Priced Out:
How the Wrong FinancialAid Policies Hurt LowIncome Students
SFARN Conference
June 2, 2011
Jennifer Engle and Mamie Lynch
© 2011 THE EDUCATION TRUST
Percent Growth Rate
Current Dollars, 1982-2007
College costs have increased at four times
the rate of inflation
500%
400%
300%
200%
439%
251%
100%
147%
106%
0%
College Tuition
and Fees
Medical
Care
Median Family Consumer Price
Income
Index
Source: Patrick M. Callan, “Measuring Up 2008” (San Jose, California: National Center for Public Policy and Higher
Education, 2008), 8. http://measuringup2008.highereducation.org/print/NCPPHEMUNationalRpt.pdf
© 2011 THE EDUCATION TRUST
Percent Growth Mean Family Income
Constant Dollars, 1979-2009
Meanwhile, earnings among the lowest
income families has declined
80%
60%
40%
73%
49%
20%
0%
-20%
-7%
Lowest
20%
23%
4%
11%
Second
20%
Third
20%
Fourth
20%
Source: The College Board, “Trends in College Pricing 2010” (New York: College Board, 2010), 24.
http://trends.collegeboard.org/downloads/College_Pricing_2010.pdf
Top
20%
Top
5%
© 2011 THE EDUCATION TRUST
Percent Responding
“Very Effective”
It’s not surprising then that families think
college
affordability
is
key
100%
80%
Survey Question: How effective do you think the following proposals are when it comes to helping
people who are struggling in the current economy?
60%
40%
63%
20%
58%
54%
48%
40%
32%
29%
22%
0%
Make college Preserve Expand job- Cut taxes
more
Social
training
for
affordable Security and programs middle class
Medicaire
Reduce
federal
deficit
Source: Public Agenda, “Slip Sliding Away Survey Results” (New York: Public Agenda, 2011), 3-5.
http://www.publicagenda.org/files/pdf/struggling-in-america-topline.pdf
Require flex Subsidize Help people
schedules affordable underwater
and paid
housing
on house
leave by
employers
© 2011 THE EDUCATION TRUST
But policies at all levels are shifting
funds away from the students who
need the most support
©
© 2011
2011 THE
THE EDUCATION
EDUCATION TRUST
TRUST
Federal Pell Grants have failed to
keep pace with rising college costs
100%
99%
Total Cost of Attendance Covered by
Maximum Pell Grant Award
77%
80%
62%
60%
40%
36%
36%
20%
15%
0%
Public 2-Year
Public 4-Year
1979-80
Private 4-Year
2010-11
Source: American Council on Education (2007). “ Status Report on the Pell Grant Program, 2007” and CRS, Federal Pell
Grant Program of the Higher Education Act: Background, Recent Changes, and Current Legislative Issues, 2011.
6
© 2011 THE EDUCATION TRUST
In the same year, $19.4 billion was spent
on college tax breaks that primarily benefit
middle and upper-income families
2010 Expenditures
Lifetime Learning Credit
$3.5 billion
American Opportunity Tax Credit
$15.1 billion
Deduction for higher education
expenses
$0.8 billion
Total
$19.4 billion
Source: Office of Management and Budget, Supplemental Materials, Tax Expenditures Spreadsheet, Table 17-1.
Estimates of Total Income Tax Expenditures for Fiscal Years 2010-2016.
http://www.whitehouse.gov/omb/budget/Supplemental
© 2011 THE EDUCATION TRUST
61% of savings from tuition tax credits go to
middle- and upper-income families
Distribution of Tax Credit Savings
by Adjusted Gross Income
39%
61%
Low-income
($0-49,999)
Middle and upper-income
($50,000+)
Source: Trends in Student Aid 2010, The College Board
8
© 2011 THE EDUCATION TRUST
91% of savings from tuition tax deductions
go to middle- and upper-income families
Distribution of Tax Deduction Savings
by Adjusted Gross Income
8%
Low-income
($0-49,999)
91%
Middle and upper-income
($50,000+)
Note: Percentages may not add to 100% because of rounding.
Source: Trends in Student Aid 2010, The College Board
9
© 2011 THE EDUCATION TRUST
At the same time, states also have shifted
costs onto students and diverted grant funds
away from low-income students
Source: Trends in Student Aid 2010, The College Board
© 2011 THE EDUCATION TRUST
State funding cuts for higher education
mean families pay higher tuition
Annual Percentage Changes in State Tax Appropriations for Higher Education
Per FTE Student and in Tuition and Fees at Public Four-Year Institutions,
Constant 2009 Dollars
Source:
Source: College Board (2010). Trends in College Pricing.
© 2011 THE EDUCATION TRUST
Change in Distribution of State Grants
Based on Need
2008-09
1998-99
18.5%
27.9%
81.5%
Source: NASSGAP Report 2008-09: Undergraduate Grant Aid in Constant 2008-09 Dollars:
1998-99 through 2008-09 (in millions of dollars).
Need-Based
72.1%
Non-Need-Based
12
© 2011 THE EDUCATION TRUST
Colleges and universities also
make inequitable choices
with their grant funds
Source: The Education Trust, Priced Out: How the Wrong Financial-Aid Policies Hurt Low-Income Students, 2011
13
© 2011 THE EDUCATION TRUST
In 2007, four-year public and
private nonprofit colleges
spent nearly $15 billion on grant aid.
Source: Education Trust analysis of NPSAS:08 using PowerStats, http://nces.ed.gov/datalab/. Results based on fulltime, full-year, one-institution dependent undergraduates
14
© 2011 THE EDUCATION TRUST
But, they spent a lot of aid on students who
likely would have gone to college without it
•Public colleges and universities spent about the
same amount of grant funds on high-income
students as on low-income students
•Private institutions spent nearly twice as much on
high-income students as they did on the lowest
income students
Source: Education Trust analysis of NPSAS:08 using PowerStats, http://nces.ed.gov/datalab/. Results based on fulltime, full-year, one-institution dependent undergraduates
15
© 2011 THE EDUCATION TRUST
Low-income students must devote an amount
equivalent to 72% of their family income
towards college costs
Family Income
Average
Income
Cost of
Attendance
Expected
Family
Contribution
(EFC)
Average
Grant Aid
Unmet Need
After EFC and
Grant Aid
% of Income
Required to Pay
for College After
Grant Aid
$0-30,200
$17,011
$22,007
$951
$9,704
$11,352
72%
$30,201-54,000
$42,661
$23,229
$4,043
$7,694
$11,493
36%
$54,001-80,400
$67,844
$23,640
$10,224
$5,352
$8,064
27%
$80,401-115,400
$97,594
$25,050
$18,158
$4,554
$2,339
21%
$115,401+
$173,474
$27,689
$37,821
$3,822
$-13,953
14%
Source: Education Trust analysis of NPSAS:08 using PowerStats, http://nces.ed.gov/datalab/. Results based on full-time,
full-year, one-institution dependent undergraduates
© 2011 THE EDUCATION TRUST
How much should low-income students
be expected to contribute towards
financing their education?
17
© 2011 THE EDUCATION TRUST
At least no more proportionally as
middle-income students contribute:
•Middle-income students finance an amount
equivalent to 27% of family income
•Average income for low-income families is
$17,011
$17,011 x 0.27 = $4,600
Source: Education Trust analysis of NPSAS:08 using PowerStats, http://nces.ed.gov/datalab/. Results based on fulltime, full-year, one-institution dependent undergraduates
18
© 2011 THE EDUCATION TRUST
For the first time, we have information
on how much low-income students pay
at individual colleges and universities.
Net Price = Cost of Attendance — Grant Aid
19
© 2011 THE EDUCATION TRUST
Two types of net price data
•Average net price for all first-time, full-time
undergraduates who received any grant or
scholarship aid (2006-07, 2007-08, 2008-09)
•Average net price by income level for firsttime full-time undergraduates who received
Title IV financial aid
Source: IPEDS 2009
20
© 2011 THE EDUCATION TRUST
Net price data limitations
•First-time, full-time students only
•Overall net price and net price by income not comparable:
Different groups of students
•Data by income only reliable for low-income students
•Data based on in-state tuition, not out-of-state
•Does not subtract out private grants
•Based on enrolled students – some low-income students may not
enroll because of cost
Source: The Education Trust, Priced Out: How the Wrong Financial-Aid Policies Hurt Low-Income Students, 2011
21
© 2011 THE EDUCATION TRUST
How many colleges and universities are
viable options for low-income students
based on conservative criteria for
affordability, quality, and access?
22
© 2011 THE EDUCATION TRUST
Only 65 institutions have a net price below 27%
of family income for low-income students
Number of Institutions
300
250
200
150
65
296
302
50-72%
72-100%
248
275
100
50
0
15
Less than 14%
50
14-27%
27-50%
More than 100%
Net Price for Low-Income Students as a
Percent of Average Family Income ($17,011)
Source: Education Trust analysis of Net Price data for $0-30,000 income range, IPEDS 2009.
Notes: Ranges are inclusive on the upper end. High-income families spend and amount equivalent to 15% of family income;
middle-income families spend an amount equivalent to 27%; low-income families spend an amount equivalent to 72%.© 2011 THE EDUCATION TRUST
Number of Institutions
Only 29 low net-price institutions have a
graduation
rate
of
at
least
50%
20
29
15
10
14
16
5
0
11
10
2
10-20%
4
20-30%
30-40%
40-50%
50-60%
3
3
2
60-70%
70-80%
80-90%
90-100%
Graduation Rate
Source: Education Trust analysis of Net Price data for $0-30,000 income range, IPEDS 2009.
Notes: Distribution is based on 65 institutions in the net-price sample with a net price for low-income students of $4,600 or
© 2011 THE EDUCATION TRUST
less.Ranges are inclusive on the upper end.
Only FIVE low net-price institutions have a graduation
rate of at least 50% and at least 30% Pell enrollment
Number of Institutions
20
15
5
10
14
5
5
5
1
3
0
0-10%
10-20%
20-30%
30-40%
1
40-50%
Graduation Rate
Source: Education Trust analysis of Net Price data for $0-30,000 income range, IPEDS 2009.
Notes: Distribution is based on 29 institutions in the net-price sample with a net price for low-income students of $4,600 or
© 2011 THE EDUCATION TRUST
less and a graduation rate of at least 50%.Ranges are inclusive on the upper end.
Given these limited options, what does
the landscape of opportunity look like for
low-income students?
26
© 2011 THE EDUCATION TRUST
The Landscape of Opportunity
Net Price for Low-Income ($0-30,000) Students
2008-09
50%
Log Scale
$60,000
Public
Private Nonprofit
$6,000
For-Profit
$4,600
Size of 30%
Pell Bubble
$600
0
10
20
30
40
50
60
70
80
90
100
Six-Year Graduation Rate, 2009
Source: IPEDS 2009
$4,600 is the amount that a low-income student would pay for college if contributing the same proportion of family income as a middle-income student.
27
On average, 30 percent of first-time, full-time freshmen at four-year colleges and universities receive Pell Grants, so if at least 30 percent of an institution's
©
2011
THE
EDUCATION
TRUST
full-time freshmen are Pell Grant recipients, the institution is considered nationally representative.
What are the five institutions that meet
relatively conservative criteria for
affordability, quality, and access?
28
© 2011 THE EDUCATION TRUST
Low net-price institutions with a graduation rate
of at least 50% and at least 30% Pell enrollment
State
Net Price for
Low-Income
($0-30,000)
Students
Grad Rate
% Pell
(Full-time
freshmen)
University of North
Carolina - Greensboro
NC
$1,470
51.6
31
CUNY Queens College
NY
$1,708
51.8
39
California State University
– Fullerton
CA
$2,412
51.6
30
CUN Bernard M. Baruch
College
NY
$3,220
60.3
44
California State University
– Long Beach
CA
$4,239
54.4
36
Institution
Source: Education Trust analysis of IPEDS 2009.
© 2011 THE EDUCATION TRUST
Only five low net-price institutions have a graduation rate of at least 50%
and at least 30% Pell enrollment
Net Price for Low-Income ($0-30,000) Students
2008-09
50%
Log Scale
$60,000
Institutions
Top 56
Institutions
$6,000
$4,600
Size of 30%
Pell Bubble
$600
0
10
20
30
40
50
60
70
80
90
100
Six-Year Graduation Rate, 2009
Source: IPEDS 2009
$4,600 is the amount that a low-income student would pay for college if contributing the same proportion of family income as a middle-income student.
30
On average, 30 percent of first-time, full-time freshmen at four-year colleges and universities receive Pell Grants, so if at least 30 percent of an institution's
©
2011
THE
EDUCATION
TRUST
full-time freshmen are Pell Grant recipients, the institution is considered nationally representative.
One unique college – Berea College –
charges no tuition
“We’re literally the only school in
American that says if you can afford to
come, you can’t”
-Larry Shinn,
President, Berea College
31
© 2011 THE EDUCATION TRUST
Berea College is committed to
serving low-income students
•Unique pricing structure excluded Berea from net price
analysis
•Average family income of students = $29,291
•Labor program: 10-12 hours/wk of work for school
•From 2002 to 2009, grad rate increased from 50% to 65%
•Since 1997, African American enrollment has grown from
8% to 17%
•Strong academic support services and transition programs
Source: The Education Trust, Priced Out: How the Wrong Financial-Aid Policies Hurt Low-Income Students, 2011
© 2011 THE EDUCATION TRUST
Where are the for-profit college
companies?
33
© 2011 THE EDUCATION TRUST
50%
For-profit colleges are among the most expensive, least successful institutions
Net Price for Low-Income ($0-30,000) Students
2008-09
25%
Log Scale
$60,000
$17,000
Public
Private Nonprofit
$6,000
For-Profit
$4,600
Size of 30%
Pell Bubble
$600
0
10
20
30
40
50
60
70
80
90
100
Six-Year Graduation Rate, 2009
Source: IPEDS 2009
$4,600 is the amount that a low-income student would pay for college if contributing the same proportion of family income as a middle-income student.
34
On average, 30 percent of first-time, full-time freshmen at four-year colleges and universities receive Pell Grants, so if at least 30 percent of an institution's
©
2011
THE
EDUCATION
TRUST
full-time freshmen are Pell Grant recipients, the institution is considered nationally representative.
Where are the top-ranked private
nonprofit institutions, many of which
have large endowments?
35
© 2011 THE EDUCATION TRUST
Most top-ranked private nonprofit institutions serve too
few low-income students and are too costly
Net Price for Low-Income ($0-30,000) Students
2008-09
50%
Log Scale
$60,000
Institution
$6,000
$4,600
Size of 30%
Pell Bubble
$600
0
10
20
30
40
50
60
Six-Year Graduation Rate, 2009
70
80
90
100
Source: IPEDS 2009
$4,600 is the amount that a low-income student would pay for college if contributing the same proportion of family income as a middle-income student.
On average, 30 percent of first-time, full-time freshmen at four-year colleges and universities receive Pell Grants, so if at least 30 percent of an institution's
36
full-time freshmen are Pell Grant recipients, the institution is considered nationally representative.
©
2011
THE
EDUCATION
TRUST
Institutions ranked in the top half of the U.S. News and World Report listing of National Universities are considered "Top-Ranked".
Where are the public flagships, which
were founded on the principle of broad
access to high-quality education?
37
© 2011 THE EDUCATION TRUST
Most public flagships do not serve enough
low-income students or keep costs low
Net Price for Low-Income ($0-30,000) Students
2008-09
50%
Log Scale
$60,000
Institution
$6,000
Public Flagship
$4,600
Size of 30%
Pell Bubble
$600
0
10
20
30
40
50
60
70
80
90
100
Six-Year Graduation Rate, 2009
Source: IPEDS 2009
$4,600 is the amount that a low-income student would pay for college if contributing the same proportion of family income as a middle-income
38
student. On average, 30 percent of first-time, full-time freshmen at four-year colleges and universities receive Pell Grants, so if at least 30
© 2011 THE EDUCATION TRUST
percent of an institution's full-time freshmen are Pell Grant recipients, the institution is considered nationally representative.
Only five flagships offer low-income
students a net price below $4,600
39
© 2011 THE EDUCATION TRUST
But they open their doors to far too few lowincome students
State
Net Price for
Low-Income
($0-30,000)
Students
Grad Rate
% Pell
(Full-time
freshmen)
University of North
Carolina at Chapel Hill
NC
$2,366
84.9
13
Louisiana State University
LA
$3,079
58.9
15
University of Florida
FL
$3,188
82.5
22
Indiana University –
Bloomington
IN
$3,383
73.6
14
University of Virginia
VA
$3,904
93.0
8
Institution
Source: Education Trust analysis of IPEDS 2009.
Note: University of Virginia's and Indiana University-Bloomington's 2008-09 net-price data in IPEDS are erroneous. The
© 2011 THE EDUCATION TRUST
data presented here reflect corrected net-price data e-mailed to Ed Trust from UVA and Indiana University.
Public flagships served
7,000 fewer low-income students
in 2007 than in 2004.
41
© 2011 THE EDUCATION TRUST
Some flagships not only serve small
proportions of low-income students, but
also do not keep costs low.
42
© 2011 THE EDUCATION TRUST
The 5 most expensive flagships for low-income
students expect them to pay more than $11,000
Institution
State
Net Price for
Low-Income
($0-30,000)
Students
University of Washington
WA
$11,661
80.7
18
Pennsylvania State
University, Main Campus
PA
$14,460
84.6
12
Rutgers University, New
Brunswick
NJ
$14,572
76.8
25
University of Alabama
AL
$15,216
65.9
14
University of South
Carolina, Columbia
SC
$15,578
69.1
13
Grad Rate
% Pell
(Full-time
freshmen)
Source: Education Trust analysis of IPEDS 2009.
Note: Rutgers University – New Brunswick’s 2008-09 net-price data in IPEDS are erroneous. The data presented here
© 2011 THE EDUCATION TRUST
reflect corrected net-price data e-mailed to Ed Trust from Rutgers.
“If we choose to give merit aid to those
who don’t need it, we’re wasting our
dollars.”
-Larry Shinn,
President, Berea College
44
© 2011 THE EDUCATION TRUST
Some flagships are so expensive, that a
low-income student could more easily
afford to go to a selective private college
in the state
45
© 2011 THE EDUCATION TRUST
In 10 states, the top-ranked private is less expensive
for low-income students than the public flagship
State
Flagship
Net Price for
Low-Income
($0-30,000)
Students
Grad
Rate
% Pell
(Full-time
freshmen)
Top-Ranked Private
Net Price for
Low-Income
($0-30,000)
Students
Grad
Rate
% Pell
(Full-time
freshmen)
MA
UMass, Amherst
$7,072
65.7
18
Harvard
$2,170
97.9
13
CA
UC, Berkeley
$8,170
90.2
24
Stanford
$3,120
94.9
15
TX
U. Texas, Austin
$8,184
80.7
23
Rice
$3,008
93.4
12
NY
SUNY Buffalo
$8,711
47.9
40
Columbia
$4,870
93.7
13
UT
U. of Utah
$10,182
57.6
14
Brigham Young
$7,247
76.6
9
NH
U. New Hampshire
$10,606
75.2
14
Dartmouth
$4,007
94.2
12
TN
U. of Tennessee
$10,724
60.6
18
Vanderbilt
$3,099
90.7
8
PA
Penn State
$14,460
84.6
12
U. of Pennsylvania
$6,704
95
10
NJ
Rutgers U., New
Brunswick
$14,572
76.8
25
Princeton
$3,110
96.7
10
AL
U. of Alabama
$15,216
65.9
14
Samford U.
$12,825
74
12
Source: Education Trust analysis of IPEDS 2009.
Note: Rutgers University’s 2008-09 net-price data in IPEDS are erroneous. The data presented here reflect corrected net© 2011 THE EDUCATION TRUST
price data e-mailed to Ed Trust from UVA and Indiana University.
The result of these federal, state, and
institutional policies?
47
© 2011 THE EDUCATION TRUST
Only 8 percent of low-income young adults
attains a bachelor’s degree by age 24
Percent with Bachelor’s
Degree by Age 24
100%
80%
60%
40%
82%
20%
8%
0%
Highest income quartile
Lowest income quartile
Source: Tom Mortenson, Bachelor’s Degree Attainment by Age 24 by Family Income Quartiles, 1970 to 2009 (Oskaloosa, IA:
Postsecondary Education Opportunity, 2010). http://www.postsecondary.org/default.asp
© 2011 THE EDUCATION TRUST
http://www.publicagenda.org/files/pdf/struggling-in-america-topline.pdf
The Landscape of Opportunity
Net Price for Low-Income ($0-30,000) Students
2008-09
50
%
Log Scale
$60,000
Public
Private Nonprofit
For-Profit
$4,600
$6,000
Size of 30%
Pell Bubble
$600
0
10
20
30
40
50
60
70
80
90
100
Six-Year Graduation Rate, 2009
http://www.edtrust.org/node/2369
49
© 2011 THE EDUCATION TRUST