Moreover, the process is dynamic, not static. Federal aid is largely first dollar; states and institutions can move their money after the federal amounts are determined. After Congress established tuition tax credits and deductions for the middle class, several institutions reduced their institutional aid for this population and targeted it to the financially needy. But that was the exception. The history of the past two decades shows that when the federal government increases first dollar aid to the low income, institutions more typically respond by shifting their aid to “merit” programs, largely benefiting those whose access and retention are not at issue.

As the New York Times pointed out this week in a feature article on financial aid packaging, this process is “secret”. Institutions fight hard to keep it secret even though there is already legislation on the books (Student Right to Know) that could take the process out from behind closed doors. If Secretary Duncan is successful in increasing Pell grants and making their funding mandatory, his next step must be to make sure that the intended recipients actually benefit.