Mark Kantrowitz recommends that eligibility for college financial aid be based on income alone, thus disregarding assets. His main arguments for this idea are that it would simplify the process and it would prevent families from becoming “discouraged about saving and making plans for the future”.
Does this proposal make sense?
While simplification is a laudable goal, it should not be the reason to allow families to become eligible for financial aid even while sitting on large balances of untouched assets. And although the current system might seem to reward spenders and punish savers, I doubt this proposal would cause many of these spenders to suddenly mend their profligate ways, depriving themselves of vacations and other luxuries to build up their bank accounts.
… Assets are as much a part of a family’s ability to pay as is income. They most certainly should be counted.
The college financial aid system is indeed complicated and unfair in many ways, but ignoring assets in determining financial need would be step backward in trying to reform it.