A White House push to increase the college-going rates of of low-income students flies in the face of real-world trends that are heading in exactly the opposite direction—including institutional and federal financial-aid and tax policy that has been shifting in favor of high-income and not low-income families.
Students from the poorest families are less than half as likely as those from the wealthiest to get bachelor’s degrees by the time they’re 25, a statistic cited by the Obama administration as a reason 140 heads of universities, foundations, and advocacy groups were invited to the White House to unveil new ideas they promised would increase the number of low-income students who enroll in college and the rate at which they graduate.
It’s not only college financial aid that has been moving to higher-income rather than lower-income students. So have federal tax breaks, including the American Opportunity Tax Credit, which Obama signed into law.
These include connecting low-income students with colleges that are the best fit for them and waiving the application fees, providing more scholarships for them in science- and technology-related fields, working with primary and secondary schools to better prepare them for college while improving remedial education that often derails them once they arrive there, and connecting them with adult mentors and advisors.
All of these things have been proven in pilot programs to increase the college-going and success rates of students from the nation’s poorest families.
“We don’t want these to be the exceptions,” President Barack Obama told the college leaders and others assembled in the South Court Auditorium of the Eisenhower Executive Office Building. “We want these to be the rule.”
One essential incentive to get students to go to college, however—money, in the form of financial aid—has been slowly shifting to wealthier families, not low-income ones, because of university interests that conflict with those White House goals.
Since 1995, the proportion of students to whom private, nonprofit colleges and universities give financial aid based on their financial need has remained flat at around 43 percent, according to the U.S. Department of Education. But the proportion getting aid who fall above the federal definition of financial need has grown from 24 percent to 42 percent. At public universities, 18 percent of students who do not demonstrate need now get financial aid anyway, compared to 16 percent of those who need the money the most.
Federal figures also show that students from families that earn at least $100,000 a year get an average of $10,200 in financial aid from colleges and universities, more than the $8,000 that goes to students from families that earn less than $20,000.
This has happened because colleges worried about their bottom lines give small amounts of financial aid to lure wealthy families that can afford to pay the rest, rather than large amounts to poor families that can’t. It’s also driven by annual rankings, which reward schools for the high-school achievements of their incoming students—meaning applicants from better-funded school districts often get money, even if they don’t need it.
It’s not only college financial aid that has been moving to higher-income rather than lower-income students. So have some federal financial aid and tax breaks, including the American Opportunity Tax Credit, which Obama signed into law.
That credit, combined with several other tax credits and deductions, now account for nearly $34 billion annually, or more than the federal government spends on Pell Grants for low-income students. And more than a third of the money goes to the wealthiest fifth of American households, according to the Center for Law and Social Policy. Fifty-seven percent of the tuition tax deduction alone goes to families earning more than $100,000, which saved an average of $500 apiece, while only 12 percent of families that made under $50,000 got the tax deduction, saving $220 to $320 apiece.
A coalition of advocacy groups wants the income eligibility for these tax breaks lowered from the current $180,000 to $86,000 and the perks refocused on poor students. A bill to that effect has been introduced by congressmen Danny Davis, D-Illinois, and Diane Black, R-Tennessee, though supporters concede the prospect it will pas is slight.
The president previously won a victory by raising the average Pell Grant, the direct grant for low-income students that can be used toward college costs without having to be paid back. Three-quarters of recipients come from families making $30,000 or less.
But Pell Grants are losing a battle with escalating college costs. Even though the taxpayer-supported program is at record funding levels, it covers only a third of the cost of attending a four-year university or college, on average—the lowest share ever.
Another federal financial-aid program, the work-study program under which students can earn money by working on campus, also disproportionally benefits the rich.
Partly because the $1 billion a year in taxpayer money that goes to work-study is based on a 50-year-old formula giving preference to high-priced private, nonprofit universities and colleges, nearly one in four work-study of the people who get it ends up coming from a family that earns $80,000 a year or more, according to Education Department figures. That’s a higher proportion than come from families that make less than $20,000. Fewer than half meet the federal definition of financial need
Community colleges, large numbers of which were established after the work-study formula got started, enroll 30 percent of all students, including many who have comparatively low incomes. But they collectively get only 16 percent of work-study money, according to the College Board. Fewer than 2 percent of community college students have work-study jobs. By comparison, private, nonprofit institutions enroll only 17 percent of all students but get 40 percent of the work-study funding.
Universities and colleges are also pushing back on an Obama administration plan to rate them based on their prices, average student debt loads, student-loan default and graduation rates, and other measures, which is designed to hold down costs through competition. The schools complain that comparing them in this way will punish the very institutions that serve the least-prepared and lowest-income students, or force them to stop taking chances on students who show promise but may not ultimately graduate.
Even some initiatives like those discussed at the White House summit, meant to help low-income students get into and through college, have ended up helping wealthier rather than poorer kids. A study by the Illinois Education Research Council at Southern Illinois University at Edwardsville found that more high-school students in suburban and rural districts than in poorer urban ones were taking college courses to get a head start on their college educations through one such innovation, known as dual-enrollment.
“Even after all these steps that we’ve taken over the last five years, we still have a long way to go to unlock the doors of higher education to more Americans,” Obama told the college and university presidents. “And especially lower-income Americans.”