I think there should be no financial aid whatsoever outside of what you can broker with loans. Price competition becomes more of a factor, keeping efficiency high, tuitions low. Problem solved. Good thing capitalism already thought of this whole scenario.

Private universities can presently charge whatever they can get away with, and offer (or not offer) direct financial aid as they wish. That capitalism isn't suppressing tuition prices.

Instead, nearly all (all?) private universities have voluntarily chosen to offer need-based financial aid for the simple reason that it buys reputation-- you get better students when money isn't a hard barrier. A number of top schools have gone to a purely need-based model for similar reasons.

valguarnera@carrionfields.com