A Rant About Responsibility

I was at a college planning workshop last week, at which financial advisors led a group of us through the labrynthine system of financial aid and tax-deferred savings for our children.

The workshop was really good, actually.  Among other things, I learned that the system of college aid is that the formula takes parental income into account to a much greater degree than parental savings.  This is good news for those who have put money into 529 college savings plans or even who have regular investments to help for college. [Sorry for the long setup here, I'll be getting to a political point eventually- stay with me]

The trainer put up an example of two hypothetical families in which the parents make $60,000 annually.  One family has $50,000 saved for college expenses, and the other family has nothing saved.  The way the system works is that the family with the large savings gets only slightly less financial aid than the family with no savings- i.e. there's good reason to save, as the college aid process takes only around 5% of your savings, compared to over 20% of your income.

A man from the other side of the room raised his hand and made a comment/ sort-of-question.  He said something like:

Wait a minute!  One of these families is being responsible and the other family is not.  Why should the responsible family, that saved for college, have to pay more than the irresponsible family, that didn't save anything?

The trainer tried to deflect the question and get back to the point, noting that, hey, this is the system, we're just telling you about it, we don't make the rules.  But I was taken aback the more I thought about this question.  I mean, the system is set up precisely to reward saving- that's the whole point of the training and presumably an intentional feature of the system.  This guy seemed upset that the system didn't reward him for saving- when it actually does so.  I guess he means that the system doesn't reward him enough for saving.

But think about the assumptions he is making from the hypothetical example.  The family that didn't save anything is irresponsible.  Is it?  His assumption is that if they didn't save it must be because they're morally deficient.  What if a parent lost a job in the last recession and they had to drain their savings? What if a hurricane destroyed their house and the deductible wiped out that savings?  What if the "responsible" family has money because of an inheritance, and hasn't saved nearly as much as they could have? 

I know this is a lot of outrage over a hypothetical example, but the underlying conservative assumption here is that people experiencing hard times must be at fault for their problems.  And sometimes they are.  But sometimes they're not.  Our public policy needs to reflect that fact- we can't even out luck, but we can ameliorate the worst of the injustices, rather than leave the poor and unlucky to their Darwinian fate.