Higher Education and Financial Aid from the Government


Higher education has its importance in the society. All across the world there has been an increased emphasis on the investment in higher education. Many people are aware of the benefits higher education comes with. Survey studies done by bodies like the U.S Census bureau, show that individuals with higher education earn relatively more income than those without degrees. However, the economies of the world have reached new lows, putting into question the decision of investing in fancy college degrees. It is quite true that higher education opens doors to higher paying careers. The problem lies in the fact that majority of individuals are not able to afford higher education. For these individuals who cannot afford funding higher education, college financial aid comes as a source of hope. Many colleges now have financial counseling services that enlighten their students regarding federal aids that offer funding. The funding provided includes scholarships, subsidized loans and grants that are offered based on the background of a student, as opposed to the academic merit (Scott 2010). However, it is not to say that performance has no weight when it comes to access to funding. A good example of financial aid program offered by state bodies is Pell Grant. This program assesses the financial need of undergraduate students and its advantage is that the students do not repay Pell Grants.

This paper will delve into development of funding institutions, importance of financial aid for higher education and the current practices in this sector. A lot of helpful financial aid programs should be developed in order to assist needy students the worldwide. This is due to the benefits of developing minds to change the current state of the world economy and other fields like science, business, health and education. The other aspect of funding is merit-based pay and it is also discussed in this paper.

Models of Funding and their Impact on Higher Education

There are differences in the mechanisms of funding offered for higher education and government allocation. There has been direct funding of public institutions for teaching and research offered based on the performance. Block grant funds and funds for various projects have also been released. The other aspect of funding is that relief on tax systems and student loans for students were made possible by government grants and scholarships (Salmi and Hauptman 2006). Before analyzing the impact of funding, it is essential to note that in a number of countries governments have tried to separate funding for teaching and research through lump sum allocations. There has been a focus on divergence from negotiated funding implying the need for representatives to have more transparent formula-based mechanisms (Jongbloed 2004). In fact, there has been a recent tendency to overhaul block funding for research with favorably more competitive funding mechanisms or mechanisms based on performance.



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The important trend to note in funding is that it is not enough to grant funding to the needy but there has to be an output. It is more of an exchange system where the donors expect some benefit to arise from funding. Denmark, for example, operates with a performance-based funding for education. The funding depends on the number of students passing their exams. This shows the new school of thought when it comes to funding. In giving grants to research, it has emerged that Denmark provides additional funding based on the recruitment of researchers and the ability to attract external donors (Frolich, Schmidt and Rosa 2010). This applies to Norway also, where output-based funding is effected in the research and education. The model targets to improve education by providing funds based on the credits and graduates produced. For research, the parameter is research publications and relevance depicted by the incoming external funding. These mechanisms, however, have their weaknesses. One of them is that there is less accountability. Their defense is that the system raises the quality of education and that there is an increase in external demands for documentation of results. The other weakness identified is that higher education institutions become mismanaged due to dependency on the government (Frolich, Schmidt and Rosa 2010). These models have direct impact on raising the quality of education in higher institutions of learning. This means that for most of the students to get financial aid, there has to be a reasonable show of performance.

However, there is a need to assist low and middle income families that can neither afford nor have the possibility to borrow to pay for tuition. The concern is where such needy students access financial aid. The role of federal government has been key to ensure that student loans are subsidized and are widely available. This is meant to bring higher education within reach so that students can afford higher education. This should be the main aim of financial aid. More than half of students now receive aid in the form of loans with the mix of scholarships and grants (Malveaux 2003). Earlier higher education was seen as an element that brought value to society. Now it is seen as each and every individual’s investment. This explains the shift in models of funding and aid for higher education. Governments want increased output for financial aid they offer to institutions of higher learning. The colleges seem to be increasing but mainstream support seems to be decreasing (Malveaux 2003). This trend implies that less people access financial aid as compared to before. Governments seemed more liberal in assisting needy students in earlier years. There are increasingly fewer opportunities for grants for students. The shift now incorporates loans, some of which are unsubsidized. This means that the number of needy students able to access financial aid from government is on the decline.


Governments should relook at their commitment to educational access. In the US it is only federal government with the capacity to take responsibility for removing financial barriers to higher education (Baum 2003). There is a critical need for needy students to access higher education without constraint of finances. The system currently relies heavily on the students and their family members to cater for the cost of education as funds have been redirected as discussed in this paper. There needs to be a commitment to assist students from low income families. There should be policies that will address the inefficient and inequitable practices when it comes to government financial aid.

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