Now that the Senate finance committee has requested - the New York Times said "demanded" - that the nation's wealthiest colleges and universities supply detailed information about their endowments and financial practices, it seems clear that college cost is emerging as a long-running, popular and bipartisan issue. The request/demand came in a stern but polite letter from committee chairman Max Baucus and ranking Republican Chuck Grassley. It asked 136 colleges and universities to supply answers in 30 days to a long laundry list of questions about tuition rises, spending and the handling of endowments.

The euphoria over Harvard's plan to grant financial relief to students from families earning up to $180,000 a year, since followed by similar announcements from Yale and Dartmouth, is long gone. Criticism of the three rich Ivies is increasingly caustic. Lynne Munson of the Center for College Affordability and Productivity, calls Harvard's reform plan "miserly," and Richard Vedder, head of the Center, wrote a Washington Post op-ed headlined, "It's a Start, Yale. Now do Something Serious." Several critics have labeled the announced reform plans "chump change" and denounced the wealthiest schools for decades of hoarding of endowment monies.

Munson points out that the new financial relief offered by Harvard amounts to a mere day and a half of earnings on the university's $34.9 billion endowment. Even so, other universities are even more addicted to penny-pinching. The University of Michigan, one of two richest public schools (along with the University of Texas) gives its 40,000 undergraduates only $61 million in aid, half of what Harvard spends on its 6,600 undergraduates.

Many critics argue that aid for students is small in relation to spending on compensation for university presidents, new stadiums, and dubious expansions of administrative officers, including the new and mostly pointless "diversity deans." Luxury housing on campuses is becoming an issue as well. Vedder calls attention to Princeton's new Whitman College (named for a donor, eBay executive Meg Whitman) that cost $388,571 per room. Vedder wrote for the Washington Post: "Taxpayers may ask why should Whitman get a multimillion dollar tax break building a luxury hotel for children of mostly wealthy Americans?"

The Senate finance committee letter launches the project of generating reliable information on the historically shrouded financial practices of colleges and universities. Grassley said that answers "will help Congress make informed decisions about a potential pay-out requirement." In other words, cooperate or else.

Harvard's announcement, on December 10, that it was eliminating student loans, and otherwise increasing grant support for lower and middle income students, has set off a torrent of welcome news in the last nine days. Two days following, Yale declared that revisions to its student aid program were forthcoming. Soon, Swarthmore announced the elimination of student loans. Duke and The California Institute of Technology declared revisions for the benefit of lower and middle-income students. On Monday, the University of Pennsylvania announced the end of student loans for students from families with incomes under $100,000, and a ten percent reduction in all other loans. Today, Haverford announced the replacement of all loans with grants beginning with the class of 2012. All great news for aspiring students and for their parents.

The profoundly encouraging truth about this development is that it's been highly voluntary. In the past, affluent institutions have made significant revisions to their aid policies, and no one followed suit. Other colleges, with fewer resources and little hope of altering their competitive posture, did nothing. Princeton eliminated student loans in 2001, but few colleges did the same - Princeton was already drawing the cream of the student crop, and less-selective colleges didn't seem to feel that comparable revisions would change that situation. Elite colleges didn't make adjustments either - and had no trouble drawing applicants, even with less attractive financial aid packages. This time, however, there's been a real shake-up. It's understandable why, say, Yale has announced revisions in response, as it is competing for much the same applicant pool as Harvard, but the waves of change have extended to institutions that are considerably less affluent - and compete with Universities such as Harvard and Yale much less directly for students.

Compare two large research universities to see the significance of the trend - Harvard, with an endowment of nearly $26 billion dollars, and an undergraduate acceptance rate of 9 percent, can easily handle aid increases - but Duke, with an endowment only about a tenth of Harvard's, and an acceptance rate over twice as high, is also clearly committing funds to reducing student debt. This is an excellent sign. As these changes show every sign of filtering across the top tier of Higher Education, they may create ideal pressure on colleges beneath them. As Peter Wood observed last week:

If other elite colleges give similar price breaks, it will mean that the top tier of American higher education will be even more irresistibly attractive to the best students. And that, in turn, will mean that other colleges will face some hard choices.

We may see much more sweeping revisions to come. Or at least hope for them.

The New York Times reports that "College Costs Outpace Inflation Rate." Of course they have. The Chronicle offers a more telling headline: "Student Aid Has Gained, but College Costs Have Risen Faster."

The Times reports "in recent years, consumer prices have risen less than 3 percent a year, while net tuition at public colleges has risen by 8.8 percent and at private ones, 6.7 percent." This was the largest increase in six years.

What is to be done? Senator Clinton has proposed a $3,500 tax credit for students, and an increased Pell grant. Bill Richardson proposes two years of free schooling at public universities in return for a year's pledge of public service. Mitt Romney has offered a similar plan, tying student aid to the type of jobs students intend to take after college. All of these plans would necessarily involve a significant increase in direct government spending on higher education. Most frankly acknowledge that government aid will never catch up to tuition increases. Few are willing to consider whether government aid might underpin the rise of tuition. Whatever the case, it's impossible to trace any consistent benefit from mere aid increases.

Richard Vedder has, as to be expected, proposed a plan of far greater substance:

Business Week reports on many colleges' increasingly cozy relations with banks. In the most common formulation, the colleges permit their ID cards to double as debit and ATM cards for particular banks, in return, typically, for some portion of the profits.

Parhaps it does work, but as Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars & Admissions Officers comments in the article: "It's unfortunate that there are colleges that have begun to view every point of contact with students as a potential profit center."

Peter Wood has been active at the NAS site, issuing additional comment on the latest permutation of the ongoing student loan scandal (if you haven't, do catch his initial summing-up of the case Those Scandlous Student Loans). This week, George Miller, Chair of the House Education and Labor Committee, introduced a bill to reduce federal subsidies of private loan providers and shift the related funds to direct federal loans. Democrats such as Miller have had considerable fun railing against fat-cat student loan companies in recent days (with good reason), but student-loans hardly ever qualified as a "private" enterprise in any traditional sense of the term. As Wood observes:

For decades, Republicans have been stalwart supporters of "private" lending for higher education, as opposed to direct federal spending. Of course, an industry addicted to federal subsidies and guarantees is private in a highly qualified sense. It has socialized its risks and privatized its profits. It would take rather advanced financial modeling to figure out whether the residual benefits of the private sector save the taxpayer more money than the industry managed to scam from the program.

In any case, the political balance has decidedly shifted in favor of a renewed effort to use direct federal loans to students. The opportunities for malfeasance, corruption, and inefficiency in this program are not to be underestimated either. But at least it will be a different malfeasance, corruption, and inefficiency -- and that will feel good. Of course, the private student loan industry won't be shutting down. The price of Sallie Mae has fallen, but the business will continue at a slightly less robust profit margin.

In other words, a sunny future. Read all of his thoughts at NAS.

By Richard Vedder

Former Commissioner of Education Statistics Mark Schneider has caused a bit of a stir with a paper in which he argues that colleges are getting a free pass on a huge problem - a very high drop-out rate. Our colleges are failure factories for literally millions of students, Schneider says, and I agree.

To be sure, our statistics on college dropouts are imperfect. Students move from full to part-time status, or change schools, and sometimes get measured as drop-outs when in fact they succeed. The reality is, however, that over half of students entering four year colleges and universities do not graduate within the advertised four year curriculum, and roughly one-third do not graduate within eight years even using better measures of dropping out.

I think there are four major reasons for this. First, of course, there is a small proportion that drop out because of adverse family circumstances that force them into the full-time work force or into caring for relatives. While some claim this is an enormous problem, the vast amount of student loans available has reduced the number of students who drop out for strictly financial reasons. Second, there is more than a grain of truth to the collegiate lament that high school graduates are often ill-prepared, with mediocre qualifications in such basic areas as writing, civic knowledge and math skills. Anyone who has looked at results of the NAEP or TIMSS tests knows that Americans on average graduate from high school with at best a shoddy intellectual base.

By Donald Downs

The stage is now set for wide debate over mandatory student fees These are the fees that educational institutions or student governments assess students above and beyond the monies that pertain to tuition, housing, dining, and similar goods. Some of these additional fees typically fund extracurricular activities or needs such as medical services, crime victim services, transportation services, and the like. The more controversial fees cover students' expressive and associational activities.

At my school, the University of Wisconsin at Madison---a hotbed of such activity that is a model for other schools---mandatory fees currently amount to about $750 per semester. After an activist group abolished student government here in the early 1990s, students organized to establish a new form of student government in 1994-5, primarily to enable activist groups to gain access to student fees.

Objections to fees that support student expressive groups take three tracks.

By Peter Wood

The student loan crisis - or near crisis; narrowly-averted crisis ; or postponed crisis - no one is sure - comes co-incidentally at a moment when many colleges and universities are once again repackaging their basic programs. The new buzzword, as John Leo has pointed out is "sustainability." I also recently tried my hand at unpacking this polyvalent idea. "Sustainability" sounds to the uninitiated as though it is about environmentalism, but it is much more. As I wrote in Inside Higher Education, many of the advocates of "sustainability" see it as an encompassing concept. It includes science, economics, and the social structure. And for many in the movement, the focus on social order is the basis for far-reaching attempts to advance "social justice" policies.

I doubt this development has come into focus for many parents or people outside the campus. The campus left learned with its promotion of the concept of "diversity" the advantages of packaging hard-core ideology in bland, feel-good terminology. Sustainability is another venture in this direction. No one can really be against sustainability (definition 1) - prudent use of resources with the needs of future generations in mind. But while most of us hear the word in that sense, campus ideologues are busy rearranging the curriculum and student life around "sustainability" (definition 2) - a condition that arises when capitalism and hierarchy are abolished; individuals are made to see themselves as "citizens of the world;" and a new order materializes on the basis of eco-friendliness, social justice, and new forms of economic distribution.

Sustainability (2) is an amalgam of environmental extremism, shards of Marxism, romantic utopianism, and identity group politics. It doesn't have a significant political following in America outside college campuses, and in that sense it is a fringe movement. But on campus it's everywhere. Hundreds of campuses now have sustainability officers, courses that promote the ideology, and most ominously, "co-curricular" programs run through student life and residence halls that attempt to "educate" students about their mistaken "worldviews" and bring them aboard this new ideological ark.

By Richard D. Kahlenberg

Despite a great flurry of activity to expand financial aid at selective colleges over the past several years, a new study by the Chronicle of Higher Education reported this gloomy bottom line: "Top Colleges Admit Fewer Low-Income Students." As someone who has worked for more than a decade to push colleges to enroll more economically disadvantaged kids of all races, the news was disappointing, though not altogether surprising. For years, elite colleges have assembled freshmen classes that include upper-middle class and wealthy students of all races and declared themselves to be diverse. New financial aid policies alone were unlikely to change that pattern.

The Chronicle study found that the percentage of students receiving Pell Grants declined at the wealthiest 75 private and 39 public colleges and universities between the 2004-05 and 2006-07 academic years. In the 75 private institutions with the largest endowments, 13.1% of undergraduates in 2006-07 received Pell Grants, which typically go to students from families earning less than $40,000 a year, down from 14.3% two years earlier. In 39 public institutions with endowments of $500 million or more, 18% were Pell Grant recipients in 2006-07compared with 19.6% two years earlier.

The news is particularly troubling given the high profile efforts announced in recent years by some 40 top colleges and universities to provide more generous financial aid to struggling families. Why did less, rather than more, economic diversity follow? The primary reason is that aid policies are only part of what drives enrollment. In order to receive aid, low-income and working class students must first be admitted. Because such students often attend lousy schools, even highly talented and hard working students - who have tremendous potential - don't look as good on paper as their more privileged colleagues. Research finds that while colleges and universities give substantial preferences to under-represented minorities (blacks, Latinos and Native Americans) and other groups, they give basically no preference to economically disadvantaged students, despite claims to the contrary.

By Charlotte Allen

You've just started your freshman year in college, so one of your first stops is the campus bookstore to pick up your textbooks. You signed up for Econ 101, where your professor has assigned one of the top-selling basic textbooks in the field: Harvard professor N. Gregory Mankiw's 936-page Principles of Economics (South-Western/Thomson), now in its fourth edition. The price: $175.95, or if you want to throw in a study guide to help you ace the course, $209.90.

Wow, that's steep for just one book - but you've only just started. Next class: the first semester of your college's world history survey course, spanning the period from 1 million B.C. to 1500 A.D. In that class the prof is having you read the first volume of Traditions & Encounters: A Global Perspective on the Past (McGraw-Hill), the ever-so-politically correct overview by Jerry H. Bentley and Herbert F. Ziegler that devotes only 28 of its 600 pages to ancient Greece. The sticker price for Traditions and Encounters, now in its second edition: $89.69. Next, chemistry class, where the assigned textbook is Karen C. Timberlake's Chemistry: An Introduction to General, Organic, and Biological Chemistry (Prentice-Hall), now in its ninth edition. The price here is $148.80 for 736 pages plus a CD-ROM, and another $64.90 if you want a study guide. The bargain on your textbook list, if you can call it that, is Lynn Bloom's The Essay Connection (Houghton-Mifflin), the required anthology for your freshman English class, and "only" $61.16 for 656 pages. The Essay Connection is in its eighth edition, an improvement over the seventh edition, its blurb promises, because the book now includes essays by David Sedaris (can't you read him at home in your parents' New Yorker?), a photo collection on the horrors of war (guess what non-English-related political point that's trying to make), and cartoons and other illustrations for students who learn better by looking at pictures.

Your textbook-bill total for the semester is now $475.60 for just four books, more than a fourth of the average $2,315 in tuition and fees for a semester at a U.S. state college, according to figures for 2004 from the U.S. Education Department) - and that doesn't include optional study guides, the lab manual you might need for chem class, or the photocopied handout packet your English teacher says she'll be passing out at your expense. Why the sky-high prices for basic textbooks? After all, the brand-new, critically acclaimed translation of Tolstoy's War and Peace by Richard Pevear and Larissa Volokhonsky (Knopf) lists at only $37 for 1,273 pages in handsomely designed hardback. If Knopf, a trade publisher, can bring in a lengthy volume with a scholarly apparatus of notes and bibliography for less than $40, why can't textbook publishers, serving a market of generally cash-strapped young people, do something similar?

By Anthony Paletta

(This article originally appeared at Inside Higher Ed)

Dartmouth College is now the latest institution to announce considerable changes to its tuition and financial aid structure, eliminating any charges for students from families making less than $75,000 a year. Dartmouth's arrangement is not nearly so generous as Harvard's or Yale's, yet it's markedly superior in one regard. Dartmouth proposes to offer a scholarship "to allow financial aid recipients to take advantage of research or internship opportunities in their junior year."

Dartmouth's is the most concrete step towards expanding access to internships, in a cycle of financial aid changes where colleges have begun to take explicit note of the fundamental inequities in their accessibility. Several colleges eliminated summer earning expectations for students on financial aid, asserting that the demand that students contribute money toward tuition in summers posed a stark obstacle to the pursuit of less-remunerative internships and volunteer work. All that is undoubtedly true, but the colleges' efforts go nowhere near establishing equality of access to internships.

Why worry? Increasingly, internships are perceived as essential steps to post-college employment, as definitive legs up for job applicants. "Internships are no longer optional, they're required," The New York Times quoted Peter Vogt, author of Career Wisdom for College Students and an adviser to MonsterTrak.com, as saying last month. A 2006 study by the National Association of Colleges and Employers indicated that 62.5 percent of new college hires performed undergraduate internships. Employers responding to association's 2007 Recruiting Benchmarks Survey reported that they offered full-time jobs to almost two-thirds of their interns. Over 30 percent of new hires came from such internal internship programs. Internships undoubtedly enhance employment prospects, but the question is - for whom? The answer, almost invariably, is for students already well-off.

By Peter Wood

A few weeks ago, I alerted readers to the threat of a tightening of the student loan market . Banks have been bundling student loans, like home mortgages, and selling them as securities. First Marblehead Corporation in Boston has been the nation's biggest player in "securitizing" student loans, and just like home mortgage-backed securities, the student loan-backed bonds issued by First Marblehead contain a lot of loans of doubtful value.

These aren't the loans that are guaranteed by the Federal government's Title IV Student Loan program. When students have borrowed all they can in Title IV loans, they frequently need to borrow still more to meet the extravagant costs of college. They often borrow at relatively high interest rates from banks and other private lenders. These banks and lenders, in turn, act just like the sub-prime mortgage lenders did: they sell the risk to someone else. First Marblehead takes loans from many banks and bundle them together to create its bond issues.

As I reported, First Marblehead appears to have hit a major snag in October, when investors declined to buy the company's new $1 billion student loan-backed bond offering. First Marblehead's stock plummeted and a chill went through the whole student loan industry.

By Peter Wood

Last week, First Marblehead Corporation, a Boston-based company, saw its stock plummet after cutting its dividend. The problem? First Marblehead is in the business of "securitizing" student loans. A year ago, this would have required some explanation, but the sub-prime mortgage mess has taught Americans - and people all over the world - the meaning of "securitizing." It is one of those words that means the opposite of what it sounds like. A company bundles together some high-grade debt, some middle-grade debt, and some really doubtful debt and sells it to investors, who only think they are making a secure investment. As we learned with the securitized mortgages, no one really knows what these chimeras are worth. And a little bit of bad debt, like a little bit of ptomaine, goes a long way to making the whole meal undigestible.

First Marblehead isn't saying exactly what happened, but Matt Snowling, analyst with Friedman Billings Ramsey, told AP report Dan Seymour, that he believes First Marblehead "was trying to sell about $1 billion in bonds." As Seymour explains, First Marblehead bundles student loans from numerous banks to put together its bond offerings. The deal usually specifies that First Marblehead has 180 days to sell the bonds, and failing that, has to buy the student loans itself.

Apparently, First Marblehead has been trying since October to sell $1.1 billion in these student loan-backed bonds - and found few takers. Meanwhile, banks keep issuing more student loans.