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Monday, March 10, 2014

Rising Tuition Costs Disproportionately Hit Poorest Students

University of Washington students walk on the campus between classes in October 2012, in Seattle. (Elaine Thompson/AP)

A new analysis finds lower-income students are seeing their costs go up by a greater amount than higher-income students. (Elaine Thompson/AP)

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 Higher-income families also disproportionately benefit from tuition tax breaks and an outdated formula for the taxpayer-supported federal work-study program.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.

Guest

Transcript

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.

MARCUS: Exactly.

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.


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  • loyal listener

    The whole premise of this study is flawed. Almost all students have little or no income. It’s the parents’ income that you’re really looking at. Some students have wealthy patents who choose not to pay much towards their kids’ education.

    You’re also not taking into account that our dear leader Obama issued a decree to make it so that a lot of student loan debt never has to be paid back. The main requirement is that you stay poor, just as he likes. Poor, stupid, dependent on the federal government. ..hmm, wonder which party they will vote for?

    • Guest

      I’m pretty sure the study was referring to the income of the families (parents) rather than the student.

      • loyal listener

        Yes, I know that. But it is really the student who is the adult and has to pay the tuition or pay back the loans. The parents might chip in, or they might not.

  • Emily

    I am at community college to become a mechanic now and I have applied for and received financial aid to help me afford school. I decided to play soccer at school last fall. Unfortunately, I lost a lot of hours at work because of my decision. I applied for a loan increase to help me be able to pay my bills so I could catch up because of my missed income. I also applied for a loan to cover tool expenses because I get an amazing discount through snap-on while I’m in school. Because I make enough regularly, I was denied my loan increase for the catching up on my bills but was awarded the money for tools. Obviously, I played catch up on my bills first. When I asked if I was getting the rest of the money this semester (since the loan increase request is based on the full school year, not the semester), I was told that I had been denied the living expense increase and that that first check was the tool money.

    I know from my friends in different schools, they have just gone to financial aid to request the maximum Stafford loan that they are eligible for. When I asked my school this, they told me they don’t give out the maximum unless there is a need. I need to be able to eat. I’m lucky if I’m home long enough to cook myself food so that I have leftovers to bring with me while I work full time and I’m at school full time. I make $25k a year. I’m attempting to get out of the rut that is retail when you have no interest in being a manager. How is denying me a loan that is supposed to be available if I need it helping me? It’s not. I’m not asking for free money, I’m asking for a loan that I know I will have to pay back when I leave college. I’ve been in college before and paid back my previous loan.

    I haven’t had any free time to scope out my options and figure out what is available to me in regards to scholarships, mainly because I have no idea where to begin looking. There is no manual on this. How can I convince my college that I have a real need for this loan now? I need tools so that I can get a job in my field and I need to have them before I start. Getting a loan at 6.25% through my student loan would be much more beneficial to me than getting a line of credit through snap-on at 18% interest. The math there is not very hard. What can I do?

  • Brandon Scullion

    Emily, Schools should not be allowed to determine what you can receive. If you are eligible you are eligible.

    As for the story, I feel it was misleading. Though I cannot argue with the statistic being discussed, the assertions made from this statistic do not hold up against these facts. There have been cutbacks in the funding of many of the Federal Aid programs such as Pell Grants and subsidized loans. These are the funds deemed “need based aid”. In the wake of this, and at no technical fault of their own, schools are left scrambling to ensure they retain a student population. It seems the trend here would be that these institutions have increased or have tried to increase institutional based aid. This would more likely be the type of aid known as merit based aid which can be attributed to a more affluent upbringing. Also, state schools like the one I work for, have a very small endowment and therefore have much less ability to increase such aid vs big name and Ivy league schools.

    This was not touched on.

  • Lal

    Our experience with financial aid for my daughters first two years at an expensive private college has been this; the first year I was “married” and showed more income than the second year we applied, but got much more aid the first year than the second! This just tells me that they give more to lure u in, then they bank on the fact that the student won’t leave, and offer less. I am very concerned about the letter that is about to come any day now with Junior years aid amount….
    I am a single parent w approx $30,000 income.

  • Annette Blum

    I wish the interviewer had pressed the guest more on this rich vs. poor thing. People who make $40,000/year are not rich. Even families who make $100,000 may not be able to pay half of that on a year’s college tuition. It was very uninformative. Many middle income families’ children are getting merit based aid because the leap in college costs was so severe that it was impossible to plan ahead for it. We were budgeting $30,000 for a year’s tuition for our oldest. Tuition for your youngest has been around $50,000. It was a huge difference, and without merit-based aid AND loans we couldn’t have afforded it.
    The definition of “rich” in this report was not given, and it made the report rather useless. Though the interviewer tried to mention that in some markets $100,000/year is not as much as it sounds, she should have pushed further. Nowhere was the term “middle income” in the discussion. As a result, the guest was able to get away with a dishonest analysis.

    • Howard M Thompson

      Since the median income in the US is near $50,000 a year, a family with an income of $100,000 a year could live a median income life and pay $50,000 a year in tuition. And, many students can attend a publis tier 1 research university in their state for much less than that.

      • loyal listener

        You’re forgetting about one little thing. .. taxes!

      • Annette Blum

        Public universities are not cheap, when you add room and board–about $9000-10,000 a semester. In the last generation, legislatures have been allocating money less and less to public universities so they have to make it up somehow. On top of that the interest rate on student loans just doubled, thanks to Congress. The better public universities are often by coincidence in states with higher housing costs where $50,000 doesn’t go very far.

  • bjarne1234

    What happened to all the great low cost colleges in America? Nothing happened to them. They are still many excellent reasonably priced regionally accredited colleges around. In our new age of internet information they are, ironically, hard to find.

    Here is an example: Consider that a Bachelor in Business Management from Western Governors University costs only $23,120. See Search results: http://www.degreesanywhere.com/Degrees.aspx?DegreeTypeId=2&FieldOfStudyId=2802#.UyMX4_ldV8E

    Or an MBA offered by Eastern New Mexico University for only $6,240. See Search results: http://www.degreesanywhere.com/Degrees.aspx?DegreeTypeId=3&FieldOfStudyId=707#.UyMbOvldV8E

    Both colleges have regional accreditation so both are equal to expensive colleges in the eyes of most employers. There is no need to pay more or go deep in debt.

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