We must get to the top. For nearly two decades, that’s been one of Northeastern University’s main goals – to ascend the infamous U.S. News & World Report college rankings. Actually, that’s been the goal of lots of colleges and universities across the country. But here’s the problem: One of the changes that many colleges have made seemingly to achieve that goal could be costing students in the short-term, and the entire country in the long-term.
First, let’s take the example of Northeastern. It was not all that long ago that Northeastern accepted nearly all of the tens of thousands of students who applied. Many were part-time and evening students. Most lived only a short car ride or subway ride away.
Over the past 20 years, the university in Massachusetts has undergone a remarkable transformation – from urban commuter campus to highly selective national research university.
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In the mid-1990s, Northeastern was struggling, with only about half of its students graduating. The school’s new president, Richard Freeland, charted a fresh course for the institution – to make it a “smaller, better university” that would target higher-achieving students throughout the country. To carry out his vision, he went on a building spree, replacing parking lots with fancy new dormitories, as well as state-of-the art academic, research, and recreational facilities. He sought out top-notch professors. And he opened up the university’s coffers to try to attract, with generous merit scholarships, a more high-achieving student body.
But Northeastern’s generous merit aid policies have left some students out in the cold.
Freeland stepped down in 2006 (he is now the Commissioner of Higher Education for Massachusetts), but the effort he started continues under the leadership of Joseph Aoun. Today, the top 25 percent of students Northeastern admits are automatically considered for a merit scholarship, with awards ranging from $5,000 to $25,000 each for the first year. National Merit finalists receive a $30,000 merit-based award from the institution. And the school provides full-tuition scholarships to 75 high-achieving freshmen.
By the standards that colleges use to judge their performance these days, the efforts of Freeland and Aoun seem to have paid off big time. Northeastern has catapulted up the U.S. News rankings, rising more than 100 spots since 2002. In the 2014 edition, the university broke the top 50 for the first time, making it a top-tier institution in the magazine’s estimation. The average SAT scores of incoming freshmen have risen over 160 points since 2006, to nearly 1,400. And the university now admits only about one out of every three students who apply.
But Northeastern’s generous merit aid policies have left some students out in the cold. Pell Grant recipients today make up only 14 percent of the university’s student body, and the school’s lowest-income students paid an average net price of $18,542 in 2011-12.
Unfortunately, the way that Northeastern spends its institutional aid dollars is becoming increasingly common at four-year colleges across the country. Low-income students are paying a high price for these policies.
This week, I released a report that analyzes U.S. Department of Education data and finds that hundreds of colleges expect the neediest students to pay an amount that equals half or more of their families’ yearly earnings to cover the full cost of attending these schools. This report is the follow-up to a paper New America released last year. The news is that things are getting worse.
The financial hurdles, the analysis finds, continue to be highest in the private nonprofit college sector, where only a few dozen mostly exclusive colleges meet the financial need of the low-income students they enroll.
Many private colleges have small endowments, making it extremely difficult for them to provide adequate support to those students with the greatest need. Indeed, it is often the poorest schools that enroll the largest proportion of federal Pell Grant recipients and charge these students high net prices because of their own limited resources. At the same time, many of these institutions provide deep discounts to wealthier students because they seem to believe it is necessary for the schools’ survival.
The bottom line: too many four-year colleges, both public and private, are failing to help the government achieve its college-access mission.
While the problem is not as extreme among public colleges and universities, it is rapidly escalating. As more states cut funding for their higher education systems, public colleges are increasingly adopting the enrollment management tactics of their private-college counterparts – to the detriment of low-income and working-class students alike. In fact, nearly two of every five public four-year colleges now leave the most financially needy students on the hook for more than $10,000 per year.
How did we get here? Fifty years ago, the federal government committed itself to removing the financial barriers that prevent low-income students from enrolling in and completing college. Policymakers have sought to achieve this goal primarily through the Pell Grant program, which spent about $32 billion in the 2013 fiscal year to help about 9 million financially needy students pay for college.
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For years, colleges complemented the government’s efforts by using their financial aid resources to open their doors to the neediest students. But those days appear to be in the past. Over the past several decades, a powerful enrollment management industry has emerged to ostensibly show colleges how they can use their institutional aid dollars strategically in order to increase both their prestige and revenue.
Worse yet, there is compelling evidence to suggest that many schools are using Pell Grants to supplant institutional aid they would have otherwise provided to financially needy students, and then shifting these funds to help recruit wealthier students. This is one reason why even after historic increases in Pell Grant funding, low-income students continue to take on heavier debt loads than ever before. They are not receiving the full benefits intended.
The bottom line: too many four-year colleges, both public and private, are failing to help the government achieve its college-access mission. They are, whether it’s intentional or not, adding hurdles that could hamper the educational progress of needy students, or leave them with mountains of debt after they graduate.
As Congress begins work on reauthorizing the Higher Education Act, policymakers must take notice of how colleges are spending their institutional aid dollars. We need federal action to ensure that colleges continue to provide a gateway to opportunity, rather than perpetuating inequality by limiting college access to only those who are rich enough to afford it.
Read Stephen Burd’s full report here.
