Grants for Higher Education

The rising cost of higher education

The rising cost of higher education is a topic of discussion and in political circles. Over the years, university grants and other merit-based schemes have excluded applicants who urgently need financial support to pursue their studies. Loans and grants have been very useful in such situations. The aim of this literature review is to examine the framework, methods, need, benefits, and some of the issues associated with loans and grants as a way of funding higher education.

Financing higher education

Financing higher education has elicited a variety of responses from world leaders. Prominent leaders including presidential candidates like Barrack Obama have proposed an increase in federal funding to the students in higher education. The adverse predicaments of limiting money funded to tertiary institutions like universities have been ignored with no basis of the good or harm they are bound to cause. The money loaned to students in higher education comes from various revenues from the government, such as taxes (Collier & Herman, 2016). Every student has a right to education and hence such need-based non-refundable financial assistance as grants and also education loan programs are necessary. To effectively review this issue, this research addresses the following issues:

1. The cost of Higher Education

2. The existing structure of Loans and Grants

3. Impact of Loans and Grants

4. Challenges facing Loans and Grants

The cost of Higher Education

Critics have questioned the high cost of education. They are in contention of the increased student enrolment in institutions as well as the increased award. More than 1.6 million students are pursuing degrees or diplomas inclusion of 19, 000 students. Averagely, the cost of completing a four-year course in a public college is about $20,000 or more per year. This figure is even higher for private colleges by approximately $10000 (Collier & Herman, 2016). With an estimated poverty rate of about 13.5%, this high and continuously increasing cost of higher education, therefore, calls for financial support for many bright students whose families may not be able to afford to support them.

Structure of Loans and Grants

The need for financial assistance for higher education has therefore led to the establishment of non-refundable grants from Federal and State governments such as the Federal Pell Grant, College and University grants which are funded by the respective institutions. Others include NGO and Public funded grants and grants from Professional Associations which offer grants to students pursuing courses allied to the organizations (Schulze-Cleven, Reitz, Maesse & Angermuller, 2017). More so, the Federal government offers refundable loans which students will be required to repay on completion of studies. These include subsidized direct loans which are of low interests (About 3.4%) for students with great financial need, Unsubsidized Direct Loans with a higher interest(About 6.8%), PLUS loans and Direct Consolidation Loans. Some private bodies and banks also offer education loans for qualified students. However, despite having such established financial aid structures, there is still need to direct more grants and loans towards funding higher education.

The subsidy channels for higher education

The subsidy channels for higher education are equivalent to their size and have developed with the corresponding strategy objectives. This involves the elements such as aggregating the access for students and backing up the inquiry. The state and federal governments have channeled their resources towards the system in various ways (Michelsen, Sweetman, Stensaker, & Bleiklie, 2016). The federal government provides monetary aid to discrete students and precise investigations since the state accommodates executive pay for the general operations in the public institutes.

Substantial funding for higher education has continued to be given to the state as well as the federal government (Schulze-Cleven, Reitz, Maesse & Angermuller, 2017). However, there are changes which have been made in the recent years which have led to donations being more each time in the last two decades. Traditionally, the states have provided significant help in post-secondary education. The economic growth has influenced development in a package referred to as Pell Grant.

Impact of Loans and Grants

The effect of instituting loans and grants to fund higher education on the economy cannot be undervalued. Students in countries such as the United Kingdom receive tuition funding from the government. Besides, close to one million students are taking non-credit bearing courses which involve industries and commerce (Marginson, 2016). It is wise for such countries to adopt loans and funds for higher education as the institutions have a significant impact on the economy. When the organizations are funded, and the students’ loans approved, agencies will have a considerable recruitment. Consequently, this will provide employment opportunities, and hence boost the economy due to increased productivity.

Similarly, the main aim of loans and grants for higher education is to eradicate poverty in the US. The war against poverty suppresses the level of crime since the older teens will enroll in various programs and short courses. Moreover, the level of corruption and drug abuse is bound to reduce since students will be occupied with their studies (Stevens, & Gebre-Medhin, 2016). An increase in college completion rate will see the government increase the number of better-paying jobs, which translates to a significant growth in the American economy.

Challenges facing Loans and Grants

Financial constraints have been a major limiting factor to the success of Loans and Grants policies as a means of funding higher education Schulze-Cleven, Reitz, Maesse & Angermuller, 2017). The cost of higher education is increasing gradually. Grants are therefore becoming a burden to the taxpayer by calling for the increase in tax contribution, a move which has been opposed by some critics.

Furthermore, bright ideas of offering loans to students are channeled down to the fact that they will pay back. The payments are made in installments once they begin working but a specific time and rate. The repayment, nevertheless, depends on the level of income (Schulze-Cleven, Reitz, Maesse & Angermuller, 2017). With the cost of education for a four-year course bound to increase gradually, there is a possibility of defaulting repayment (Schulze-Cleven, Reitz, Maesse & Angermuller, 2017).

Once the fiscal environment becomes constrained, it will be necessary for the policymakers to consider better means of attaining the shared goals, which includes accessing the students and supporting the research process (Marginson, 2016). This involves elements such as coordination, reform of policies and other forms of funding mechanisms.

Conclusion

The ideology of offering loans and grants to students for students in higher education will help to eradicate poverty in the US, as well as increasing productivity and bolstering economic growth. The matter has politicized for quite some time but is worth implementing since it will help the students enroll in the various programs as well as nurture their careers. The credibility of the process will ensure the process is successful and the process is productive. The structures will nonetheless call for the taxpayers to increase their contributions in the form of taxes to finance the process. The government should, therefore, locate other sources of funding for the process other than imposing more taxes on its citizens. Generally, the adoption of loans and grants is suitable and will help the country attain economic growth and eradicate poverty.

References

Collier, D. A., & Herman, R. (2016). Modifying the Federal Loan Guarantee Provision in the Higher Education Act of 1965: An Overview of Federal Loan Policies that Have Transitioned Higher Education from the Social Good. Special Issue 2016 Reauthorization of the Higher Education Act, 9.

Marginson, S. (2016). The worldwide trend to high participation higher education: Dynamics of social stratification in inclusive systems. Higher Education, 72(4), 413-434.

Michelsen, S., Sweetman, R., Stensaker, B., & Bleiklie, I. (2016). Shaping perceptions of a policy instrument: The political-administrative formation of learning outcomes in higher education in Norway and England. Higher Education Policy, 29(3), 399-417.

Schulze-Cleven, T., Reitz, T., Maesse, J., & Angermuller, J. (2017). The new political economy of higher education: between distributional conflicts and discursive stratification. Higher Education, 73(6), 795-812.

Stevens, M. L., & Gebre-Medhin, B. (2016). Association, service, market: Higher education in American political development. Annual Review of Sociology, 42, 121-142.