Who Really Gets the Most College Financial Aid?

One of the complaints I hear most often, and which I see posted most frequently on Web stories about financial aid, is a version of this: "If you're poor, you get all the free money you could possibly want. If you're rich, you already have all the money you need or want. But if you're in that nice medium called middle class you get screwed right out of your socks," which was posted last year at USNews.com by "College studen" (sic) of Texas. (I'm assuming CS simply mistyped and knows how to spell the word student.)

Is there any evidence supporting this?

A soon-to-be-published book by a Princeton sociologist found that low-income minority students (mainly African-Americans and Hispanics) who have good grades and test scores appear to have an edge over whites and Asians with similar grades and test scores (but not necessarily other factors such as extracurricular activities or recommendations, which were not considered in this study) at getting into the elite private colleges that tend to give out the most scholarships.

But by U . S . News's count, only 54 of the 5,000-plus American colleges and universities promise to provide enough scholarships to meet all students' financial need. And those colleges give plenty of aid to the far greater numbers of middle- and upper-middle-class students whom they admit. Harvard, for example, charges no more than 10 percent of a family's income for all those who earn $180,000 or less.

A few dozen other schools promise to meet the need of students from low-income families only, typically cutting their generosity off at annual incomes of about $40,000.

The few students who meet these criteria may very well receive better financial aid deals than similar students who aren't lucky enough to win admission or whose families earn slightly more than their school's cutoff. But the numbers of students who get this advantage is surprisingly tiny. Most of the really generous schools are quite small. Princeton University, for example, enrolled just 1,300 freshmen this year. An analysis by Postsecondary Education Opportunity, a think tank based in Oskaloosa, Iowa, found that only about 10 percent of Princeton's students come from low-income families. Using some back-of-the-envelope calculations, I'd estimate that these generous schools take no more than 200,000 or so of the 3 million freshmen who start college each year. But because the majority of those admitted to elite schools tend to be from well-off families, the number of low-income freshmen who get full financial aid probably doesn't exceed 30,000—or 1 percent—of all college freshmen.

For the other 99 percent, the think tank found that it is the poor and working class who particularly get the financial aid shaft.

PEO researcher Tom Mortenson has found that families earning less than $70,000, on average, don't receive the amount of scholarships and grants they need to meet the stingy budget formula the government uses to determine a student's "need."

Mortenson calculated the amount of grants students received and subtracted that from the costs of their colleges. When he compared that number with what the government thought the student could afford, he found some depressing results: The poorer the family, the bigger the gap between their aid and their need.

Take students from families earning about $35,000. The government calculates they typically can afford only about $2,600 a year for college. But considering dorms, books, travel, and tuition, those students' bills come to about $20,000 a year. Mortenson found that the average grant these students received in 2008 was about $7,000. That means those families had to spend about $13,000—almost 40 percent of their 2008 annual incomes—to support one child in college. Even adding in more than $5,000 worth of loans and work-study earnings leaves a gap of more than $5,000 between what they actually had to pay upfront and the aid they received.

Families who earned about $65,000 were expected to contribute almost $10,000 toward the student's cost. But they typically got only $4,600 in grants to cover their $11,600 need. Even if the student worked and borrowed, the family was typically left with a gap of $1,443.

Now look at what happened to students from families earning about $170,000 a year. The government estimates those families can afford to pay, on average, more than $36,000 a year, or about 15 percent of income, toward college. That's more than most in-state public universities, and even some private universities, charge. But some of those students nevertheless win "merit" grants or scholarships, such as Georgia's Hope Scholarship, which covers tuition at in-state public universities for any Georgia student with good grades. In fact, one study found that more than one quarter of students from families in the richest 25 percent got some state merit grants. While good students should be rewarded, no matter how wealthy (or poor) their parents are, the result is that some wealthy students are getting more aid than the government calculates they need.

Have you been able to get enough financial aid to pay for college? Let us know what you think in the comments.

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