aides, “Anything you could hook on the defense situation would get by.”

The president insisted that Congress make the 1958 National Defense Education Act a limited bill providing only temporary aid. Lawmakers included small scholarships for graduate students and $1,000 loans for undergraduates promising to study math, science, engineering, foreign languages or other subjects that lawmakers considered vital for defense. Yet even though tuition was far less expensive than it is today, this paltry amount did not cover even that, let alone other related costs.

Even so, the new law drove more schools (whether public, private, religious, single sex or segregated) into the loan business than in decades past. Staff had to apply to set up a campus defense loan fund. They were supposed to supply 10 percent of the money available and collect payments to replenish the loan funds that interest charges were supposed to help grow.

The Eisenhower administration had to scramble to create a system for rolling out the hastily adopted yet complex National Defense Student Loan Program. The Office of Education, which had done little more than collect statistics for decades, frantically set up a new Financial Aid Branch, which recruited experienced campus financial aid officers to serve or volunteer their time to set up regulations and guidelines. But they refrained from establishing rules to determine students‘ eligibility for this much-needed assistance, because, from their point of view, it would duplicate the FAF, which a lot of East Coast schools already used.

Federal tuition assistance did little to make applying for and receiving help easier for parents and students. The defense loan program’s clunky bureaucracy never dampened families’ or campuses‘ enthusiasm for the program. No campus was forced to use the FAF, but a growing number of colleges and universities nationwide embraced its complex methods for determining need. And because the government allowed schools to decide how to award this aid, some staff members ignored what those forms revealed and used defense loans to sweeten their admissions offers to top students and athletes.

Nonetheless, lawmakers let campuses continue to decide how to distribute new federal tuition assistance programs included in the 1965 Higher Education Act. That additional help included work-study opportunities, small grants, defense loans and loans available through the new Guaranteed Student Loan Program, which the Johnson administration and its congressional allies hoped would jump-start a student loan industry capable of creating more equal educational opportunities for everyone.

But it didn’t. Financial aid officers continued to focus aid on White men, not women and students of color, who remained the most in need. So when Congress reauthorized the HEA in 1972, it included Title IX to guarantee equal educational opportunities for women, and small scholarships, now known as Pell grants, directly awarded by the government to low-income undergraduates, who then and now remain more likely to be citizens of color. Yet, Pell grants did not truly address the need to equitably fund higher education. Campus financial aid and admissions offices retained much of the power to decide who gets what kind of tuition assistance. Even worse, beginning in the 1970s, states started slashing funding for universities, knowing that public colleges and universities could just increase fees to compensate for the cuts.

And the process of figuring out how to pay for college didn’t become any easier either. Many campuses continued using the FAF until 1992, when Congress created the FAFSA, a government form, to standardize the process of applying for the federal aid available. But the form unlocking access to federal loans was no more easy to use than what Eisenhower’s aides had thought was fine decades before.

This convoluted system’s consequences became clear when the 2008 HEA reauthorization forced lenders and campuses to turn over more information about who gets what kind of help covering college costs. Numerous studies revealed that low-income students, particularly women of color, have to borrow more even though colleges regularly give scholarships or discounts to more privileged applicants.

Those revelations have led many Americans to declare student loan forgiveness a matter of economic and social justice. However, wiping out already-incurred debt won’t change the overly complex and unequal system. That requires some form of more direct public financing — be it eliminating tuition or some other method. What we have now manages to stress students and parents with an overly complex process while still leaving a lot of colleges and universities underfunded.