Jim Windham of See Thru Edu has a new post about the real world of college financing that may surprise you.

Exposing the Dirty Little Secret in College Finance

A recent article in The Wall Street Journal by Douglas Belkin exposes a shady element of college finance that, while long- and well-known by insiders, seems finally to be raising a fair amount of pushback from those families and students who are in many cases borrowing money to finance the scheme.

I make reference to the long-standing practice of using a percentage of the tuition of those middle- and upper-middle class students whose families can afford to subsidize scholarships for those students who can’t.  In a survey conducted by The Wall Street Journal, these subsidies have increased by 174% in the past eight years and amounted to over $512 million in the 2012-13 academic year.

This practice is not new to me, having had a daughter who attended one of the better private (and more expensive) universities a number of years ago, where I learned, quite by accident, that approximately 20% of her tuition was allocated to a fund for such subsidies.

I was incensed at the time and protested vigorously, particularly since we had saved for her education since her birth, were denied financial support because of our income level and the size of her college fund, and because we felt that the practice was unfair to her, not to mention the perverse incentives it promotes for students and their families.  Over 20 years later, I still feel the same way, even more so because of the growth of this practice.