Public Higher Ed Skews Wealthy

New report analyzing mobility data over time takes aim at public universities for using so-called merit aid to attract wealthy students. Universities push back.

October 26, 2017
 
Stony Brook students

A majority of the country’s top public universities have grown less accessible for the most financially strapped students since 1999 -- and at the same time, they have grown more accessible for wealthy students.

More than half of selective public institutions, 54 percent, have reduced the share of students they enroll from families with incomes in the lowest 40 percent of earners, while also increasing the share of students they enroll from families that are among the country’s top 20 percent of earners. Put differently, 217 out of 381 top public institutions enrolled a larger share of wealthy students even as they reduced their percentages of low-income students.

That statistic is key to a provocative argument about dwindling access in a new report being released today by the left-leaning think tank New America. The think tank is releasing its findings as part of a report analyzing publicly available data from the Equality of Opportunity Project, a study of U.S. social mobility combining public information on higher education with deidentified tax records from students and their parents.

The Equality of Opportunity Project received coverage early this year for showing that a handful of prestigious colleges enrolled more students from the top 1 percent of families sorted by income than they did from the bottom 60 percent. Other coverage of the project included the argument that college rankings incentivize institutions to favor wealthy students. New America has also published a series of blog posts looking at the data and what they show about higher education and mobility.

Those blog posts culminate in the new report out today. The Equality of Opportunity Project data are important because they allow researchers to see enrollment patterns among students from both poor and wealthy backgrounds, according to Stephen Burd, a senior policy analyst with New America. Previously, data available from the federal government did not provide insight into students from wealthy families.

“You try to read all the tea leaves and put together something based on what was available,” said Burd, who wrote portions of the new report addressing public institutions’ enrollment patterns over time. “We’ve hypothesized through various reports that this was happening.”

Burd calls out institutions by name in the report. Most prominently, he highlights Stony Brook University, a public research university that is part of the State University of New York System and is located on Long Island.

Stony Brook receives accolades for helping the low-income students it enrolls. More than half of the students at Stony Brook in the late 1990s who were from families earning less than $20,000 per year ended up in the top 20 percent of earners by the middle of their 30s, earning $110,000 or more. Almost eight in 10 made it to the middle class.

But the share of Stony Brook students coming from low-income families has dropped, while the share of its students coming from high-income families has risen. Students from families in the bottom 40 percent of earners -- those families making less than $37,000 -- made up more than a third of Stony Brook’s class in the late 1990s. Today they are a quarter of its class. Students coming from families in the top 20 percent of earners used to make up about a third of the university’s class. They accounted for almost 40 percent of the class of 2013.

Burd points to Stony Brook increasing its spending on merit aid, or non-need-based aid, as a driver of this shift. Non-need-based aid is often seen as a tool universities can use to attract desirable, high-achieving students -- who are often wealthy. It contrasts with need-based aid, which many view as the most targeted way to enable low-income students to attend college.

Stony Brook ratcheted up spending on non-need-based aid, from about $5 million in 2011-12 to over $8 million in 2015-16, according to Burd. More freshmen are receiving non-need-based aid as well.

The university also seems to be targeting out-of-state and foreign students, according to Burd. Those students pay higher tuition prices than in-state students. Stony Brook, like many other top public universities, appears to be enrolling more wealthy foreign students and out-of-state students to compensate for state budget cuts and to boost its prestige, he writes.

Between 2008 and 2016, Stony Brook’s international freshman enrollment jumped from 154 to 483, while the share of international students in its freshman class spiked from 5 percent to 17 percent. Since 2004, domestic out-of-state freshman enrollment rose from 4 percent to 9 percent.

Meanwhile, in-state enrollment has been pinched. In 2004, students from within New York State made up 90 percent of Stony Brook’s student body. Today, they make up 74 percent, Burd writes.

This phenomenon is not limited to Stony Brook. Burd also calls out similar trends at numerous other public colleges.

“These data should raise alarm bells throughout higher education and among policy makers,” Burd writes. “They need to consider whether the cult of enrollment management, which has encouraged public and private colleges and universities to cater to affluent students, has gone too far and left low-income students in the lurch.”

Stony Brook disputed the characterization. The university is enrolling a higher number of students from New York now than it has in past years, said Braden Hosch, assistant vice president for institutional research, planning and effectiveness. It also enrolls a higher number of students receiving Pell Grants -- often used as a proxy for low-income students -- than it did in the past.

But Stony Brook’s overall enrollment has grown as well, and it has added more out-of-state and international students. As a result, the percentage of in-state students can drop even as the sheer number does not.

The same relationship holds true for Pell Grant recipients. At 37.6 percent, the portion of Stony Brook undergraduates receiving Pell Grants in 2016-17 is the same as it was in 2003-04, even though the university now enrolls over 400 more Pell Grant recipients.

New York State is also experiencing a decline in its number of high school graduates, Hosch said.

“The number of New York students is declining,” he said. “There are just not more New York students, proportionally, to enroll.”

Asked whether Stony Brook could enroll more students from populations that were previously underrepresented, Hosch said the university tries.

“But everybody is competing for those students,” he said. “It’s a closed system, and we have enrolled more. We’re just competing with everybody else.”

There is also the argument that state disinvestment has forced public universities to enroll more full-pay students so they can use the high margins those students generate to fund students from families who cannot afford to pay for college. But Burd is not swayed by that or other arguments.

“I think, really, the part that gets lost that they won’t talk about is the prestige factor and the rankings,” he said. “This isn’t all about revenue.”

Burd also examined 32 public flagship universities whose data were available. He labeled them the biggest players in “the merit-aid arms race.”

Two-thirds of public flagships analyzed increased their shares of wealthy students while cutting their percentages of low-income students since the late 1990s. Just three flagships -- the Universities of Michigan, Nevada and Texas at Austin -- did the opposite.

Again, Burd names names. The University of Alabama at Tuscaloosa spent more than $100 million on non-need-based aid in 2014-15, up from $12 million in inflation-adjusted dollars 2000-01, he writes. More than two-thirds of its institutional aid dollars go to non-need-based aid.

The university increased its share of students from top-earning families by about 13 percentage points since the late 1990s, to 59 percent. The share of students from families in the bottom 40 percent of earners fell by almost six percentage points, to about 11 percent in the Class of 2013. The average annual income for a family with a student enrolled at the University of Alabama increased from $152,000 in the class entering in 1999 to almost $230,000 for the class graduating in 2013.

The University of Alabama’s out-of-state recruitment efforts focus on all students interested in attending, said a statement from Rick Barth, assistant vice president for enrollment management. Non-need-based scholarships have attracted students from wealthy families but also allowed in-state and out-of-state students to attend who otherwise would not be able to do so, he said.

Barth also disputed the idea that non-need-based aid caused the average family incomes of Alabama students to rise. As more students from faraway states have attended the university, “there has been a natural increase in average family income,” he said.

“The merit-based scholarship program has assisted UA with its out-of-state growth much more through benefiting families that otherwise would not have been able to send their sons or daughters out of state than it has attracted students from families that can afford to send their children to any institution,” Barth said.

Burd also names several other flagship institutions, including the University of Arkansas, which increased the percentage of students from top-earning families by almost 15 percentage points since the late 1990s, to 53 percent of the Class of 2013.

Arkansas indicated an interest in changing.

"Improving access to affordable higher education and supporting student success through graduation is a top priority of the University of Arkansas," said Mark Rushing, assistant vice chancellor of university relations. "That is why we are actively increasing funding for need-based scholarships through several programs."

The university has also shifted more aid to Arkansas students in the last two years.

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