Financial Aid Falls Short for Low-Income Students, Reveals New America Report

Posted By Eliana Osborn on April 7, 2016 at 9:33 am
Financial Aid Falls Short for Low-Income Students, Reveals New America Report

States like Kentucky and Utah, as well as City Colleges of Chicago, are offering innovative scholarships to make up the difference between the aid students qualify for and the actual cost of attendance. There is often a gap where families who receive Pell grants are left trying to cobble together enough money to pay for tuition.

A report from New America discusses this aspect of how the Pell system is failing low-income students. Undermining Pell III focuses on the average net price students pay after accounting for all funding sources. In the policy paper introducing the report, Stephen Burd writes, “nearly half of public four-year colleges examined now leave the most financially needy students on the hook for more than $10,000 per school year.”

In that situation, students take out loans. Federally subsidized loans have limits, especially during the first two years of college. That means private loans or parent loans; either way, with much higher interest rates and less favorable terms. Like virtually all other costs associated with college, average net price is only increasing.

The study finds the net price issue is most prevalent at private nonprofit universities, where 94% leave low-income students paying $10,000 a year. Some big name schools provide full ride scholarships for high achieving, low-income students, but that simply isn’t the case in most situations.

The lowest bracket of family income is for those earning less than $30,000 a year. This group is where Undermining Pell III primarily focuses. Of the 824 private nonprofit universities examined, fully ten percent “required these students to come up with an average of more than $25,000 each year.”

The most remarkable schools are the 25 private nonprofit universities that enroll a significant population of Pell grant students (at least 15%) and charge the lowest income group less than $10,000. Some are large schools with healthy endowments; others are very small schools. What they have in common is a leadership commitment to enrolling an economically diverse student body and making it financially feasible.

The solution, according to New America, involves rewarding schools that enroll large numbers of low-income or Pell receiving students. Institutions with 25% or more of this population—and good graduation rates across the campus—will earn Pell bonuses for keeping down that average net price number.

Currently, schools with low graduation rates are serving a disproportionately high number of Pell recipients. And Pell grantees have a 14-point graduation rate gap compared to other students, according to data compiled in an Education Trust report. . Addressing this disparity is another priority when considering the gap in financial aid and cost of college for low-income students.

Eliana Osborn
Eliana Osborn is an associate English professor at Arizona Western College, with degrees from Brigham Young University and Northern Arizona University. She’s published widely in forums such as The New York Times, the Washington Post, the Christian Science Monitor, and the Chronicle of Higher Education.

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