November 09, 2003

Financial Aid Battle

Similar discrepancies emerge across the nation, adhering to a somewhat counterintuitive underlying theme: The federal government typically gives the wealthiest private universities, which often serve the smallest percentage of low-income students, significantly more financial aid money than their struggling counterparts with much greater shares of poor students.

-- Greg Winter, "Rich Colleges Receiving Richest Share of U.S. Aid"

File this one under "the campus culture wars are a distraction from the real battles." The above-linked NYTimes article reports that college financial aid officers are calling for a new system that would "[steer] financial aid toward the universities that poor students actually attend, rather than those with the biggest reputations." To illustrate the kind of imbalance that the National Association of Student Financial Aid Administrators seeks to redress, the NYTimes explains that

Brown, for example, got $169.23 for every student who merely applied for financial aid in order to run its low-interest Perkins loan program in the 2000-1 academic year. Dartmouth got $174.88; Stanford, $211.80. But most universities did not get nearly that much: the median for the nation's colleges was $14.38, according to a New York Times analysis of federal data on the more than 4,000 colleges and universities that receive some form of federal aid.

Nearly 200 colleges received less than $3 per applicant for financial aid. The University of Wisconsin at Madison got 21 cents.

Similar discrepancies characterize the dispersal Pell grant money. Where Princeton, for example, received $1.42 for every Pell dollar received by one of its students in 2000-01, the City University of New York, "which had the most financial aid applicants in the nation that year," got "4 cents on the dollar." That's quite a discrepancy. "It is the magnitude of the disparities that irks many college officials," writes Winter.

Of particular interest is the article's suggestion that the disparities derive from a kind of cronyism:

As for the origins of the disparities, most veterans of university finance agree that they date back at least to the 1970's, when regional panels of educational experts, not formulas, decided how much colleges would receive. Because each university had to make its own case for the money, those with long histories and a certain financial savoir-faire tended to do particularly well. In fact, the panels were sometimes composed of their peers.
Not surprisingly, "the call for redistribution has put many universities on the defensive." I could be wrong about this, but my guess is that federal funding is pretty much a zero-sum game: the federal government is only going to contribute so much money, so that whatever increase might go to a CUNY would mean a decrease to a Princeton. Things could get ugly. But apparently officials at the University of Phoenix can rest easy:
In fact, few universities seem to know exactly how they would fare under a new system, though the financial aid officers association has a pretty good idea of who would be the big beneficiaries: community colleges and, perhaps most surprisingly, for-profit universities.
Posted by Invisible Adjunct at November 9, 2003 10:37 AM

Some of that discrepancy must be due to to the differential cost of attending a Princeton over a CUNY, surely.

There are, I think, two bigger "social justice" issues here. First is the worth or utility of a degree of any kind for students from poor backgrounds (how much a college degree, wherever awarded, alters "life chances"), and of degrees from different types of institutions (how many more opportunities open up through an ivy league, vs a minor liberal arts college, vs major research state school, vs. minor state school, vs community college).

The second and quite different issue is how the vast gap between private and state school fees can be justified, and why the quality of education received depends so much on ability to pay (with a few exceptions in the competitive state schools). Although financial aid programs at the most prestigious (and other) private universities enable students below a very low income threshold to enjoy an education they could not otherwise afford, there are many above that threshold who also cannot afford those costs and must choose between ridiculous debts or state schools. Thus, private colleges and most of the prestigious universities (minus your Berkeleys & UNCs) remain highly elitist, their educational benefits, social networks, and "status" largely restricted to the middle, upper-middle, and wealthy classes.

I suspect you're right, IA, that federal aid is a zero-sum game. There is simply not enough federal aid to close the gap and make private tuition affordable to that large group between the poorest families and those sufficiently comfortable to pay for private colleges. I can't help thinking that the debate on "redistribution" of federal aid is misplaced, and that it's a different kind of redistribution we need. I'm not just dreaming: although other so-called developed countries are also facing problems in their higher education systems, many have still been much more successful than the US at removing cost barriers for low-income and working-class students.

Posted by: reba at November 9, 2003 06:20 PM

While I've elsewhere decried the valuation of education in solely economic terms, I'll point out by way of response to Reba that, according to Dennis Gilbert in The American Class System, "a college degree is worth roughly $11,000 more in annual earnings than a high school diploma" (173). Furthermore, to confirm points already made, Gilbert also cites a wealth of sociological research to point out that there's "an enormous gap in the college participation rates of young adults from high- and low-income families" (175).

Thanks for posting this, IA. I think it's an important discussion.

Posted by: Mike at November 9, 2003 06:46 PM

You learn something every day. I read that article with great interest this morning. I knew something about this disparity, but I assumed it had something marginally rational to do with the cost of subsidizing low-income students at highly selective and expensive private universities. I had no idea this was largely the result of a locked-in peer-determined formula from the 1970s. There's no rational justification for it.

Posted by: Timothy Burke at November 9, 2003 08:40 PM

There's a reply to the NYT article here, which is (to put it mildly) rather unhappy with it. (Scroll down to the November 8 entry.)

Posted by: Anon at November 11, 2003 12:45 AM

It's a fairly safe assumption that a University like Princeton has the resources to afford WAAAYYY better lobbyists than CUNY regarding the distribution of Federal dough...

This is an aspect of the debate that shouldn't be forgotten, especially regarding the allocation of Federal resources, which are always, always determined in relation to political calculations and bias. The University I'm the most familiar with pays lobbyists to represent it's interests at both the State capital and in D.C., and the range of policy areas covered isn't limited to simple 'education'. A large public University is difficult to distinguish in operation from a public corporation (which most are), and it's naive to expect non-political or altruistic considerations to take priority over the bottom line (no mad rush to divest from South Africa).

Posted by: A Crawford at November 12, 2003 04:13 AM