No Room for the Needy?

Education Trust analysis asserts that only five colleges succeed at making quality higher education affordable for low-income students -- a finding challenged as overstated.
June 2, 2011

In a new report released Wednesday, the Education Trust aims to judge how many of more than 1,000 colleges and universities successfully serve low-income students. After putting the institutions through an analysis based on enrollment, net price and graduation rates, the advocacy group reaches a conclusion: five of them.

The report, "Priced Out: How the Wrong Financial Aid Policies Hurt Low-Income Students," argues that the price of college for low-income students is still far too high at the vast majority of institutions, based on how much the students are expected to pay after grant aid is exhausted. It criticizes many private and public institutions, but reserves the harshest criticism for the for-profit sector.

Some outside experts questioned the fairness of the group’s expectations, but said the analysis was generally sound. The nonprofit group, which advocates for low-income students at all levels of education, looked for colleges where at least 30 percent of students were eligible for Pell Grants, and where the graduation rate was at least 50 percent. The net price charged to the poorest students, expressed as a percentage of family income, was to be the same percentage that middle-class students pay: no more than 27 percent of annual average income, or about $4,700.

The criteria were intended to give a broad picture of which institutions do the best job at making college accessible to low-income students, and then making sure the students earn a degree. The group described the three benchmarks as relatively conservative, but outside observers said they constituted a triple set of hurdles.

For almost any institution to achieve all three aims would be a balancing act, said Michael McPherson, president of the Spencer Foundation, who said he liked the report’s overall direction and analysis despite its drawbacks. “The way the thing is set up, you could predict in advance exactly what’s going to happen,” McPherson said. “The rhetoric is framed in a way that probably makes it sound easier to actually meet that set of hurdles.”

The five colleges that did, according to the report’s authors, were all public institutions, including two in the California State University system (its campuses at Fullerton and Long Beach) and two in the City University of New York system, Queens College and Bernard M. Baruch College. The fifth was the University of North Carolina at Greensboro.

None were public flagships, which the report criticized for directing their grant aid toward programs that help high-achieving students who do not necessarily need it. “Because they are comparatively rich, with far more resources than other public institutions, all 50 flagships should be affordable,” the authors, Mamie Lynch, Jennifer Engle and José L. Cruz, wrote in a section pointedly titled “Where are the public flagships?” In fact, all but five flagship publics charged a net price above $4,600, they wrote, and those universities enrolled low-income students at a below-average rate.

In an era of shrinking state budgets, many public universities might quibble with being called wealthy. The authors understand that resources are limited, Engle said. But they said a big problem was where those limited funds are directed.

“They are certainly giving out their aid in a manner that disadvantages low-income students,” she said. Public flagship universities spend about the same amount on aid to low-income students and to students from wealthier families. That wouldn’t be a problem if low-income students had their needs met first, she said, but many still have to borrow.

The authors also criticized selective private universities. While lauding them for making education affordable for low-income students -- a year at Harvard, Stanford or Princeton costs about $3,000 after grant aid -- and for their high graduation rates, the authors said those institutions need to do more to enroll more low-income students.

But the authors' harshest words were reserved for for-profit institutions, many of which combine a high net price with low graduation rates. Many require students to pay or borrow more than 100 percent of their family income, Lynch said. “In return, the schools only give them a 1 in 4 shot at graduation,” she said. “They’re the schools that have the greatest room for improvement in terms of affordability and quality.”

Students eligible for Pell Grants can also borrow up to $23,000, at a maximum of $5,550 per year, in federally subsidized loans. But the report doesn't consider those loans as a factor in helping students pay the net price, which McPherson said was a serious weakness.

“It’s, to my mind, pretty obvious that for students who have a reasonable chance of graduating, there’s just no reason why they can’t undertake a reasonable level of educational debt,” he said. “The implication that people should just be able to pay for college out of their pocket is, I think, misleading. It’s not a complete statement of the issues that need to be on the table.”

The authors wanted to point out how much money students would have to come up with after grant aid, which does not need to be repaid, and how it compared proportionally to middle-income students, Engle said. “They have to find a way to finance almost three-quarters of their income after grant aid,” she said. “We felt that was unacceptable.”

In examining net price, it’s important to put the issue in context, said Mark Kantrowitz, publisher of and a leading student aid analyst, who praised the report.

He and McPherson both pointed out that the report does not address correlations between selectivity, income levels and graduation rates. Low-income students are more likely to be poorly prepared academically, McPherson said. While selective private colleges could do a better job recruiting and enrolling Pell Grant-eligible students, an increase big enough to take them up to 30 percent would mean changing the nature of the institutions. And colleges that enroll more low-income students tend to have lower graduation rates, Kantrowitz said.

“To the extent that this paper is trying to argue that colleges are not doing enough to help low-income students, it is important to set this in an appropriate context,” he wrote in an email to Inside Higher Ed. “How much of this is due to institutional aid policies and how much due to federal and state financial aid policies?”

The report’s authors noted that context as well. The maximum Pell Grant, currently $5,550, has been imperiled as Congressional leaders wrangled with the federal budgets for 2011 and 2012.

“The Pell Grant is really the cornerstone of need-based financial aid,” Engle said. “That we’re even considering cuts to the Pell Grant, given how few choices there are [for low-income students], could be a national tragedy.”

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