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A new analysis by The Hechinger Report, the Education Writers Association and the Dallas Morning News finds that poorer families are disproportionately bearing the brunt of rising tuitions at public and private schools:
Financial-aid officials say higher-income families have learned to work this system, pitting institutions against one another to negotiate for even more discounts while also capturing a lopsided share of outside scholarships.
This phenomenon is occurring even as colleges and universities contend they’re less and less able to help low-income families financially. Higher-income families also disproportionately benefit from tuition tax breaks and an outdated formula for the taxpayer-supported federal work-study program.
At private universities, between the 2008/2009 and 2011/2012 academic years, students in the lowest income group saw their costs go up by around $1,700, while higher-income students saw costs rise by $850 to $1,200 dollars.
Jon Marcus of the The Hechinger Report joins Here & Now’s Robin Young to discuss his reporting.
ROBIN YOUNG, HOST:
It's HERE AND NOW.
We know the cost of college has been skyrocketing. But new research from The Hechinger Report, the Education Writers Association and the Dallas Morning News shows that poorer families are disproportionately bearing the brunt of those rising costs. Between 2008 and '11, students in the lowest income group at private universities saw their costs go up by about $1,700 while their higher-income classmates saw cost increase by about $700 less on average.
John Marcus of The Hechinger Report came to our studios. And, John, you've told us before, just as airline passengers pay varying process for the same trip, college students pay different prices for the same degree. That's not new.
JON MARCUS: That's true. Very few people actually pay the sticker price of what colleges and universities say they charge. They pay the net price, which is the price when you subtract financial aid and grants.
YOUNG: And your research and the research of your colleagues seems to show that the wealthier students are getting more help along the way.
MARCUS: That's true. The net price has increased much more quickly for the lowest income students. At the most elite universities and colleges, twice as quickly on the lowest-income students than the highest-income students. High-income students still pay more, but the gap is narrowing.
YOUNG: And we know you got a lot of response to this from parents across the board. So we'll get to that in a second. But give an example. Maybe start with Notre Dame.
MARCUS: Yes. Well, at Notre Dame, for example, the poor students have paid a significant increase - almost double what they paid in 2008 - while the higher-income students have actually seen their net price decline.
YOUNG: Well, and you write across the board colleges and universities last year gave about $8.3 billion in merit aid. This is aid based on grades and such, as opposed to need-based aid, and that the proportion of student getting merit aid has overtaken the portion getting the need-based aid. Why would schools lean this way?
MARCUS: Well, that's right. $8.3 billion last year for students that did not meet the federal definition of financial need. And the reason for that is that if you're a university and you have $20,000 to give out, you can give $20,000 in financial aid to one poor student. You get one poor student and no revenue. If you take that $20,000 and you give it to five wealthier students, you get five students and you get families that are capable of paying the rest of the price. So that benefits your bottom line.
YOUNG: And you're going to get more money coming in. And also, the other bottom line that schools are looking at is their rankings.
MARCUS: The students that are wealthier who come from better-funded high school - school districts, public school districts and private schools have better SAT scores, AP exam scores and grade point averages than students that come from lower-funded urban districts, for example. And they get the money.
YOUNG: And this looks better when they are surveyed, some of those - like the U.S. News survey.
YOUNG: Right. You also point out that wealthier families know how to work the system. For instance, they have schools bid against each other.
MARCUS: Well, as this situation has become more complex and as enrollment has began to flatten out and fall, wealthier families know that they can go to one school and say, this other college offered me this much financial aid. What are you going to do? And increasingly, what they also do, we're told by admissions directors, is they'll apply without expressing a financial need. Many colleges and universities are need-conscious in admission. They look at your ability to pay.
So wealthier families say we don't need financial aid. And then after the child is accepted, they go back and say, well, we'd like financial aid. How much will you give us? Another thing that wealthier families, according to admissions directors, are particularly good at doing is working private scholarships compared to less-affluent families who might not know how to apply for those.
YOUNG: Steven Burd, senior policy analyst at the non-partisan New America Foundation, called what you're talking about affirmative action for the rich. But wait a minute, because how do you define low income and higher income? We're reading low income as defined as below $30,000 a year in parents' income. But that means that somebody making, 40, 50, 60 living in some cities where that's not a lot of money would consider themselves as eligible for some of this aid, but they might be written off, in surveys like yours, as the, quote, "wealthy."
MARCUS: That's true. And that's what makes this very, very complicated is, at this point college cost so much that even what we consider higher-income families have trouble sending kids to college. And that's part of the response we got, not only from readers but from some of the activists we spoke with. But the question is where are our priorities? Thirteen out of 14 of the higher-income students and their families, those students will go to college anyway.
Lower-income students are increasingly being priced out of a college education. That's going to be a problem because increasingly, most of the demographics are - that are heading to universities and colleges are lower-income, underrepresented, first-generation college students who don't have the money. And we're not serving them.
YOUNG: Yeah. Well, you're saying, for instance, somebody who comes from a family whose income might be 80, $90,000, maybe they don't go to that private school, but they'll certainly go to a public school. They have more of a safety net whereas somebody making under 30 won't go at all.
MARCUS: They have a safety net. They have other resources. And they are likely to go to a school good enough that they can graduate and repay debt if they need to borrow.
YOUNG: Well - but Sandy Baum, professor at George Washington University, told you, we shouldn't have to pick between people from $30,000 families who, as you say, wouldn't get to go at all and people from $60,000 families. They all need help. From your research, what do you think needs to happen here because the Obama administration has said they want to help people to go to school?
MARCUS: The Obama administration has said that but, in fact, federal policy also disproportionately benefits the rich. If you look at tax deductions for tuition, half of that money is going to the families in the top one-fifth of income.
YOUNG: That's earning more than a $100,000 a year.
MARCUS: Yes. Yet, the White House proposed last week to make permanent the American Opportunity Tax Credit, which is one of those tax credits. So there's a lot of policy change that can happen here. And universities and colleges, is it necessarily a choice between higher income and lower income? No. But right now, they are picking the higher-income students.
YOUNG: Biggest - as you've explained, it better the school to have those students who might bring in some revenue, might bring up their rankings, et cetera. Again, though, $100,000 - a lot of money. But in some cities, it doesn't go very far. And so that family might say, I need that tax deduction.
MARCUS: There's no question. It's a problem with - that's extremely complicated. And there are a lot of families that make in that low six figures that are also struggling to pay for college.
YOUNG: Yeah. Does your research show anything else that can be done to swing some of these money back to the very low-income American young people?
MARCUS: Well, there's a consortium of organizations funded by the Gates Foundation that are looking for ways of repurposing financial aid in general to sort of unify a number of the separate programs into a more clear, consumer friendly kind of a package. That can happen currently because the Congress is in the middle of reauthorizing the Higher Education Act. Whether there's political momentum for - for example, a proposal currently in Congress to lower the maximum income level, which is now 180 - I think $185,000 for these tax credits and tax deductions. Whether there's political momentum for that is kind of dubious. But these proposals are out there and people are discussing them.
YOUNG: Of course, there's also lowering the cost of college, but that's a whole other segment.
MARCUS: That would be the ultimate solution.
YOUNG: Jon Marcus of The Hechinger Report, along with the Education Writers Association, The Dallas Morning News, he's come up with research showing that poorer families disproportionately bear the brunt of the rising cost of college. We'll have that report, along with a tuition tracker that they've come up where you can plug in your income and see what your cost or aid might be. We'll have all of that at hereandnow.org. Jon, thank you.
MARCUS: Thank you.
YOUNG: And also, your experience with financial aid. Does it match his research? Let us know that as well at hereandnow.org. Transcript provided by NPR, Copyright NPR.