Low-Income Students Pay High Net Prices at Many Colleges, Study Finds

At hundreds of colleges, low-income students pay high prices, even after grant aid. That’s one key finding of an analysis of federal data released on Wednesday by the New America Foundation.

In the paper, “Undermining Pell: How Colleges Compete for Wealthy Students and Leave the Low-Income Behind,” Stephen Burd, a senior policy analyst at the foundation, evaluates how well individual colleges with varying resources serve low-income students. His analysis considers, for the 2010-11 academic year, the share of undergraduates receiving federal Pell Grants—a traditional measure—as well as the average net price paid by students whose families earn $30,000 or less. Including the net-price data, which the U.S. Department of Education began collecting relatively recently, “adds a whole different dimension,” Mr. Burd said in an interview.

Although the students in each data set don’t match up perfectly—the average-net-price data are for first-time, full-time freshmen who receive federal aid, and the Pell ratio is for the whole undergraduate student body—using both sheds light on which colleges enroll many low-income students, and which support the poorest students well.

Some observers of higher education think no wealthy colleges do a good job of serving low-income students, said Mr. Burd, who wanted to show that some do. So he looked at private colleges with more than 15 percent of students receiving Pell Grants and an average net price of less than $10,000 for those in the lowest-income group.

For private institutions with endowments of at least $500-million, Amherst College tops the “best of the best” list (see tables, below). Twenty-two percent of its students receive Pell Grants, and those whose families make $30,000 or less pay an average net price of $448. Amherst’s full cost of attendance in 2010-11 was $54,322.

Other wealthy institutions that also do well on both measures include Vassar and Pomona Colleges and Stanford and Wesleyan Universities.

More wealthy colleges could enroll and support low-income students, said Mr. Burd, but they have to make an effort. “What it really takes,” he said, “is college leadership.”

Despite the report’s title, Mr. Burd, a former reporter for The Chronicle, does not examine colleges’ aid to wealthier students—an area of sparser data. But he writes that the high prices low-income students pay at many colleges are the result of those institutions’ prioritizing not need-based aid but the “relentless pursuit of prestige and revenue.”

Low Income, High Price

Among colleges with smaller endowments that did well on both measures, Rust College, in Holly Springs, Miss., had the largest share of Pell recipients, 85 percent, and an average net price of $6,415. The lowest average net price on that list—$1,042—was at Haverford College, where 16 percent of students are on Pell grants.

A handful of colleges, including most of the Ivy League, enroll small shares of Pell Grant recipients but provide them with robust financial aid. Other colleges in that group include Washington University in St. Louis and Bates College, the paper says.

The New America Foundation’s analysis also identified 38 private colleges where small shares of students receive Pell Grants and the lowest-income students pay high net prices. And on another list, the paper named 388 colleges with large shares of students who receive Pell Grants and high net prices for the lowest-income students. That group includes wealthy colleges such as New York University, the University of Miami, and the University of Southern California.

Nearly 500 public colleges are also included in the analysis. Some experts have suggested that if more public institutions followed the high-tuition, high-aid model common among private colleges, low-income students would benefit. And with reductions in state appropriations, more public colleges might adopt that model, which could allow them to direct more aid to needy students, the thinking goes.

But when colleges move in that direction, the paper suggests, low-income students don’t necessarily benefit from reduced prices. In fact, public colleges that charge low-income students a high net price are concentrated in high-tuition states like Ohio and Pennsylvania, the paper says. The states where public colleges are most affordable for low-income students are California, Florida, Hawaii, Louisiana, New Mexico, North Carolina, and Wyoming.

The federal government should reward colleges that serve low-income students well and require more from those that don’t, the paper says, repeating policy recommendations the New America Foundation made in a report in January on student-aid reform. Mr. Burd hopes the new paper will help dispel a persistent impression: “Low-income students,” he said, “are not getting a free ride.”

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Correction (5/14/2013, 6:29 p.m.): The final table in this article originally misstated the average net price paid by low-income students at Santa Clara University. The figure has been updated, from $46,347 to $21,824, after the university pointed out a discrepancy between federal data and its own information.