Bait and switch: The selling of the stimulus


Now that the economic stimulus has been passed, politicians are considering ways to make parts of it meaningless.

Taking money designed to help lower-income kids pay for college and using it for whatever the state’s politicians want is hardly in the spirit of the stimulus bill, but that’s what may happen, according to a story today from Minnesota Public Radio’s Tim Post. Even as politicians are talking up the merits of the stimulus bill, they’re considering diverting some of it to a budget deficit of their own making, at the expense of a solution to a problem.

It’s easy to do. When the U.S. sends $1 for financial aid for kids, transfer $1 the state provides for financial aid for kids to something else. The net effect on a kid’s ability to go to college: zip.

Kathy Ruby, director of financial aid at St. Olaf College in Northfield, is also the president of the Minnesota Association of Financial Aid Administrators. Her view is shared by the statewide group, she said.

“Certainly the state deficit creates a real challenge for our lawmakers. It’s easy for me to say, but it seems clear to me that this is something that students clearly need, and this is something that Congress intended,” said Ruby.

This approach to the program is in stark contrast to the picture Gov. Pawlenty painted at the National Governor’s Association meeting with President Obama on Monday, in which he sounded like a governor in handcuffs. “The federal government has attached so many conditions, strings, limits on the use of the money that it’s not going to allow us to be as creative or reform-minded or as flexible as we would have liked, and that’s disappointing,” he said.

The Pell Grant situation, though, recalls some past complaints about higher education by lawmakers. In the past, when the state would increase financial aid to students, colleges would raise tuition, negating the impact of the aid to the kids.

The Minnesota approach to diverting stimulus money is happening elsewhere, too.

In New York, Gov. David Paterson said he might divert money that was intended to help Medicaid recipients. “It does not have any direction. It is discretionary,” he said.

North Carolina is also considering diverting state money replaced by the stimulus bill for Medicaid.

Should strings have been attached to all of the money, or should the feds just have given the money to the state to figure out how to spend?

(Photo: ZioDave on Flickr/cc)

update 917 am

(h/t for video: Sara Meyer)

  • Paul

    Part of the problem is that we have something of an “tuition bubble” under way. College tuition’s doubled and tripled simply because we privatized the student loan process, which in turn has fallen victim to the same schemes we’ve seen in the housing market. Just like housing prices went up simply because loans were available, so have tuition’s risen because student loans have been available. There was never any really good reason for these giant increases in tuition. Yes, state universities did see budget cuts, but those cuts don’t account for these year over year double digit tuition increases we’ve seen for almost a decade. At the end of the day you have someone standing in a classroom in front of a bunch of students talking about stuff, the cost of that has not doubled and tripled. Nor has the cost of the books doubled and tripled. The wages and salaries of the professors and instructors has not doubled and tripled in most cases (there have been some notable cases where imported corporate models at places the Carlson School of Management have led to hiring people for ridiculous amounts of money, but those are the exceptions rather than the rules). Many universities have also increased their costs by adopting inefficient private sector corporate organization models that have driven up administration costs, but still, at the end of the day colleges and universities raised tuition’s simply because the could, people would pay, and they paid because they got loans. Sound familiar?

    We certainly have to increase college grants and what not, but tuition’s are going to have to come down as well, and maybe now they will, maybe the bubble is finally popping.