When Wealthy Colleges Shun Low-Income Students

Higher education is an expensive proposition in the United States, particularly for low- and moderate-income students and their families. We could argue about the cause of the affordability problem and cast blame in various directions, but let’s start with a few simple things that colleges and families can do to alleviate the problem right now. 

Without question, institutions of higher learning need to open their arms wider to Pell Grant students. Pell Grants are one of the key tools that low- and moderate-income families use to make higher education more affordable.

But the temptation is strong to limit Pell Grant students. Recruiting wealthier students makes it easier for schools to balance their budgets, but it also perpetuates the narrative that colleges and universities are for the elite.

This behavior is particularly galling when well-off institutions admit only a paltry number of Pell Grant students. (Nationally, roughly one-third of college students are Pell recipients, but at “highly rejective” schools, they make up less than 10% of the student body).

Part of the solution is to make an institutional commitment to access for low-income students. 

The American Talent Initiative is a great example of this principle in action. It’s a diverse set of public and private colleges and universities with high graduation rates working toward a shared goal: attracting, enrolling, and graduating 50,000 additional high-achieving, low- and moderate-income students by 2025. 

The pledged commitment and collective action of ATI, which currently encompasses 132 schools, helps create accountability among member institutions and mitigates the temptation for schools to focus on targeting wealthier students as the primary way of balancing their budgets.

Another thing schools can do to make life easier for low- and moderate-income students is to provide greater transparency around financial aid. There’s quite a bit of room for improvement here. A recent report by the U.S. Government Accountability Office suggests that many schools are doing a terrible job on this front, making it hard for families to compare financial aid offers.

Part of the solution is greater standardization, including increased usage by schools of a standardized form that makes sure schools are speaking the same language about loans, grants, and financial costs so that families can accurately compare costs between institutions. 

Less arcane information from schools would also help. At my own school, Wabash College, we have been praised for the “radical transparency” of our financial aid web page, which describes merit scholarships and clearly articulates how need-based awards work.

Need-blind admission is another tool universities have at their disposal to help level the playing field and ensure accessibility for low- and moderate-income families. Many colleges wait until after a student has submitted a Free Application for Federal Student Aid (FAFSA) to make admission decisions, which can obviously skew in favor of admitting well-resourced students. With need-blind admissions, a lot of that bias goes away.

There are things that students and their families can do, too. They can broaden their search when it comes time to pick a college. Affordability concerns are primarily driven by what’s happening at a handful of elite schools. But you can get a high-quality (even elite) education at many schools if you look beyond the “usual suspects” at the very top of the U.S. News and World Report college rankings.

Families should also look beyond the sticker price before deciding if higher education is out of their price range. College Board data show that the average price paid by families has actually been coming down for more than five years. This is true for public and private schools alike, but it’s not well known because the media focus on sticker prices, which few students actually pay.

Finally, students and their families should lengthen their time horizons and focus on the long-term return on investment of higher education, rather than being overwhelmed by the short-term cost. We have long known that a bachelor’s degree pays off in increased earnings for graduates. Recently, more granular data quantifying the return on investment of individual schools have shown that even at some private colleges, the payoff is achieved in as little as two years. 

Why do we need to confront this issue? Because the country is divided enough already between the “haves” and “have-nots,” and access to college is a part of it. Even private colleges receive public support in the form of significant tax benefits, but that may not continue to be the case if college educations are not made more accessible to disadvantaged citizens. Schools with large endowments are already being taxed. Could more schools face this penalty if we stay on this trajectory? I fear they could. 

There are things that we can do right now to meet this challenge.