Tuesday, June 12, 2007

The Beneficiaries of Financial Aid

Carleton's financial aid setup has been on the hot seat recently. No, we haven't been caught up (as far as I know) in that massive student loan scandal that made headlines recently. But students here have been up in arms about some aspects of our aid system. For one, we are not on a system of 100% need-blind admission. The vast majority of our students are admitted need-blind. But at the very end of the process (to get the last 5% of the class, I believe), we start dividing the candidates among economic lines and chop away at the bottom strata. This is wrong. Just as I believe that no person should not be able to attend Carleton because they can't afford it, no person should not be admitted to Carleton (when they otherwise would be) because their family income is not high enough. It's regressive and it runs counter to the traditions and values of the college.

Carleton is also committed to meeting 100% of the demonstrated financial need of anybody who does get in and attends. To my knowledge (I'm not on financial aid), we do a reasonably good job at this. But we're not perfect. A big kink in the system is the work/study program. A fair amount of the financial aid we give to students is in this form. All well and good, except that we don't have enough hours to go around. So we're caught in a situation where people are told that their aid will come via working for the college, but the college doesn't have a job for them. Which, itself, is a euphemism for "you're not getting the money." This may not have the terminal impact that non-need-blind admissions does, but it makes up for that by being plain cruel. Bait-and-switch is a bad policy for a financial aid office.

However, Carleton is not all that bad. We're facing a budget crunch (our endowment took a big hit when the tech bubble burst), and the college, to its credit, has maintained an economically diverse body of students that for the most part have been able to pay for college without too much unnecessary pain or heartache. Part of the reason we are able to afford the programs we do have is because need-based financial aid is the only type of financial aid we give out. Carleton has no academic or merit based scholarship. The one exception is the National Merit Scholarship (given to high performers on the PSATs). The National Merit Foundation gives $1,000 to its recipients, and Carleton matches. That gives $2,000 towards our $40,000+ tuition, which, while appreciated, is not much of a dent. Aside from that, all of our scholarship money is need-based. As it should be, for an elite institution like Carleton (here are some stats on our economic makeup).

Unfortunately, other colleges are not necessarily replicating this commitment. A goodly portion of philanthropic and scholarship money is going to relatively affluent students--and not the one's who need it most:
In 2003, about 100 research extensive universities spent $257 million in financial aid for students from families earning over $100,000 a year, almost as much as that spent on students from families earning $20,000-40,000, and more than that spent on students from families earning less than $20,000.

And the trendline is moving in the wrong direction:
Between 1995 and 2003, flagship and other research-extensive public universities actually decreased grant aid by 13 percent for students from families with an annual income of $20,000 or less, while they increased aid to students from families who make more than $100,000 by 406 percent. In 2003, these institutions spent a combined $257 million to subsidize the tuition of students from families with annual incomes over $100,000 – a staggering increase from the $50 million they spent in 1995. At the same time, poor students were disproportionately bearing the brunt of increased college tuition and fees.

The links are via Ann Bartow, who notes that there is a fast and easy way to get colleges to increase their commitment to assisting lower-income students: make it part of the rankings. If the all-powerful US News developed metrics measuring economic diversity, or availability of need-based scholarships, you can bet your bottom dollar that colleges would respond. Economic diversity, I might add, is something that should be considered important when saying what the "best" university is (it's certainly more relevant than some of the other considerations US News uses in putting together its list).

3 comments:

PG said...

"Between 1995 and 2003, flagship and other research-extensive public universities actually decreased grant aid by 13 percent for students from families with an annual income of $20,000 or less, while they increased aid to students from families who make more than $100,000 by 406 percent. In 2003, these institutions spent a combined $257 million to subsidize the tuition of students from families with annual incomes over $100,000 – a staggering increase from the $50 million they spent in 1995."

How much did median family income increase between 1995 and 2003? As demonstrated by the now-bipartisan concern about the AMT, income figures that once signified Wealth are creeping toward upper middle class families with two earners. Two Long Island public school teachers, each making $55k, would be over $100k pre-tax, but that doesn't mean they're affluent enough to pay for all their children to attend Carleton.

As for scholarship funds, frequently these are tied, by the donors who made the scholarships possible, to certain qualities (such as ethnic or geographic origin) or to academic/ standardized testing accomplishments (National Merit). I would want to see how much of the grant aid that is purely within the school's discretion is given to middle and upper class students, not just how much grant aid total.

David Schraub said...

Most of the economic data I've seen indicates that income inequality is rising--that is, even though the rich (and perhaps upper middle class) are getting richer, the majority of the middle class' incomes are stagnant. I thus have trouble believing that rising incomes can account for the movement in scholarship money we're seeing.

The problem I've seen with Carleton and seems to be occurring elsewhere isn't that its wrongly giving aid to our 110k Long Island pals (certainly, they'd need it). It's that we're accepting fewer and fewer students from families making 20 or 30k (a function, in part, of not being 100% need-blind). The working poor, in other words. And, as the rest of the IHE article indicates, the schools that are taking those students aren't getting the donations necessary to help them.

Anonymous said...

Currently, it's 15% who don't get in need-blind, not 5%.

There's also the problem of loans. They are becoming more and more part of the financial aid package. That makes for more fresh graduates with pretty screwed up financial situations...

Romeo