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Net Price of College Rises More for Low-Income Than Wealthy Students

An analysis of newly available information on the prices families actually pay for college finds that the costs have increased by a larger amount for poor students than for wealthy ones in recent years.

The Education Writers Association, The Hechinger Report, the Omaha World Herald, and The Dallas Morning News partnered to examine new federal data that colleges are now required to report on the "net price" of attendance—the bottom-line cost once all state, federal, and institutional scholarships and grants are deducted from the published sticker price for tuition, room, board, and other expenses.

The net price is often welcome news, since most families get some form of discount. However, this analysis shows that, from 2008-09 to 2011-12, students from lower-income families at many colleges are actually paying more while prices have come down for upper-income students. Over that time period, the net price for college increased for all students by an average of $1,100 at public institutions and $1,500 at private ones between 2008-09 and 2011-12, according to data from the U.S. Department of Education.

Yet at private, nonprofit universities, costs rose by $1,700 for students in the lowest income group over that time period, by $1,200 for those from the wealthiest families, and $850 for middle-income families. The disparities were evident at public universities as well with costs rising by 17 percent to $1,380 for the lowest income families and 11 percent or $1,950 for the wealthiest.

(Low-income students are defined in the analysis as those from households earning less than $30,000 a year. Middle-income students are from households earning from $48,001 to $75,000; and upper income are those earning more than $110,000.)

Still, there are large gaps between what students pay. One example that the analysis highlights is the University of Notre Dame. Students from the lowest-income families paid an average net price of just over $15,000 per year, while students from middle-income household paid about $18,500 and those in the top income bracket shelled out about $37,500 to attend. Sticker price was about $55,000.

From 2008-09 to 2011-12, the net price at Notre Dame for low-income freshmen grew from $7,300 to $15,100. At the same time, it dropped slightly for students in higher-income groups.

To illustrate the situation at public institutions, an interactive graphic on The Dallas Morning News website shows the average share of income that families of various means spend on public universities.

In a webinar hosted by the Education Writers Association on Monday, reporters Holly Hacker from The Dallas Morning News and Jon Marcus from Hechinger explained the project and the reaction offered for the disparities by college officials.

Part of the gap may be traced to higher-income families often knowing how to appeal to colleges to ask for more grant money, while students who are the first in their families to go to college may not be as experienced with the financial-aid system.

As for the colleges, many have abandoned need-blind admissions and it can be in the school's financial interest to give several wealthy students a price break, knowing they will be paying some tuition, rather than more generous packages to poor students who can't afford tuition, the reporters noted.

According to the new federal data, families earning more than $100,000 a year got an average of $10,200 in institutional financial aid, while students from families earning less than $20,000 got an average of $8,000. The poorer students also likely receive federal Pell Grants to make up some of the difference.

To allow families to view the net price data in a searchable database, the project included the development of a Tuition Tracker search engine.  It is based on IPEDs data, which is limited in that it only includes first-year, full-time students who receive financial aid.

This information comes out at a time when President Obama is encouraging colleges and universities to do more to support disadvantaged students in getting degrees. Earlier this year, the White House sponsored a summit on the topic and secured pledges from several institutions and nonprofits to do more to propel low-income students to college completion.

In response to the new data, some colleges and universities question the validity of the government's formula for determining net price. Others admitted that using more merit aid helps attract strong students who can help boost their institution's standing in outside rankings, the reporters said.

Other research, such as a study last year from the New America Foundation, notes that although public universities are supportive of low-income students, state funding cuts for higher education have led many public colleges to reduce aid and left students with higher tuition bills overall.

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