The Dangerous Bargain Behind Federal Student Aid

By Dr. Eric M. Wallace

The debate over federal control of higher education has once again exposed a deeper question many conservatives have avoided asking: Why is the federal government involved in financing colleges and universities at all?

The recent controversy surrounding proposed federal regulations affecting Christian colleges reveals the danger of dependency. Under a new Department of Education proposal, programs whose graduates do not meet government-defined earnings thresholds could lose access to federal loans and grants. Christian colleges are warning that ministry and theology programs could be devastated because pastors and missionaries rarely enter high-paying careers.

But perhaps conservatives should ask a more fundamental question. If government money inevitably comes with government strings, why were Christian institutions taking the money in the first place?

For decades, many conservatives have rightly championed small government, local control, and institutional independence. Yet when it comes to higher education, too many have accepted the assumption that taxpayers should subsidize colleges through federal grants, federally guaranteed loans, and endless streams of student aid. That assumption deserves reconsideration.

The federal government was never intended to become the financier of American higher education. The modern explosion of federal student aid began primarily with the Higher Education Act of 1965 as part of Lyndon Johnson’s Great Society agenda. Over time, Washington’s role expanded dramatically through Pell Grants, federally guaranteed loans, and eventually direct federal lending. By 2010, the federal government had effectively taken over most student lending through the Federal Direct Loan Program.

What has been the result?

Student debt has exploded into the trillions. Tuition costs have skyrocketed far beyond inflation. Universities have built bloated bureaucracies, luxury amenities, and ideological empires financed by easy federal money. Degrees with little market value continue to multiply because federal aid shields institutions from economic accountability. Instead of lowering costs, federal intervention inflated them.

And now Christian colleges are discovering the inevitable reality: whoever funds you eventually governs you.

This is not merely an economic issue. It is a theological and philosophical one. Scripture repeatedly warns about debt and dependency. Proverbs 22:7 reminds us that “the borrower is the slave of the lender” (ESV). Institutions are no different. Once Christian colleges became dependent on Washington for student financing, they opened the door to federal oversight over admissions policies, gender policies, accreditation pressures, reporting requirements, and now even judgments about which degrees deserve to exist.

The irony is striking. Many Christian colleges that proclaim biblical authority simultaneously rely on federal funding streams administered by increasingly secular bureaucracies hostile to historic Christian teaching.

There is another path. Hillsdale College stands as perhaps the clearest modern example of institutional independence. Rather than submit to growing federal control tied to student aid programs, Hillsdale rejected all federal and state taxpayer funding decades ago. The college concluded that accepting government money would ultimately compromise its mission and autonomy.

That decision was costly. It required donors, discipline, and sacrifice. But Hillsdale preserved something increasingly rare in American higher education: freedom.

Perhaps the real lesson for Christian colleges is not how to preserve federal aid, but how to survive without it.

Why should a plumber in rural America be forced through federal taxation to subsidize degrees at elite private universities his children will never attend? Why should taxpayers underwrite programs they may fundamentally disagree with morally, politically, or religiously? Conservatives often oppose federal involvement in health care, housing, and energy because subsidies distort markets and expand bureaucratic control. Why should higher education be treated differently?

Defenders of federal aid argue that college access would shrink without government assistance. Yet the present system has already created a generational debt crisis while pushing millions of young Americans into degrees disconnected from employment opportunities. Meanwhile, vocational trades, apprenticeships, entrepreneurship, and workforce development programs remain underemphasized despite offering more practical and economically sustainable paths for many students.

A truly conservative vision of education would encourage competition, affordability, private philanthropy, church support, local investment, apprenticeships, and institutional independence, not permanent dependency on Washington.

Christian colleges especially should recognize the spiritual danger of relying on Caesar to fund the mission of Christ-centered education. Government money is never neutral. Every dollar eventually carries expectations, regulations, and ideological assumptions.

The current controversy may actually be a providential warning.

If Christian institutions truly believe their mission is ordained by God, then perhaps it is time to trust God’s people, not federal bureaucracies, to sustain them. The future of faithful Christian education may depend less on protecting federal subsidies and more on recovering the courage to live without them.

Dr. Eric M. Wallace, author of the new book, The Heart of Apostasy: How The Black Church Abandoned Biblical Authority for Political Ideology--And How to Reclaim It, is a trailblazing scholar, dynamic speaker, and passionate advocate for faith-based conservatism. With a distinguished academic background and an unwavering commitment to biblical truth, Wallace has become a leading voice challenging cultural and political narratives that conflict with a biblical worldview.

Wallace holds postgraduate degrees in biblical studies (M.A., ThM, Ph.D.), Wallace is the first African American to earn a Ph.D. in biblical studies from Union-PSCE (now Union Presbyterian Seminary). His scholarship and ministry experience equip him to address today’s most pressing sociopolitical issues through the lens of faith, reason, and historical accuracy.