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America’s colleges and universities are quietly shifting the burden of their big tuition increases onto low-income students, while many higher-income families are seeing their college costs rise more slowly, or even fall, an analysis of federal data shows.

It’s a trend financial-aid experts and some university administrators worry will further widen the gap between the nation’s rich and poor as college degrees—especially four-year ones—drift beyond the economic reach of growing numbers of students.

“We’re just exacerbating the income inequalities and educational achievement gaps,” said Deborah Santiago, co-founder and vice president of Excelencia in Education, a nonprofit group that advocates for Latino and other students.

The shift also runs contrary to an Obama administration push to make a college degree more affordable for low-income students. At a White House summit in January, college leaders and others promised to find ways to make degrees more affordable for the less affluent.

In fact, lower-income and working-class students at private colleges and universities have seen the amount they pay, after grants and scholarships, increase faster than the amount their middle- and upper-income classmates pay, according to an analysis of data that institutions are required to report to the U.S. Department of Education.

The net price—the total annual cost of tuition, fees, room, board, books and other expenses, minus federal, state, and institutional scholarships and grants—rose for all students by an average of $1,100 at public and $1,500 at private universities between the 2008-09 and 2011-12 academic years, the most recent period for which the figures are available.

At private universities, students in the lowest income group saw the biggest dollar increase over that period: about $1,700, after adjusting for inflation, according to the analysis by The Dallas Morning News, The Hechinger Report and the Education Writers Association. Higher-income students paid more overall, but their costs rose more slowly—an inflation-adjusted average of about $850 for middle-income families and $1,200 for those in the top income group.

At private research universities, including many of the nation’s most elite, the net price rose by an average of $2,700 for the poorest families—those with incomes under $30,000 a year—compared to $1,400 for their higher-income classmates. Those averages are also adjusted for inflation, and the sample is limited to students who received any federal aid. (To see how any university or college in the country has raised its net price, based on income, click on this Tuition Tracker tool.)

Experts and advocates concede that, as tuition spirals ever higher, even higher-income families need help paying for it, making the situation far more complex.

Who’s getting the money

Wealthier students still pay more for college educations, on average. But, to help colleges maintain enrollment numbers, keep revenue rolling in, and raise standings in annual rankings, these students are getting billions of dollars in discounts and institutional financial aid that many critics say should go instead to their lower-income classmates.

Junior Nick Mills of McKinney is going to the University of North Texas because of the Emerald Eagle Scholar program, an affordable education plan for lower-income families. Here he writes notes during his psychology class on campus, Monday, January 27, 2014. (Tom Fox/The Dallas Morning News)
Junior Nick Mills of McKinney is going to the University of North Texas because of the Emerald Eagle Scholar program, an affordable education plan for lower-income families. Here he writes notes during his psychology class on campus, Monday, January 27, 2014. (Tom Fox/The Dallas Morning News)

“Schools are talking out of both sides of their mouths. They say that they support access, but in general they’re giving more and more of their aid to higher-income students,” said Stephen Burd, a senior policy analyst at the New America Foundation, a nonprofit think tank.

Burd calls the practice “affirmative action for the rich.”

Financial-aid officials say higher-income families have learned to work this system, pitting institutions against one another to negotiate for even more discounts while also capturing a lopsided share of outside scholarships.

This phenomenon is occurring even as colleges and universities contend they’re less and less able to help low-income families financially. Higher-income families also disproportionately benefit from tuition tax breaks and an outdated formula for the taxpayer-supported federal work-study program. (See accompanying story.)

“If this really is an era of tight resources, then we need to make every dollar count,” said Julie Strawn, a former senior fellow at the Center for Postsecondary and Economic Success. Instead, Strawn says, “We’re pitting groups of students against each other, most of them from families that make less than $30,000 a year, on the premise that there just isn’t enough money to invest in low-income people going to college.”

The real price of college

Just as airline passengers pay varying prices for the same trip, college students often pay different prices for the same degree.

College costs
Source: National Postsecondary Student Aid Survey, 2008; calculations by Teachers College, Columbia University

Until a few years ago, that information was hard or impossible to find. Now, colleges and universities must annually disclose their so-called “net price,” which is what families are left to cover through savings, loans, work-study, and private scholarships from civic groups and other sources.

The most recent data for the University of Notre Dame, for instance, show that the poorest students, defined as coming from families with annual incomes below $30,000, paid an average net price of just over $15,000 per year. Students with family incomes between $48,000 and $75,000 paid more, around $18,500. And families that earn more than $110,000 paid the most, about $37,500.

Over the four years the data were collected, however, the net price for Notre Dame’s poorest freshmen more than doubled, from about $7,300 in 2008-09 to $15,100 in 2011-12, while it declined slightly for students in higher-income groups.

There are shortcomings with these figures—most notably that they take into account only full-time, first-year students who receive federal financial aid. At Notre Dame, as an example, that means just under half of all freshmen are included. Still, the data offer the most comprehensive and transparent look at what students of varying financial means really pay. And because the government’s net-price figures have been calculated consistently over the years, they’re the best available measure of how financing patterns are changing.

Need versus ‘merit’

Colleges and universities last year gave about $8.3 billion in so-called merit aid to students whose family incomes were too high for them to qualify for government-issued Pell Grants, the College Board reports. Pell eligibility varies based on such things as whether students are dependent on their parents and go to school full- or part-time, and the cost of their tuition. Three-quarters of Pell recipients come from families that make $30,000 or less per year.

Tuition tracker

College costs

The Tuition Tracker online tool at shows the net price by income for a year of school at more than 3,700 U.S. colleges and universities. It is designed to help students and their parents find affordable colleges based on family income level.

The website is based on data that colleges report each year to the U.S. Department of Education. The site also shows the sticker price, or total published annual cost, to attend each school.

To analyze college affordability, The Dallas Morning News and its partners, The Hechinger Report and the Education Writers Association, looked at four years of federal data showing what students in different income groups pay.

The focus was average net price. That’s the total cost—tuition and fees, room and board, books and other expenses—minus grants and scholarships from federal, state and local governments and the college.

Since the 2008-09 school year, colleges have had to report this information for first-time, full-time freshmen who received federal financial aid, including loans, grants and work-study jobs. Public colleges and universities report costs only for freshmen who paid in-state tuition.

The national and state trends shown are for schools that award mainly associate’s degrees or bachelor’s degrees. Specialty colleges, such as art schools or theological seminaries, were not included.

Average net prices were derived by weighting the cost at each institution by the number of students in each income group. Averages for 2008-09 were adjusted for inflation using the Consumer Price Index.

That means public and private colleges and universities are spending more of their financial-aid budgets trying to lure higher-income students, whose families earn much more than $30,000 a year, than on meeting the financial needs of low-income ones, according to a 2011 report from the U.S. Department of Education.

The colleges do this because dividing even a little money among several higher-income students means each of their families will pay the rest—filling more seats at a time when enrollments are declining, and keeping much-needed revenue coming in—while giving that same amount to a single low-income student would result in a loss to the bottom line.

Better-off students tend to come from better-funded high schools and also typically bring the kinds of entrance-test scores and grade-point averages that make colleges look better in those annual rankings than do students from poorer districts.

The result is that, since 1995, the proportion of students receiving merit aid has overtaken the proportion that gets need-based aid, nearly doubling from 24 percent to 44 percent at private institutions, and more than doubling at taxpayer-supported public universities, from eight percent to 18 percent, according to that 2011 U.S. Department of Education report.

“There are good arguments for institutions to make limited and judicious use of merit aid,” the University of Southern California’s Center for Enrollment Research, Policy and Practice and the Education Conservancy jointly warned as early as 2011. But “the practice has grown to the point of significantly reducing the funds to qualified students from lower-income households who could benefit from a college education.”

Knowing this, higher-income families have gotten more aggressive in negotiating for money, directors of admission and financial aid say.

“Families love the idea of merit,” said Donald Bishop, Notre Dame’s associate vice president of undergraduate enrollment. “But what it really is, is a bald-faced discount. I get calls all the time from parents who say, ‘Well, my children have been offered a full-ride at these schools, half tuition at these schools, and what are you guys going to do?’ They’re good at, and motivated to, look for money. Those are usually the people who are trying to hammer the colleges.”

While Notre Dame has the clout to say no to parents who negotiate for more, “a lot of other schools don’t have the luxury to wax philosophical,” Bishop said. “They’re dealing with a blunt reality. And so you’re seeing a shift away from lower-income kids to higher-income kids.”

Higher-income families also appear to be shrewder at winning independent scholarships. In his own analysis, Bishop found that students at Notre Dame whose families make under $48,000 a year collectively received $241,000 in outside scholarships, while about the same number of students from families that make more than $110,000 a year together reaped scholarships worth $1.7 million.

“Kids from lower incomes are not as active or skilled in finding those outside awards” as kids from higher-income families, said Bishop.

Some high-income students apply for admission without saying they will seek financial aid—which, at the many schools that consider ability to pay in the admissions process, improves their chances of acceptance—only to demand it, often successfully, as a condition of enrolling.

“I’ve taken more and more calls in the last two years of, ‘My kid’s in at six places, and five of them gave my kid merit money and you didn’t.’ And when I look the kid up, I see that they didn’t even apply for aid,” said Larry Dow, dean of admissions and financial aid at Trinity College in Hartford, Conn.

To stretch its financial-aid budget, Trinity three years ago dropped a so-called “no-loan” policy of helping students avoid borrowing to pay tuition. That’s one of the reasons net price there for the poorest students rose about $4,400 on average between 2008-09 and 2011-12, Dow said, while dropping $971 for the highest-income group.

Schools with the most federal work-study money

Berea College

City University of New York

University of Southern California

New York University

University of Pennsylvania

Columbia University

University of Michigan Ann Arbor

Boston University

Northeastern University

Northwestern University

Source: U.S. Department of Education, 2011-2012

Meanwhile, he said Trinity’s “heels are getting nipped at by the merit” aid being lavished on its applicants by rival institutions.

“You can’t sustain this process of giving limited financial aid to families that don’t necessarily need it,” Dow said. “The question is, what’s going to give?”

One thing that appears to be giving, at Trinity, is the number of low-income students who are coming there, which Dow said has begun to fall. And now other institutions, including the University of Virginia, are also dropping their no-loan policies for low-income students.

These factors have helped push the proportion of their household earnings that the lowest-income families now spend on their net cost of attending college to more than 94 percent, compared to less than 20 percent for their highest-income counterparts, said Elissa Chin Lu, an institutional researcher at Harvard who has studied the issue.

Of course, if higher-income families have grown savvier in navigating the financial-aid system, it could be because they face financial pressures of their own, experts note. Higher-income families with more than one child in college at the same time may still need help with the costs, for example.

“If you’re making $120,000 a year and you’ve got a couple of kids, you do have financial need, so it becomes much more complicated,” said Sandy Baum, a professor at The George Washington University Graduate School of Education and Human Development and a consultant to the College Board who tracks financial-aid trends.

“Too many low-income advocates are unrealistically ignoring the problems facing working-class kids, and those are really significant problems,” Baum said. “We shouldn’t have to pick between people from $30,000 families and people from $60,000 families—they all need help.”

Universities are increasingly picking more affluent students. Federal figures show that students from families earning more than $100,000 a year got an average of $10,200 in institutional financial aid, while students from families earning under $20,000 got an average of $8,000. Because more low-income students also receive federal Pell Grants, this difference suggests that colleges are leaving it to taxpayers to subsidize the people at the bottom, while they use their own financial aid to court families higher up the income ladder.

“Institutions are really allocating resources to attract those not full-paying, but close to full-paying, students to secure the revenue they need,” said Laura Perna, a professor at the University of Pennsylvania’s Graduate School of Education and an expert on higher-education financing. “As any rational actor, they’re making decisions in their own self-interest, but those are not necessarily in the public interest.”

Public universities

Lower-income students have been particularly vulnerable to tuition increases at many taxpayer-supported public universities, too, which have followed state budget cuts for higher education, the federal figures show.

In Arizona, for example, for every dollar the state spent on higher education in 1987, families paid 35 cents in tuition and fees. By 2012, for every dollar from the state, families paid $1.11. At Arizona’s largest public campus, Arizona State University, that increase has fallen more on in-state lower-income students, who saw a jump in net price of about $4,400, compared to a $2,400 increase for the richest.

In Delaware, the poorest in-state students paid an average net price of $10,300 in 2008-09. That jumped to $14,500 in 2011-12, meaning poor residents are expected to pay the equivalent of nearly half their annual incomes toward college expenses. And Illinois, which is now among the five most expensive states for public-university tuition, had one of the biggest increases in net price for poor families.

At Alabama State, the cost has risen for the poorest students while dropping for students with family incomes of $75,000 or more. Low-income students there have seen their net price increase about $3,800, while it has declined by an average of $700 for students in the top income bracket. The University of Arkansas raised its net price by a little more than $600 for its poorest students from 2008-09 and 2011-12. The higher-income students still pay more, but their net price dropped by more than $1,500 during the same period. Neither of these universities nor Arizona State responded to requests for explanations.

As some states and individual campuses show, it doesn’t have to be this way.

In California, where state funding for higher education has been slashed, it’s wealthier students who are shouldering the lion’s share of net-price increases, which rose $4,000 for them between 2008-09 and 2011-12, while the poorest students paid an additional $1,000.

Nor are all universities heading in the same direction. Several private institutions are raising money to endow financial aid for lower-income students, for example.

“The people who make important contributions to the world are not all coming from well-to-do families,” said Mark Wrighton, chancellor of Washington University in St. Louis, which has brought down its net price for low-income students—though it still has a comparatively small proportion of them—by nearly $12,000 over the period of this analysis.

“The country has a growing income gap,” said Wrighton, who was the first in his family to go to college. “We need to turn that tide. This is one of the major challenges we’re going to face as a country.”

Besides, he said, “People who provide us with all of these resources have an expectation that we’re going to help meet society’s needs.”

What the colleges say

Some colleges and universities dispute the government’s formula for determining net price, which takes into account only students who receive so-called Title IV financial aid, and only the earnings of custodial parents. Many say they use a different calculation that, among other things, is based on total assets and the incomes of both parents, even if they’re divorced.

Some of the reduction in net price for higher-income families is due to the loss of value of higher-income families’ homes after the economic downturn, said Meg Kimmel, a spokeswoman for Bates College in Maine, where the net price for wealthier students fell about $4,800 while for the poorest it rose $3,200 between 2008-09 and 2011-12.

Some universities concede that they use merit aid to improve their academic standings. “As an institution with a rising academic reputation and building selectivity, we do use merit strategies to employ scholarship dollars,” said Melissa Connolly, spokeswoman for Hofstra University in New York, where students whose families earn $30,000 a year or less face an average net price of about $26,800, while their wealthier classmates have seen their costs drop by about $1,100 to about $31,600.

At Skidmore College in New York, which enrolls a comparatively small number of low-income students, the net price nearly doubled for low-income students, from about $7,600 to $13,200, while falling for upper-income ones. That’s because the college has increased the proportion of its costs that students pay through loans, spokesman Dan Forbush said. He said the idea is ultimately to free up more of the college’s financial-aid budget to give grants to the lowest-income students.

Washington and Lee University in Virginia has nearly quadrupled its net price for the poorest students, from about $3,800 to $13,700 per year, while lowering it for those in the top income group, this analysis shows. Spokesman Jeffery Hanna said the university has started a program to give free tuition to students from families with incomes under $75,000, and is trying to raise $160 million for financial aid.

“What can be frustrating is having to defend our commitment to access for low-income students at precisely the time when we are working harder and harder to make it possible for any qualified student to attend, regardless of their family’s ability to pay,” Hanna said.

That was once the guiding principle for all financial aid, said Santiago, of Excelencia in Education.

“Now we’re more focused on higher- and middle-income students who believe a higher education should be their right, and feel they’ve been locked out,” she said. “But there are limited resources. And because there are limited resources, it becomes a shell game of who gets the most support and who gets to go.”

It will be hard to reverse this course, Trinity’s Dow predicted.

“We’re in for some difficult times, but, to say the least, very interesting times,” he said, “in terms of how this gets worked out.”

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  1. This piece is so fundamentally misleadling it would be funny if there weren’t a chance someone would take the numbers seriously. The income that a family has before or while a student is in college is not relevant, only the lifetime income after graduation. No student who completes college will be poor unless they choose to be (by entering a convent for example – or picking an acting major). Making students think seriously about whether college is right for them (and taking their work seriously while there) by making them responsible for repaying loans after they complete is sound public policy
    (From a professor with over 30 years experience)

  2. So maybe the poorer students should decide which is more valuable, a PhD in Art History or a JC certification as a welder. If they don’t know the answer, they shouldn’t go to college.

  3. The piece is very misleading. The vast majority of students fall into the middle-income range which gets hardly any breaks. Especially with job lay-offs and other hard-hit times, those students and parents are struggling to pay for school. That is where the use of merit can help students. Somehow I doubt those are generally coming from families making more than $110K a year, which is quite high.

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