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Rich Student, Poor Student

March 16, 2006

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Harvard University has a $25 billion endowment and in 2003-4, only 6 percent of its undergraduates were of sufficiently modest means to qualify for Pell Grants. While Pell eligibility varies based on a number of factors, only 5 percent of Harvard undergraduates that year came from families with incomes less than $30,000.

At Trinity University, in Washington, there's a lot less money in the bank -- but a much larger share of students are getting Pell Grants. The endowment is about $9 million. In 2003-4, fully half of Trinity's students were poor enough for Pell Grants, and 26 percent came from families with incomes less than $30,000.

If the comparison makes anyone in Cambridge squeamish (or just has someone objecting to the comparison's fairness), that's precisely the point of a new Web site, Economic Diversity of Colleges, which is being unveiled today. The Web site features data from about 3,000 colleges -- taken from reports that the institutions file with federal agencies. Tools on the Web site allow users to browse institutions or to set up groups -- by geography or institution type, for example -- for comparison purposes.

In addition to information about Pell Grant recipients and family income levels, the site also features data on levels of student indebtedness and tuition costs. The Web site doesn't rank colleges or suggest what an appropriate level might be for percentages of Pell recipients or families with incomes at certain levels. "We decided not to say that this is good or this is bad. These are the kinds of discussions institutions should be having," said Robert Shireman, director of The Institute for College Access and Success, a research organization that created the new Web site.

There are some obvious limitations to the site that Shireman acknowledges. While Pell Grants are frequently used as a proxy in measuring economic diversity, they aren't the only measure. And some institutions, such as low-cost community colleges, may have low percentages of Pell recipients because tuition just isn't that much and students therefore might not need the federal grants to afford to attend.

Likewise, the data don't reflect problems in public education (many low income students may attend high schools that don't put them in the pool for competitive colleges) and the data don't reflect a number of changes adopted by colleges (including Harvard) in the past two years to make aid packages more generous to low-income students.

Elite colleges continue to adopt new aid policies -- Stanford University announced on Wednesday that families with incomes of less than $45,000 would no longer need to contribute anything toward tuition. The Massachusetts Institute of Technology announced last week that it would match Pell Grants. But the new data drive home that many of the most prestigious and most wealthy colleges in the country -- public and private -- aren't necessarily the leaders when it comes to educating low-income students. And institutions with limited financial resources are managing to attract such students.

Patricia McGuire, the president of Trinity, says that she thinks "it's shameful" that the wealthiest institutions in the United States aren't educating more low-income students. "They make the big headlines when they drop the loan requirements for students, but that's a drop in the bucket, considering their condition," she said.

McGuire noted that Trinity, a Roman Catholic institution, once educated a much wealthier -- and overwhelmingly white -- student body. As the area around Trinity diversified and as it became clear that there were not enough colleges reaching out to low-income minority women, McGuire said that the college shifted focus and started providing more of its own aid to such students, on top of the Pell Grants that they receive. Of low-income students, she said, "this is who we are called to serve today," adding that more colleges should be reaching out to such students.

Elite colleges frequently note that with their highly competitive admissions, many in their applicants pools are in fact wealthy. But Shireman said that there were clearly many more low-income students who could succeed at top institutions that currently enroll relatively few such students. And his data show that other competitive institutions were managing to get significantly larger shares of Pell recipients than Harvard was two years ago. Cornell University's Pell percentage was 17 percent, nearly three times that of Harvard.

There's also evidence from Harvard itself that policy changes can make a difference. A study of the impact of recent aid changes at the university found that they were resulting in increases in the numbers of low-income students enrolling.

Not surprisingly, the data show that community colleges -- which cost much less than four-year institutions -- are serving many of the nation's poorest students. Alabama Southern Community College has half of its undergraduates receiving Pell Grants and 38 percent come from families with incomes less than $30,000.

Many historically black colleges also show high enrollments of students with few resources. To take two that have been in the news because of the damage that they suffered from Hurricane Katrina, 48 percent of the undergraduates at Xavier University and 69 percent of those at Dillard University received Pell Grants. Similarly, many Hispanic-serving institutions are enrolling large numbers of low-income students. At the University of Texas at Brownsville, for example, the Pell percentage is 53 percent and 36 percent of students come from families with incomes below $30,000.

Not all public institutions will like the comparisons that jump out. In Wisconsin, for example, Beloit College's tuition and fees are five times that of the flagship campus in the state, the University of Wisconsin at Madison. But Beloit graduates leave with only marginally more debt than Madison graduates ($20,339 to $17,528). And Beloit outpaces Madison in the percentage of families with incomes under $30,000 (8 percent to 4 percent) and the percentage of undergraduates receiving Pell Grants (16 percent to 11 percent).

"It looks like we cost five times as much, but we don't," said John E. Burris, Beloit's president. He suggested that public institutions would be better able to reach a broader range of students by increasing tuition and putting substantially more money into financial aid.

Madison is hardly unique. In many states, similar comparisons could be made, with flagship public universities appearing to have smaller shares of low-income students than those enrolled in other sectors. At the University of Georgia, only 12 percent of undergraduates receive Pell Grants; the figure is 14 percent at the University of Minnesota-Twin Cities and 13 percent at the University of Colorado at Boulder.

Shireman said that he hoped such comparisons would prompt state legislators and educators to ask whether flagships were focused too much on competitiveness as opposed to serving state populations broadly. David Edelson, a spokesman for the National Association of State Universities and Land Grant Colleges, said officials there hadn't yet seen the data being released. But he questioned whether it was fair to compare figures from large research universities and small liberal arts colleges. He said that there was no doubt that flagship publics are serving many low-income students and working to serve still more. "Percentages don't tell the whole story," he said.

While many flagships don't fare well in the new database, there are some notable exceptions -- especially from campuses in the University of California and the State University of New York systems. SUNY's university centers at Albany, Binghamton, Buffalo and Stony Brook have Pell enrollment percentages of 28, 28, 34 and 43 percent, respectively. Berkeley's percentage is 29 and UCLA's is 30.

Shireman said that he hoped colleges would ask a series of questions about their data:

  • Are they enrolling as many low-income students as might be possible?
  • If they are enrolling many low-income students, are those students able to find and obtain federal student aid they should be eligible for?
  • Are students borrowing too much money, based on total costs, and borrowing patterns are institutions with similar expenses.

"There should be different goals for different kinds of institutions," Shireman said.

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Comments on Rich Student, Poor Student

  • Another question
  • Posted by Art D. on March 16, 2006 at 6:10am EST
  • " .. Not all public institutions will like the comparisons that jump out. In Wisconsin, for example, Beloit College ..

    Regarding Beloit College v. U-W/Madison (UWM) --

    What's the four-year graduation rate at Beloit v. UWM? Six-year?

    That information impacts on productivity of total funds spent on higher education. For instance, if one college has higher graduation rates, that college has had a greater impact, many would argue.

  • Pell is a poor yardstick
  • Posted by Fin Aid Administrator on March 16, 2006 at 6:50am EST
  • The paper wrongly assumes that percentage of students receiving Pell Grants is a vaild measure of the socioeconomic diversity of the student body. Many of the wealthy institutions like Harvard give low income students financial aid awards that are more generous than federal regulations allow (i.e. $0 family contribution instead of $200 family contribution). In order to do this they avoid using federal programs for low income students and use their own institutional funds to replace what would have been received from the Pell program.

  • Turning away Pell Grants?
  • Posted by CFO on March 16, 2006 at 9:50am EST
  • Really? Since when?

    This is a new concept for me. Financial aid administrators have numerous strategies at their disposal that are more sophisticated than this.

    Even so, full tuition rates (like airline fares) are imaginary in the sense that it is the actual net yield that is important.

    Turning away Pell Grants must surely be an option of last resort that is rarely employed, no?

  • Harvard as Welfare Office?
  • Posted by Bob on March 16, 2006 at 11:05am EST
  • I understand and believe in the obligation of state colleges and universities to do what they can to make a college education available to all the qualified students in their states. But when did Harvard and the other elite private institutions acquire an obligation to serve the poor? Noblesse oblige? I couldn't afford to send my children to one of the Ivies without substantial, nay huge, financial aid, but I have no sense of entitlement that Harvard etc. owe me or my kids anything. And if they don't owe me anything, they don't owe anyone else either.

  • Posted by Thane Doss on March 16, 2006 at 11:55am EST
  • In places, the language of the article suggests that what is measured is not actual recipients of Pell Grants, but persons with qualifying incomes for them. In other places, it seems to suggest that what is measured is actual recipients. One would assume that most who qualify would take them, but that is an assumption, not a given.

    As for what Harvard owes to people, considering the large amount of public funding it receives in addition to its private funding, surely it owes something to the public at large.

    While fairness may come from a more idealized plane than ideas of "owing the public," I think the outsized roles the Ivies play in public life should affect considerations of access at them. In the last Presidential election, the choice was between a low-achieving (academically) Yalie Skull and Bones member and another low-achieving (academically) Yalie Skull and Bones member. About the only choice that presented itself during the electoral process was the possibility of a Yalie who wasn't a Skull and Bones member (Howard Dean). The previous president, of course, went to Yale Law School, and met someone there who is also sometimes discussed as a potential presidential candidate. Clinton, of course, was a poor boy who managed to make it to Yale for professional school, but the rest of these people were all children of privilege, privileged further by their Ivy associations.

  • Graduation Rates
  • Posted by Teri on March 16, 2006 at 12:15pm EST
  • Art asked: "Regarding Beloit College v. U-W/Madison (UWM) —

    What’s the four-year graduation rate at Beloit v. UWM? Six-year?"

    UWM has about a 40% 4-year grad rate compared to about a 60% 4-year rate at Beloit. They even out by the time you get to a 6-year rate - UWM even pulls ahead some (about 75% to Beloit's 72%). This is based on data from the Education Trust as of 2003 (http://www.collegeresults.org/search1ba.aspx?InstitutionID=238333,240444).

  • Taxation Without Representation
  • Posted by dm on March 16, 2006 at 8:15pm EST
  • I’m bothered by the implications embedded in a statement by Beloit president John E. Burris: “public institutions would be better able to reach a broader range of students by increasing tuition and putting substantially more money into financial aid.” From a budget standpoint his comment is obviously true – and it probably describes what many public and private schools already do – charge some students more so that they can charge other students less. The elite colleges have endowments that permit them to fund financial aid without taking the funds from other students. Other schools do not.

    When I’ve mentioned my concern to administrators, I’ve received two unsatisfactory responses that strike me as dodges. First, since no student pays the “full price” of his or her education, we’re not really asking Peter to pay for Paul. Second, though somewhat related, dollars are fungible and one can’t really track the dollar that Peter pays into Paul’s financial aid package.

    Those arguments, however, fly in the face of how I’ve seen budget and tuition rate decisions actually made at my private institution. We arrive at our needed expenditure levels – including in there the “financial aid” dollars, and once we’ve arrived at those numbers we then set our tuition hikes. The tuition rates end up being the final piece of the puzzle. Hence, by deciding how much we’re going to discount Paul’s tuition, we end up deciding how much more we’re going to charge Paul.

    In essence, the universities decide to tax Peter without giving him any representation. And we’re certainly going to do our best to make it difficult for Paul and his parents to recognize what’s happening. Fortunately, more and more middle class parents understand the game and more frequently than we like decide they’ll just take advantage of the state school where they sense that less such taxation will go on. If President Burris has his way, we’ll continue to see the taxation carried out by non-elected school administrators.

    Another argument that I hear is that the educational experience of all students is deepened and enriched by the socio-economic diversity that is heightened by reducing merit aid and giving more need-based financial aid. On the margins, I agree, but frankly, as a parent I would rather pay higher tuition dollars to improve the chance that my daughter will be sitting next to a national merit scholar. I’m willing to concede that her education might well be richer if that’s how the financial aid is given out – read based on merit. But as Bob pointed out, need-based financial aid is a form of welfare. I don’t have a problem with the government, through an appropriate political process, deciding to use its taxing authority to provide such assistance. Nor do I object to philanthropists contributing to universities to assist in those efforts. I don’t, however, appreciate academic administrators and do-gooders deciding that it’s fair and just to force Peter to graduate with $25,000 in debt so that Paul can afford to come to college for less. How generous of them!

  • Does counting Pells undercount low income students at Harvard?
  • Posted by MKT on March 17, 2006 at 4:40am EST
  • "Many of the wealthy institutions like Harvard give low income students financial aid awards that are more generous than federal regulations allow (i.e. $0 family contribution instead of $200 family contribution)."

    There's no question that the statement above is correct; Harvard very publicly announced a couple of years ago that students from families with incomes below $40K would not be asked to contribute anything. But ...

    "In order to do this they avoid using federal programs for low income students and use their own institutional funds to replace what would have been received from the Pell program."

    As with a previous commenter, this is news to me. Why would an institution say "no" to receiving Federal funds (Hillsdale College and the like excepted)? More specifically, if Harvard is avoiding using Federal programs, why does it require financial aid applicants to fill out a FAFSA?
    http://fao.fas.harvard.edu/application_instruct_us.htm

    Schools can and do use both Federal Methodology and Institutional Methodology in making financial aid awards; Harvard's use of its own IM in determining EFC doesn't preclude it from using FM in determining Pell grant eligibility.

  • Social engineering can't be avoided
  • Posted by MKT on March 17, 2006 at 4:40am EST
  • "I don’t, however, appreciate academic administrators and do-gooders deciding that it’s fair and just to force Peter to graduate with $25,000 in debt so that Paul can afford to come to college for less."

    The problem with this is that some students are going to have more debt, and others less, no matter what the college does.

    If you object to need-based financial aid, as you apparently do, then are you advocating that a given college charge all students the same amount, say $15,000 per year, regardless of income level?

    Peter might well be able to graduate debt-free with that tuition level, whereas Paul might be burdened with a $25,000 debt.

    No matter what, some students are going to get hit harder than others by college tuition. The question is how hard should they get hit?

    Some, indeed I think most, Americans would agree that the low income student should be hit less hard (lower EFC) and the high income student should have a higher EFC. I suppose that makes them "do gooders".

    But that seems highly preferable to a system which charges the same amount to all students, and says "tough luck" to the low income students who can't afford that tuition. If the former group is the "do-gooders", I'd call this other group the "do- badders".

  • On Need-Based Financial Aid
  • Posted by dm on March 17, 2006 at 8:40pm EST
  • I don’t object to need-based financial aid, but I do have serious reservations about how universities pay for the aid. Legislatures, with the constitutional power of imposing taxes, are duly authorized to make such decisions for the larger population and hence to decide that the greater public good is served by the larger society providing these opportunities (and they do it to support private higher education as well). And individuals who are not comfortable with that level of support are welcome to provide even more support on their own through their own gifts. It’s when administrators decide that it’s fair for them to tax others that I become uncomfortable. So I’m not embarrassed about a suggestion that “that a given college charge all students the same amount.”

    I do suspect that my administrator friend would not be pleased for a local car dealer to suggest that he pay an additional $10,000 for his car so that the dealer could then give me a better deal. We distinguish education from such commodities as automobiles because, among other reasons, we sense that everyone should have an opportunity for an education. Of course, we also subsidize public transportation because we believe that some level of transportation is a necessity and hence a virtual right. Can we make similar distinctions about levels of quality in education? Everyone’s entitled to be able to afford a Chevy education, but not necessarily a Cadillac? Okay, the analogy breaks down.

    MKT may be right that even most Americans “would agree that the low income student should be hit less hard,” though I suspect the percentages would depend upon how the question were phrased and upon the degree of the subsidy and upon how progressive the tax would need to be to support it. Many of us would even be willing to vote to pay more ourselves to make it possible for others to find college affordable. $1,000 a year – sure. $2,000 a year – let me think about it, but okay. $3,000 a year, well, let me get back to you on that ….

    I don’t know where the line would be drawn, but I do know that colleges will make it as difficult as possible for prospective students and their parents to understand that the choice is already being made for them and that the tax is likely to keep going up.

  • Uncontrolled costs v Financial Aid
  • Posted by Art D. on March 19, 2006 at 8:45am EST
  • Teri, thanks for your note. I saw an near-Ivy provost on BookTv about this topic; basically, by increasing velocity of graduation, a year or two of wages can be saved -- that's a big number.

    As to this from the research group: " .. Are students borrowing too much money .."

    Yes. Why?

    Because containing costs is NOT a goal of college adminstrators (Vedder, Ohio U.) As long as there is "easy money" from taxpayer-guaranteed financial aid in the system, there is little, if any, incentive to control college costs.

    Providing more financial aid only encourages the administrator-seals to yelp for more money. Their mindless, money-mad behavior is frightening -- makes ENRON look amateurish.

  • Graduation Rates
  • Posted by Debbie Furlong , Dir. Institutional Research at UW-Green Bay on March 20, 2006 at 10:35am EST
  • To the inquiry about graduations rates at UW-Madison and Beloit....

    It was indicated that the 6-year graduation rate at "UWM" was 40% and that Beloit fared significantly better, and a URL was provided. UWM is UW-Milwaukee, not UW-Madison. Madison's graduation rate is over 75% and has been for the past several cohorts. UW-Milwaukee has a far different mission and a larger percent of its students come from the lowest income quintile. Complete UW System graduation rates can be found at http://www.uwsa.edu/opar/reports/RetetionGraduationRates.pdf.
    Thanks, Debbie Furlong, Director of Institutional Research, UW Green Bay