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Colleges Shortchanging Needy Students in Battle for Prestige, Money

Just because students get a Pell Grant—federal aid that goes to families who generally earn $30,000 or less—doesn't mean their college gives them much of a break on tuition.

A new analysis of college aid by Stephen Burd, a senior policy analyst at the New America Foundation, a Washington-based nonprofit public-policy institute, looked at the share of undergraduates receiving Pell Grants and the net price they paid. It found hundreds of public and private nonprofit colleges expect the neediest students to pay an amount that is equal to or even more than their families' yearly earnings.

Nearly two-thirds of the 426 private institutions Burd examined charge students from the lowest-income families, those making $30,000 or less a year, a net price of more than $15,000 a year.

Although public universities are more supportive of low-income students, the paper notes that state funding cuts for higher education have led many public colleges to reduce aid as well.

"Overall, too many four-year colleges, both public and private, are failing to help the government achieve its college-access mission," writes Burd. "They are instead using their financial resources to fiercely compete for the students they most desire: the 'best and brightest' students—and the wealthiest."

In his paper, Undermining Pell: How Colleges Compete for Wealthy Students and Leave Low-Income Ones Behind, Burd says the unequal situation leaves many disadvantaged students taking on debt and more likely to work full time while in school, which can reduce their chances of completion. There have been historic increases in Pell Grant funding, but as schools raise their prices and don't provide more aid, the college-going gap between low- and high-income students is a wide as ever, he writes.

Many small colleges don't have large endowments to cover the tuition costs for those with the greatest need, yet Burd found that some of the country's most prosperous private colleges are the stingiest with need-based aid.

Colleges give nearly $30 billion in institutional aid each year, but how that money is distributed by campus varies.

Burd notes that many colleges are extremely generous, such as Amherst College in Massachusetts. On that campus, 22 percent of students receive Pell Grants and pay an average net price of $448 per year, while Amherst's published cost of attendance is about $54,000. Vassar College in New York and Grinnell College in Iowa also led the list of the best schools at enrolling the highest percentage of low-income students and offering them financial support.

Other schools that didn't have a high percentage of disadvantaged students, but did offer those that attended substantial aid, included most of the Ivy League Schools and other prestigious institutions, such as Washington University in St. Louis and Bates College in Maine.

Private colleges with few low-income students, yet high prices, included Washington and Lee University in Virginia, where 8 percent of the students received Pell Grants and were charged an average of about $14,000. Leading this list of private schools with lots of Pell Grant students and high net prices was Texas Christian University, where 16 percent of the students get Pell Grants and pay an average net price of $22,000.

The analysis also includes public institutions. The least expensive schools for low-income students include Georgia Institute of Technology, which charges no tuition for Pell Grant recipients. California State Dominquez Hills charged about $1,000, and Cal State Fullerton $1,300.

The most expensive schools for disadvantaged students are Rowan University in New Jersey ($20,000), Pennsylvania State Altoona ($18,000), and University of Southern Maine ($18,000).

The message to those who need financial assistance: Generosity varies tremendously by institution. Students should look closely at their options before committing.

To remedy the situation, the New America Foundation's Education Policy proposes a federal solution that would offer Pell bonuses to financially strapped public and private four-year colleges that serve a substantial share of Pell Grant recipients. The extra money could be used to bring down the net prices of attendance for the neediest students and create support programs to increase retention and graduation rates for those students. For wealthier colleges that use their aid for merit awards and generally enroll a relatively small share of low-income students but charge them high net prices, Burd proposes they be required to match at least a share of the Pell dollars they receive.

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