Colleges Giving Even More Financial Aid to Wealthy Students

Way back in the earliest history of Education Sector--I believe it was January 2006--we published our first "Chart You Can Trust." It described how colleges are increasingly funneling scholarship money away from lower-income students and instead giving it to wealthy applicants who are more useful for boosting both colleges' standing in the U.S. News college rankings and their financial bottom line.

That chart used data from the federal National Postsecondary Student Aid Survey, gathered in 1992, 1995, and 1999. Yesterday, the Education Trust (my former employer) released an excellent new report titled "Promise Abandoned: How Policy Choices and Practices Restrict College Opportunities." It contains a similar analysis, but uses newer data from the 2003 NPSAS survey.

Their conclusion: things have gotten even worse.

From 1999 to 2003, private colleges increased the average aid to students from families making less than $20,000 per year from $4,027 to $5,240, an increase of $1,213, or 30%.

During the same time period, private colleges increased the average aid to students from families making more than $100,000 per year from $3,321 to $4,806, an increase of $1,485, or 45%.

This is on top of even larger disparities in earlier years. Over the last decade, both public and private institutions have devoted a hugely disproportionate share of new scholarships to the most privileged students. The whole principle of awarding financial aid according to financial need appears to be rapidly disappearing from our colleges and universities.

Higher education institutions enjoy a wealth of benefits in our society, ranging from social standing to direct and indirect financial support from the government. Those benefits are based on the notion that these institutions serve a higher social purpose than a typical private enterprise. Colleges are supposed to be more than businesses, they're supposed to represent the best of what our society is, and aspires to be.

But when those institutions start to put their own interests of status and money ahead of the pressing need to help lower-income students earn a college degree, it calls those basic assumptions into question.

Addendum #1: Welcome, Talking Points Memo readers. For those of you reading the Quick and the Ed for the first time--and I'm guessing that's more or less all of you--this blog is published by Education Sector, an independent, nonpartisan education policy think tank located in Washington, DC. If you're looking for a smart, fresh perspective on education that's not tied down by predictable orthodoxies, give us a try.

Addendum #2: A few readers have emailed to point out that institutions like Harvard and Yale have taken steps in recent years to cut tuition for low- and middle-income students. True enough. But that's just another example of how the national sense of what's going on higher education is warped by the actions of a few elite, high-profile institutions that educate only a tiny percentage of all students.

It's great if universities with multi-billion dollar endowments finally do the right thing and stop charging the families of the few low-income students they enroll (75% of all students at elite colleges and universities come from the top income quartile, only 3% from the bottom quartile) tens of thousands of dollars of tuition. But if those actions don't alter the overall averages -- and the new data clearly indicate that they don't -- then the basic problem is unchanged.