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[Yesterday the New America Foundation's Education Policy Program released "Undermining Pell: How Colleges Compete for Wealthy Students and Leave the Low-Income Behind," a report that presents a new analysis of little-examined U.S. Department of Education data showing the "net price" – the amount students pay after all grant aid has been exhausted – for low-income students at individual colleges. This is the second in a series of posts related to the report's findings. Read the first part of the series here.]
Until recently, it has been very difficult to assess how well individual colleges are serving low-income students. Policymakers, researchers, and journalists have mostly had to rely on a single measure to do so: the proportion of Pell Grant recipients each college enrolls.
While this dataset provides a useful tool for comparing colleges based on their record of admitting low-income students, it does not tell us anything about the schools’ commitment to making college affordable for these individuals. For example, if a college enrolls a large number of Pell Grant recipients but doesn’t come close to meeting their remaining financial need, it may be setting them up for failure.
In 2008, Congress recognized the need for policymakers to get better information about how colleges are spending their institutional aid dollars — financial aid they provide students from their own resources. As part of legislation to reauthorize the Higher Education Act, lawmakers required colleges to report to the U.S. Department of Education the average net price they charge first-time, full-time students, broken down by income for those individuals who receive federal financial aid. The net price is the amount of money that students and their families have to pay after all grant and scholarship aid is taken into account.
The net price data provide a clear picture of the financial hurdles that low-income students face at individual campuses, and they open a window on how colleges are spending their institutional aid dollars. But the view is far from complete, as the data include only those students who receive federal Title IV grants or loans. Wealthy students who receive only merit aid from their schools are not captured in these data. As a consequence, we remain in the dark about the extent to which colleges are using their aid to help those without financial need.
Higher education lobbyists have repeatedly beaten back efforts by policymakers to force colleges to reveal more about their financial aid practices. In 2008, for example, they fought a proposal included in the original House reauthorization bill that would have required colleges to report to the Education Department the average amount of institutional grant aid that they provide to their students and the average net price they charge, with each disaggregated by students’ family income. These data were to reflect the experiences of all students at a school, including those with family incomes of $140,000 a year or more.
College lobbyists opposed the provision, arguing that colleges don’t have any way of knowing how much students and their families make if they haven’t applied for federal aid. It’s unclear, however, why schools can’t at least report the disaggregated data for all students on their campuses receiving institutional aid.
Despite the data’s limitations, the net price information is extremely helpful in showing the real prices that low-income students must pay. That’s because the vast majority of the neediest undergraduates receive federal financial aid.
According to a report that the research and advocacy group Education Trust published in 2011, titled “Priced Out: How the Wrong Financial-Aid Policies Hurt Low-Income Students,” 82 percent of full-time students with family incomes of $30,000 or less obtain federal grants and/or loans. In contrast, only about a third of students with family incomes over $110,000 receive federal aid.
As a result, the net price data provide a much more accurate measurement for judging how well different colleges are serving low-income students than just the Pell Grant data alone. For example, the University of Cincinnati has repeatedly earned a top spot in rankings that The Chronicle of Higher Education has published comparing wealthy colleges based on the proportion of low-income students they enroll — with Pell Grant recipients making up 27 percent of the university’s students. But the net price data (which wasn’t available when the Chronicle last conducted its rankings) show that the school’s lowest-income students must pay a hefty price: an average of nearly $15,000 after all grant and scholarship aid is taken into account.
Similarly, Syracuse University has appropriately received a lot of praise for the substantial efforts it has made to admit low-income students. After all, 27 percent of Syracuse’s students receive Pell Grants — a figure that is largely unmatched by peer institutions in the private college sector. Still, the net price data reveal that the university’s neediest students must come up with an average of over $18,000 to attend.
Why do low-income students at these wealthy universities have to face such high prices? Is it because schools simply can’t afford to meet their financial need? Or is it because the institutions are redirecting a large share of their aid dollars to helping more-affluent students? We won’t know for sure until colleges are required to lift the veil off their institutional aid practices, once and for all.