Admissions & Student Aid

Inadequate Grant Aid Hurts Low-Income Students' Chances of Earning Degrees

June 25, 2010

The grant aid available to low- and moderate-income students is insufficient to ensure that they will enroll and stay in college, undermining the bachelor's-degree completion rates of high-school graduates, according to a report presented here on Friday by the Advisory Committee on Student Financial Assistance.

The report, "The Rising Price of Inequality," is the first part of a study on access and persistence that the independent committee, which advises Congress and the secretary of education, was directed to undertake as part of the Higher Education Opportunity Act of 2008. It builds on the committee's earlier work, including the 2006 report "Mortgaging Our Future."

The new report uses data from the Education Department's National Center for Education Statistics to examine the access and success of a subset of low- and moderate-income students who graduated from high school and appear academically qualified to attend a four-year college. If grant aid were sufficient, those students would be expected to enroll and persist at a rate similar to their higher-income peers, the report says.

The net cost to attend a public college, after all grant aid is taken into account, represents an increasing share of income for low- and moderate-income families, the report says. For example, the net price of a four-year public college was 41 percent of a low-income family's annual income in 1992 and rose to 48 percent by 2007.

The report also documents a shift in the enrollment patterns of qualified low- and moderate-income high-school graduates. In 2004, 40 percent of qualified low-income graduates directly enrolled in a four-year college, compared with 54 percent of students in that group in 1992.

Based on that enrollment shift, the report projects that the percentage of low-income students who earn bachelor's degrees will drop from 38 percent for those who graduated from high school in 1992 to 31 percent of those who graduated in 2004, if persistence rates stay the same.

The advisory committee invited input on the report from a panel of student-aid experts, several of whom said that the report shows how difficult it will be to meet President Obama's goal for the United States to have the world's largest share of college graduates by 2020. But the report is limited because it does not consider nontraditional students, who are important to the president's goal, said one of the panelists, Mark Kantrowitz, publisher of FinAid, a Web site with information on student aid.

The report makes many of the same recommendations the committee offered four years ago in "Mortgaging our Future." Those include limiting the increasing price of college and offsetting the increases with need-based aid; moderating the shift from need- to merit-based aid and from grants to loans; and improving remediation.

But there are two new recommendations in the report. The first is to conduct a "national loan experiment" to determine if making loan forgiveness and income-based repayment options more generous would increase college access, and how much doing so would increase the programs' costs. The second is to create a comprehensive federal strategy to raise bachelor's-degree attainment among low- and moderate-income high-school graduates. Any such strategy, the report says, should consider academic preparation, financial barriers to access, and persistence.