Colleges Should Increase Low-Income Grants, Report Says

(Photo: Flickr, Creative Commons)

(Photo: Flickr, Creative Commons)

A new report from New America has examined data provided by the US Department of Education pertaining to the amount that low-income college students across the country are expected to pay for their education — and the financial burden leftover is significant.

In the report, “Undermining Pell: Volume III,” author Stephen Burd states that, according to data from the 2013-14 school year, the average student from families who make $30,000 or less per year is expected to pay almost half of their family’s yearly earnings in order to attend college.

The expenses involved with attending college were found to be highest at private nonprofit institutions.  In total, 94% of the private colleges included in the report charged low-income students an average net price of more than $10,000.  Meanwhile, the number of institutions charging these students more than $15,000 or even $20,000 continues to grow.

Burd writes that the problem is prevalent at private colleges because these schools typically have smaller endowments, meaning that they have great difficulty providing support to students who need it.  He states that it is more profitable for these schools to offer $5,000 merit scholarships to wealthier students who will be able to afford to attend the school, no matter how academically inclined they are, than it would be to offer a single $25,000 grant to a low-income student with high grades.

Four-year colleges were judged for the paper based on two criteria, including the number of Pell Grant recipients they enroll and the average net price charged to the lowest-income students.  In all, 824 private nonprofit, four-year colleges and 591 public four-year universities were examined.  All schools had enrollment of 750 or more and were located in the United States.

Just 6% of schools observed, or 49 private colleges, charged freshmen who come from families that make less than $30,000 per year an average net price of less than $10,000 for the 2013-14 school year.

According to the findings, a total of 775 private colleges, or 94%, charged freshmen who had family incomes of less than $30,000 per year an average net price of over $10,000.  Meanwhile, 596, or 72%, charged more than $15,000; and 246, or 30%, charged more than $20,000.  In addition, 10%, or 85 schools, charged more than $25,000.

In terms of Pell Grant recipients, the report found that the number of such students enrolled in a college is closely related to the school’s wealth.  For example, 590 schools, or 72% of those observed, were found to have Pell Grant recipients accounting for 25% or more of the student body.  The average endowment at these schools was $31 million, and the average net price charged to low-income freshmen was $17,189.

“A college’s commitment to helping low-income students can’t be measured along a single dimension. It matters how many low-income students they enroll and how much these students are asked to pay. Some researchers, advocates, and journalists, however, continue to judge colleges based solely on the percentage of Pell Grant recipients that they enroll.”

New America suggests that a federal solution is needed in order for schools to become socioeconomically diverse.  Any plan created must also hold schools accountable for making college affordable for low-income students.

Researchers suggest a federal-state partnership plan in which states would receive formula funds from the federal government that they would then need to partially match and send to colleges that enroll a large proportion of low-income students.  States would be required to maintain, or even increase, their investment in higher education in order to be eligible.