Why colleges use financial aid to attract wealthier students

Colleges continue to use financial aid to recruit wealthier students, rather than to support low-income students.

Attracting wealthy students, who can pay more, is often in colleges’ best interest. In some cases, Burd writes, colleges provide merit aid to wealthy students who aren’t high achieving. It’s cheaper to provide $5,000 merit scholarships to five wealthier students than to provide one $25,000 grant to a low-income student — even if the low-income student is academically superior — because the five wealthier students will be able to pay the rest of their tuition.

Temple U offers grant in exchange for students agreeing to work less, study more

More on financial aid, the working student, the lack of clarity about how many students struggle to pay for college while working low-wage jobs.

 

Temple pays students in additional financial aid to reduce their need to work so much that they delay graduation

“There was some pushback,” he said. “This was thought of as, ‘You’re paying kids not to work.’ And I had to be very clear. We’re not paying them to go home and play video games. We’re paying them to free them up from this need to earn money, so they can reallocate that time to course work and to staying on track to graduate.”

via Temple U offers grant in exchange for students agreeing to work less, study more.

Financial Aid That May Not Help

So many exhausted students have sat across from me in my office, unable to cut back on work hours, unable to drop classes because they’d fall below the minimum they need for their financial aid package, and most persevere. But we cannot equate pressure with support.

New policies encourage students to take 15 credits to speed time toward degree.

“Research clearly indicates that giving them more grant aid will help them complete degrees at higher rates. The money is necessary,” she wrote. “But what will happen if it comes at an additional price associated with being pushed to take more credits than they otherwise would have? Is this positive motivation, or a punitive approach driven by political requirements to ration financial aid?”

via Fifteen-to-Finish campaign wins fans, stokes worries.

 

New Report on Financial Aid

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A new report on financial aid  by the New America Foundation,  Education Trust, and Young Invincibles (and commissioned by the Bill and Melinda Gates Foundation) calls for  “bold” federal action to ensure that college is affordable for all families.

Now, instead:

[O]ur aid system places a disproportionately large burden on families at the bottom of the income scale. Families in the lowest income quintile are asked to come up with an amount equal to 80 percent of their annual income to pay the net price (i.e., price after all grant and scholarship aid) for one year of education at a public, four-year college or university … . That’s more than five times the percentage of income high-wealth families are asked to contribute for higher education — hardly, an equitable share of the cost burden.10 The result? Rather than operating as engines of opportunity and social mobility, all too often higher education is calcifying existing inequities, shifting back toward the extreme stratification that mainly serves the elite. (emphasis added)

I understand that all of this is a complicated outcome of steeply declining state spending in a time in which many argue for a smaller federal role in education.

But I object to framing the most basic steps to make access to college equitable as “bold”.

It’s the morally right thing to do.

Starbucks, College Access, and an Unquestioning Media

I live near the original Starbucks and often have to walk through the crowds of people taking selfies, standing in long lines for the same coffee drinks they can get anywhere, and taking endless photos of one another.   I’m often asked for directions to this Starbucks as I’m walking nearby.   The accents and languages suggest that people make this pilgrimage from all over the world.

They spend precious time of their vacation to come there, even while there are several others Starbucks — and, more importantly, several other excellent local coffee shops — within a few blocks.

There’s just a mystique about Starbucks.

And that may explain why so much of the media simply reported the carefully orchestrated press release about Starbucks’ subsidizing college tuition for its employees rather than actually reporting.  The story was everywhere on Monday — in print, on TV and radio, and even on The Daily Show, in which  even Jon Stewart claims that though it’s out of character, he can’t “hate” Howard Schultz’s announcement that Starbucks will be “the first U.S. company to provide free college tuition for all employees”.  Schultz talks at length about Starbucks as a company and explains that “we can’t want for Washington” to solve the problem of college indebtedness.   Schultz goes on to argue that private businesses have to step in when government does not.

Yet it turns out that the Plan depends more on Washington than on Starbucks’ bottom line, as was clear by midweek.   Just a sample of the pushback that began showing up on social media:

The Chronicle of Higher Education reported that the deal was actually highly subsidized by the for-profit on-line sector of Arizona State, that students would likely be getting federal Pell grants and subsidized loans,  and Starbucks would actually be shelling out  relatively little.

Tressie McMillan Cottom placed this deal in the broader context of for-profits targeting education for lower-income workers whose education will be subsidized from public coffers. She writes:

My read of that is Starbucks gets to minimize its contribution to tuition assistance by funneling aspirational student-workers into the student aid system and ASU gets to extract profit from student aid on a sliding scale where lower income students are the most profitable human widgets.

The New York Times simply reported that critics were pointing to drawbacks of the “scholarship” program.

Matt Reed at Inside Higher Ed noted that college might well be less expensive if Starbucks employees just went to their local community college for their first two years and then transferred to a four year school.

The Pell Grant program that would in fact pay much of the costs of attending the profit-generating ASU program is already on precarious footing.

Starbucks, meanwhile, joins other huge corporations in seeking tax breaks.

But no one was reporting any of this at first on Monday.

Everyone in the media instead seemed to be lining up and smiling within Starbucks’ orbit, just like all those tourists down the street.