Uncomfortable Truths

The University of Wisconsin-Madison has recently launched an initiative to leap toward a tuition model that involves greater degrees of price discrimination. It plans to increase tuition significantly, capitalize on those students who can pay the higher costs, and re-distribute excess money to low-income students. It's a bad idea for a variety of reasons (read the Edu-Optimists here and here for more), not least of which is making the true cost of higher education ever more opaque, but it's also forcing Wisconsin to admit some hard truths:

To sell the Madison Initiative, [Wisconsin's Chancellor] has had to be candid about some shortcomings at the institution. Offering need-based aid simply hasn't been part of the "tradition" at Wisconsin, and that's left a gap of about $20 million in annual unmet need at the university, according to [the chancellor]. The Madison Initiative is expected to provide $10 million to close the gap, and a simultaneous fund-raising effort is designed to raise the remaining $10 million.

Historically, Wisconsin has put most of its money toward funding students based on merit -- not need. In 2006-7, the university awarded $23 million in merit-based aid to undergraduates, compared with $6.5 million in need-based aid, according to university officials.

Unfortunately, offering need-based aid isn't part of the "tradition" at most elite colleges and universities. And not only do they not give much aid, they don't enroll very many low-income students, either. Below are the percent of students enrolled with Pell Grants, a good proxy for low-income college students, at selected prestigious institutions across the country:

University of Illinois at Urbana-Champaign: 15.9%
University of Michigan Ann Arbor: 12.9%
University of Virginia: 7.9%
University of North Carolina at Chapel Hill: 14.0%
University of Wisconsin-Madison 12.5%
Stanford University: 13.5%
Yale University: 10.4%
Harvard University: 8.7%
Princeton University: 9.5%
University of Pennsylvania: 9.3%
Duke University: 10.1%
Northwestern University: 9.2%

Some of these institutions received a lot of good press in the last couple years for announcing generous financial aid programs for low-income students. The dirty secret is they tend not to enroll very many low-income students in the first place. And, while the rest of the country experienced a 36.7 percent rise in Pell Grant participation between 2000 and 2006, elite colleges and universities enrolled 1.9 percent fewer. Thanks to Wisconsin for nothing else than forcing these realities into the public.