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© 2011 THE EDUCATION TRUST
Priced Out:
How the Wrong Financial-Aid Policies Hurt Low-Income Students
SFARN Conference June 2, 2011Jennifer Engle and Mamie Lynch
© 2011 THE EDUCATION TRUST
Source:
College costs have increased at four times the rate of inflation
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
College Tuition and Fees
Medical Care
Median Family Income
Consumer Price Index
0%
100%
200%
300%
400%
500%
439%
251%
147%106%
Perc
ent G
row
th R
ate
Curr
ent D
olla
rs, 1
982-
2007
© 2011 THE EDUCATION TRUST
Source:
Meanwhile, earnings among the lowest income families has declined
The College Board, “Trends in College Pricing 2010” (New York: College Board, 2010), 24. http://trends.collegeboard.org/downloads/College_Pricing_2010.pdf
Lowest 20%
Second 20%
Third 20%
Fourth 20%
Top 20%
Top 5%
-20%
0%
20%
40%
60%
80%
-7%
4% 11%23%
49%
73%
Perc
ent G
row
th M
ean
Fam
ily I
ncom
eCo
nsta
nt D
olla
rs, 1
979-
2009
© 2011 THE EDUCATION TRUST
Source:
It’s not surprising then that families think college affordability is key
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
Make col-lege
more af-fordable
Preserve Social
Security and Medicaire
Expand job-training
programs
Cut taxes for
middle class
Reduce federal deficit
Require flex schedules and paid leave by
employers
Subsidize affordable
housing
Help peopleunderwater
on house
0%
20%
40%
60%
80%
100%
63% 58% 54% 48% 40% 32% 29% 22%
Perc
ent R
espo
ndin
g “V
ery
Effec
tive”
Survey Question: How effective do you think the following proposals are when it comes to helping people who are struggling in the current economy?
© 2011 THE EDUCATION TRUST© 2011 THE EDUCATION TRUST
But policies at all levels are shifting funds away from the students who
need the most support
© 2011 THE EDUCATION TRUST6
Federal Pell Grants have failed to keep pace with rising college costs
Public 2-Year Public 4-Year Private 4-Year0%
20%
40%
60%
80%
100% 99%
77%
36%
62%
36%
15%
1979-80 2010-11Source: 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.
Total Cost of Attendance Covered by Maximum Pell Grant Award
© 2011 THE EDUCATION TRUST
Source:
In the same year, $19.4 billion was spent on college tax breaks that primarily benefit
middle and upper-income families2010 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
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 TRUST8
Source: Trends in Student Aid 2010, The College Board
61% of savings from tuition tax credits go to middle- and upper-income families
39%
61%
Distribution of Tax Credit Savings by Adjusted Gross Income
Low-income ($0-49,999)
Middle and upper-income ($50,000+)
© 2011 THE EDUCATION TRUST9
Source: Trends in Student Aid 2010, The College Board
91% of savings from tuition tax deductions go to middle- and upper-income families
8%
91%
Distribution of Tax Deduction Savings by Adjusted Gross Income
Low-income ($0-49,999)
Middle and upper-income ($50,000+)
Note: Percentages may not add to 100% because of rounding.
© 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
Source:
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
State funding cuts for higher educationmean families pay higher tuition
Source: College Board (2010). Trends in College Pricing.
© 2011 THE EDUCATION TRUST12
Change in Distribution of State Grants Based on Need
Source: NASSGAP Report 2008-09: Undergraduate Grant Aid in Constant 2008-09 Dollars:1998-99 through 2008-09 (in millions of dollars).
72.1%
27.9%
2008-09
Need-Based
Non-Need-Based
81.5%
18.5%
1998-99
© 2011 THE EDUCATION TRUST13
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
© 2011 THE EDUCATION TRUST14
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 full-time, full-year, one-institution dependent undergraduates
© 2011 THE EDUCATION TRUST15
• 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 full-time, full-year, one-institution dependent undergraduates
But, they spent a lot of aid on students who likely would have gone to college without it
© 2011 THE EDUCATION TRUST
Source:
Low-income students must devote an amount equivalent to 72% of their family income
towards college costsFamily Income Average
IncomeCost 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%
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 TRUST17
How much should low-income students be expected to contribute towards
financing their education?
© 2011 THE EDUCATION TRUST18
•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 = $4,600Source: Education Trust analysis of NPSAS:08 using PowerStats, http://nces.ed.gov/datalab/. Results based on full-time, full-year, one-institution dependent undergraduates
At least no more proportionally as middle-income students contribute:
© 2011 THE EDUCATION TRUST19
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
© 2011 THE EDUCATION TRUST20
•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 first-time full-time undergraduates who received Title IV financial aid
Source: IPEDS 2009
Two types of net price data
© 2011 THE EDUCATION TRUST21
• 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
Net price data limitations
© 2011 THE EDUCATION TRUST22
How many colleges and universities are viable options for low-income students
based on conservative criteria for affordability, quality, and access?
© 2011 THE EDUCATION TRUST
Source:
Only 65 institutions have a net price below 27% of family income for low-income students
Education Trust analysis of Net Price data for $0-30,000 income range, IPEDS 2009.
Less than 14% 14-27% 27-50% 50-72% 72-100% More than 100%
0
50
100
150
200
250
300
1550
248296 302
275
Net Price for Low-Income Students as a Percent of Average Family Income ($17,011)
Num
ber o
f Ins
tituti
ons
65
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
Source:
Only 29 low net-price institutions have a graduation rate of at least 50%
Education Trust analysis of Net Price data for $0-30,000 income range, IPEDS 2009.
10-20% 20-30% 30-40% 40-50% 50-60% 60-70% 70-80% 80-90% 90-100%0
5
10
15
20
24
1416
10
3 3 2
11
Graduation Rate
Num
ber o
f Ins
tituti
ons
29
Notes: Distribution is based on 65 institutions in the net-price sample with a net price for low-income students of $4,600 or less.Ranges are inclusive on the upper end.
© 2011 THE EDUCATION TRUST
Source:
Only FIVE low net-price institutions have a graduation rate of at least 50% and at least 30% Pell enrollment
Education Trust analysis of Net Price data for $0-30,000 income range, IPEDS 2009.
0-10% 10-20% 20-30% 30-40% 40-50%0
5
10
15
20
5
14
31
Graduation Rate
Num
ber o
f Ins
tituti
ons
5
15
Notes: Distribution is based on 29 institutions in the net-price sample with a net price for low-income students of $4,600 or less and a graduation rate of at least 50%.Ranges are inclusive on the upper end.
© 2011 THE EDUCATION TRUST26
Given these limited options, what does the landscape of opportunity look like for
low-income students?
© 2011 THE EDUCATION TRUST27
0 10 20 30 40 50 60 70 80 90 100$600
$6,000
$60,000
PublicPrivate NonprofitFor-Profit
Six-Year Graduation Rate, 2009
Net
Pri
ce fo
r Low
-Inco
me
($0-
30,0
00) S
tude
nts
2008
-09
$4,600
50%
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 full-time freshmen are Pell Grant recipients, the institution is considered nationally representative.
Log Scale
Size of 30% Pell Bubble
The Landscape of Opportunity
© 2011 THE EDUCATION TRUST28
What are the five institutions that meet relatively conservative criteria for affordability, quality, and access?
© 2011 THE EDUCATION TRUST
Source:
Low net-price institutions with a graduation rate of at least 50% and at least 30% Pell enrollment
Institution StateNet Price for Low-Income ($0-30,000)
StudentsGrad 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
Education Trust analysis of IPEDS 2009.
© 2011 THE EDUCATION TRUST30
0 10 20 30 40 50 60 70 80 90 100$600
$6,000
$60,000
Institutions
Top 6 Institu-tions
Six-Year Graduation Rate, 2009
Net
Pri
ce fo
r Low
-Inco
me
($0-
30,0
00) S
tude
nts
2008
-09
Only five low net-price institutions have a graduation rate of at least 50% and at least 30% Pell enrollment
$4,600
50%
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 full-time freshmen are Pell Grant recipients, the institution is considered nationally representative.
Log Scale
Size of 30% Pell Bubble
5
© 2011 THE EDUCATION TRUST31
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
© 2011 THE EDUCATION TRUST
Source:
Berea College is committed to serving low-income students
The Education Trust, Priced Out: How the Wrong Financial-Aid Policies Hurt Low-Income Students, 2011
•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
© 2011 THE EDUCATION TRUST33
Where are the for-profit college companies?
© 2011 THE EDUCATION TRUST34
0 10 20 30 40 50 60 70 80 90 100$600
$6,000
$60,000
PublicPrivate NonprofitFor-Profit
Six-Year Graduation Rate, 2009
Net
Pri
ce fo
r Low
-Inco
me
($0-
30,0
00) S
tude
nts
2008
-09
For-profit colleges are among the most expensive, least successful institutions
$4,600
50%
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 full-time freshmen are Pell Grant recipients, the institution is considered nationally representative.
Log Scale
Size of 30% Pell Bubble
25%
$17,000
© 2011 THE EDUCATION TRUST35
Where are the top-ranked private nonprofit institutions, many of which
have large endowments?
© 2011 THE EDUCATION TRUST36
0 10 20 30 40 50 60 70 80 90 100$600
$6,000
$60,000
Institution
Top-ranked Private
Six-Year Graduation Rate, 2009
Net
Pri
ce fo
r Low
-Inco
me
($0-
30,0
00) S
tude
nts
2008
-09
Most top-ranked private nonprofit institutions serve too few low-income students and are too costly
$4,600
50%
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 full-time freshmen are Pell Grant recipients, the institution is considered nationally representative.Institutions ranked in the top half of the U.S. News and World Report listing of National Universities are considered "Top-Ranked".
Log Scale
Size of 30% Pell Bubble
© 2011 THE EDUCATION TRUST37
Where are the public flagships, which were founded on the principle of broad
access to high-quality education?
© 2011 THE EDUCATION TRUST38
0 10 20 30 40 50 60 70 80 90 100$600
$6,000
$60,000
InstitutionPublic Flagship
Six-Year Graduation Rate, 2009
Net
Pri
ce fo
r Low
-Inco
me
($0-
30,0
00) S
tude
nts
2008
-09
Most public flagships do not serve enough low-income students or keep costs low
$4,600
50%
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 per -cent of an institution's full-time freshmen are Pell Grant recipients, the institution is considered nationally representative.
Log Scale
Size of 30% Pell Bubble
© 2011 THE EDUCATION TRUST39
Only five flagships offer low-income students a net price below $4,600
© 2011 THE EDUCATION TRUST
Source:
But they open their doors to far too few low-income students
Institution StateNet Price for Low-Income ($0-30,000)
StudentsGrad 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
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 data presented here reflect corrected net-price data e-mailed to Ed Trust from UVA and Indiana University.
© 2011 THE EDUCATION TRUST41
Public flagships served 7,000 fewer low-income students
in 2007 than in 2004.
© 2011 THE EDUCATION TRUST42
Some flagships not only serve small proportions of low-income students, but
also do not keep costs low.
© 2011 THE EDUCATION TRUST
Source:
The 5 most expensive flagships for low-income students expect them to pay more than $11,000
Institution StateNet Price for Low-Income ($0-30,000)
StudentsGrad Rate
% Pell(Full-time freshmen)
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
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 reflect corrected net-price data e-mailed to Ed Trust from Rutgers.
© 2011 THE EDUCATION TRUST44
“If we choose to give merit aid to those who don’t need it, we’re wasting our
dollars.”-Larry Shinn,
President, Berea College
© 2011 THE EDUCATION TRUST45
Some flagships are so expensive, that a low-income student could more easily
afford to go to a selective private college in the state
© 2011 THE EDUCATION TRUST
Source:
In 10 states, the top-ranked private is less expensive for low-income students than the public flagship
State FlagshipNet Price for Low-Income ($0-30,000)
Students
Grad Rate
% Pell(Full-time freshmen)
Top-Ranked PrivateNet 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
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-price data e-mailed to Ed Trust from UVA and Indiana University.
© 2011 THE EDUCATION TRUST47
The result of these federal, state, and institutional policies?
© 2011 THE EDUCATION TRUST
Source:
Only 8 percent of low-income young adults attains a bachelor’s degree by age 24
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 http://www.publicagenda.org/files/pdf/struggling-in-america-topline.pdf
Highest income quartile Lowest income quartile0%
20%
40%
60%
80%
100%
82%
8%
Perc
ent w
ith B
ache
lor’
s D
egre
e by
Age
24
© 2011 THE EDUCATION TRUST49
http://www.edtrust.org/node/2369
0 10 20 30 40 50 60 70 80 90 100$600
$6,000
$60,000
PublicPrivate NonprofitFor-Profit
Six-Year Graduation Rate, 2009
Net
Pri
ce fo
r Low
-Inco
me
($0-
30,0
00) S
tude
nts
2008
-09
$4,600
50 %
Log Scale
Size of 30% Pell Bubble
The Landscape of Opportunity
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