Even if students work and families save, many won't be able to afford college tuition |
On Board Online • April 23, 2018
By Gayle Simidian
Research Analyst
An "affordability gap" means many students from low- and moderate-income families cannot afford higher education, according to a report by the Institute for Higher Education Policy (IHEP), a nonprofit dedicated to improving college access for students.
Low-income students are often less apt to complete college than their higher-income counterparts, according to research by the Lumina Foundation.
The report says students and parents are likely to have trouble affording college even if they honor the so-called Rule of 10. The rule assumes that, in a given family, parents save one-tenth of their discretionary income for a decade prior to college matriculation and that the student works 10 hours each week during the school year all four years of college.
To illustrate the rule of 10, the report also discusses Mia, a fictional student whose four-member family has an annual income of $100,000. The family's discretionary income would be $51,400. Ten percent of this discretionary income over a decade would be $51,400 (excluding compound interest or investment income).
If Mia works 10 hours each week during her tenure at college, she would be able to contribute about $14,500. Therefore, she and her family would be able to pay for a four-year degree with a price tag of $65,900.
To examine the issue of affordability, researchers used a website called College Abacus to get data on tuition/fees, room and board, books, supplies, transportation and additional expenses of attending about 2,000 two- and four-year colleges. (More than 500 U.S. colleges block College Abacus from obtaining their net prices.)
The researchers examined the ability of 10 fictional students of varying incomes to afford various colleges, factoring in whether they would be eligible for federal student loans. Maria, with a family income of $162,995, would have the finances to enroll at 90 percent of colleges in the College Abacus database. Sergio, with a family income of $105,405, could enroll at 41 percent of the colleges. The remainder of the students from lower income levels ($2,130 to $69,000) could attend 5 percent or less of the colleges.
The research also shows that taking out federal student loans isn't a panacea for inequities regarding college access, although it does help. For example, Sonia has a family income of $12,491 which makes 97 percent of the colleges unaffordable for her, but with the assistance of federal Stafford Loans, fewer colleges are unaffordable (78 percent).
Federal Pell grants can contribute to increased college access for many low-income students too, according to the Institute for College Access & Success, a non profit dedicated to increasing college access to all interested parties. The grant's maximum amount for 2017-18 ($5,920) doesn't even take care of one-third of college expenses compared to the 1980s, when the maximum would take care of, at least half of college expenses, according to the Institute.
But Pell grants would help a lower-income student like Anthony with a yearly income of $2,706. Without need-based aid, he could only afford 2 percent of colleges in the sample, but with the maximum Pell Grant, could afford 20 percent of colleges.
Trying to increase college access for lower-income students is a perennial issue for higher education admissions personnel.
"Pell Grants and Subsidized Stafford Loans are the critical tools enabling access to public and private higher education by students of low- to moderate-income," said Rehnuma Wahab, vice president of enrollment management at Sage Colleges in New York's Capital Region.
The Trump administration has proposed altering or getting rid of key aspects of postsecondary student loan programs. While the consensus among public policy and advocacy groups is that most of the proposed cuts won't materialize, college admissions officials are concerned.
"Any cuts in federal funding in support of financial aid to students would impact the number of students we would be able to award financial aid to in an entering class," said Mary Lou Bates, dean of admissions and financial aid at Skidmore College in Saratoga Springs. "Skidmore currently commits to meet the full demonstrated financial need of every student we admit. Any decrease in federal funds would be replaced with Skidmore dollars which means that we would be able to fund fewer students."
The IHEP report outlines several recommendations to increase college access for poor students including doubling the maximum Pell Grant. To view the report, go to http://www.ihep.org/limited-means-limited-options .