Student Loans

College Financial Aid Isn't Going to the Neediest


Students who need the financial assistance the most often are not the ones getting the help

Photograph by King Wu/Getty Images

Students who need the financial assistance the most often are not the ones getting the help

When faced with questions about rising tuition, colleges have long responded that yes, tuition has skyrocketed, but many students don’t actually pay the full list price because of financial aid. In a new paper, the New America Foundation reveals that while students do get aid, the poorest students increasingly aren’t the ones getting the help. Instead, colleges are using their often limited resources to give students merit-based scholarships, which don’t take family finances into account. For the schools, it’s all in the name of “their relentless pursuit of prestige and revenue,” according to the paper.

Schools are “working hard to bring wealthy students to their campuses,” the authors write. “After all, it’s more profitable for schools to provide four scholarships of $5,000 each to induce affluent students who will be able to pay the balance than it is to provide a single $20,000 grant to one low-income student.” The students getting “merit aid” aren’t necessarily betters scholars, either. For example, the paper cites data that show 19 percent of freshman with SAT scores under 700 (out of a maximum 2,400) received merit aid, as did 27 percent of freshman with scores between 700 and 999. The term “merit scholarships,” in other words, is a misnomer, the report says, because schools can distribute the aid however they please.

The result is that poorer families face a chasm between what they can afford and what they are being charged. Nine of 10 private colleges charge students whose families earn $30,000 or less a net price of more than $10,000; three of five charge those students more than $15,000. There are gaps at public colleges, too, though the spreads are smaller. Faced with a price tag they can’t afford, students turn to other solutions, such as taking out loans or working full time in addition to classes.

Some private colleges have made strides in helping the neediest applicants. Harvard and Yale, for example, leave a small gap cost for students to cover. But they still have small (albeit rising) enrollment of low-income students. At Harvard, 11 percent of the student body receives Pell Grants. (Check out the report’s interactive graphic to see how different schools fared.) The report calls out Amherst College for leading the pack, both providing close to the full need for poorer students and actively recruiting diverse applicants.  Almost a quarter of its student body receives Pell Grants. While Amherst has built its program over the past decade, the situation for needy students at scores, if not hundreds, of other schools has grown bleaker.

Weise_190

Weise is a reporter for Bloomberg Businessweek in Seattle. Follow her on Twitter @kyweise.


Video Game Avenger
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus