I do not disagree with this. It is these Pell Grants and Subsidized Federal Loans that have allowed prices to inflate in the 1st place. The money IS given to the student to be disbursed to the school, *kind of*.
You still have to go THROUGH the University to *GET* that money, and it is at the discretion of their Office of Student Financial Aid that *you* can be disbursed that money. I have experienced this first hand, as I decided to go to grad school in the same university as my undergrad. I was not permitted to receive financial aid through the university (my FAFSA went through just fine and was supposedly offered enough to cover my expenses) but because their system had a glitch and still showed me as undergrad attempting too many credits towards my degree, I was denied aid... Not by the government, but by the university... I had to appeal to the university to reinstate my aid, and to get my status updated...