Report Examines State of Low-Income Students in Higher Ed
By Joelle Fredman, NASFAA Staff Reporter
As policymakers discuss ways to increase access in higher education, a new report takes an in-depth look at the state of low-income students enrolled in postsecondary institutions and determines that they enroll and graduate at lower rates, are underrepresented at selective schools, and are not well-served with the federal aid made available to them.
The Pell Institute for the Study of Opportunity in Higher Education found in its report, “2018 Indicators of Higher Education Equity in the United States,” that lower-income students enroll in and graduate from postsecondary institutions at much lower rates than their counterparts from families in higher-income brackets. In 2016, 78 percent of 18- to 24-year-olds from the highest income quartile (families making more than $124,019), enrolled in higher education, compared to 46 percent of students from families in the lowest quartile, (those making less than $37,564). This 32 percentage-point gap, however, has declined from 43 points in 1990.
College persistence rates follow a similar trend; the completion rate for students from families in the highest quartile in 2016 was 87 percent, compared to 61 percent for those in the lowest quartile.
The report also found that these lower-income students are much more likely to enroll in for-profit institutions. For-profit institutions enrolled 72 percent of first-time, full-time undergraduates in 2016, compared to 38 percent at public, four-year schools and 33 percent at private, nonprofit schools.
Additionally, the report found that the more competitive and selective an institution is, the lower number of student receiving Pell Grants at the institution is. In the 2014-15 academic year, Pell-receiving students only made up 16 percent of the “most competitive” institutions. This remained relatively unchanged between 1999-00 and 2014-15, while other sectors saw significant increases in federal grant-receiving students — such as a 55 percent jump at two-year public and private, nonprofit schools, and a 22 percent jump at “noncompetitive” schools. The for-profit sector also experienced a 37 percent increase during this period.
The report also found that the federal aid that lower-income students are offered to pay for higher education did not cover a significant amount of the costs of attending school. In 2016-17, the maximum Pell Grant, which was $5,815 and awarded to just a quarter of eligible students, only covered 25 percent of college costs. For comparison, the maximum award covered 68 percent of college costs in 1980.
While average college costs increased by 148 percent since 1974-75, from $9,291 to $23,019, median family income increased only 31 percent, from $55,665 to $72,707. Over this same period, the maximum Pell award increased by only 20 percent, and the average award increased by 17 percent, the study found.
The report also looked at the net price of attending college — the cost of attendance minus grant aid — and found that “average net price increased in constant dollars for all quartiles, but increased at a greater rate for those in the top two income quartiles than the bottom two quartiles.” While the net price in 1980 was $10,881 for the lowest quartile and $18,123 for the highest, in 2012 it increased to $13,699 and $26,580, respectively.
“The meaning for equity of the widening gap in average net price by family income is ambiguous,” according to the report’s authors. “On the one hand, a widening gap may signify that institutions have allocated available financial aid to students with the greatest financial need. On the other hand, the widening gap may indicate that net price has not risen as rapidly at the colleges most frequently attended by low-income students as the colleges attended by more affluent students,’” the authors wrote.
The report suggested that if price is related to academic quality, then this indicates that “the increasing difference in average net price for students in the upper- and lower-family income quartiles may reflect growing inequity and increased stratification of the nation’s higher education system.”
Further, the report looked at student’s unmet meet — what is left after federal financial aid is applied — and found that, even though they were more likely to attend less expensive schools such as community colleges, undergraduates in the lowest income quartile had an average unmet need of $8,221 in 2012, and students in the second lowest quartile had an average unmet need of $6,514. Students in the highest quartile however, saw an average surplus of $13,950 after federal aid was applied.
The report also found that in 2012, 90 percent of black students borrowed to finance their education, 72 percent of Hispanic students borrowed, and 66 percent of white students borrowed. Additionally, although white students on average borrowed higher amounts of funds in the past, black students averaged the highest amount in 2012 ($31,300), which rose by 157 percent from $12,200 in 1990.
The authors noted that the impact of the Great Recession was likely partially to blame for the spike in student borrowing between 1990 and 2012. “Regardless of institutional control, the percentage of students who borrow to pay college costs has increased over time, so that now more than two-thirds of undergraduate seniors are borrowers,” the authors wrote.
Publication Date: 5/25/2018
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