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Education Dive
To attract middle-income students, colleges add scholarships and tuition discounts
Institutions are increasing aid for students who don't qualify for
traditional need-based assistance but borrow at rates similar to their
low-income peers.
Natalie Schwartz
Nov. 5, 2019
Skyrocketing tuition prices are forcing middle-income students and
their families to make a tough choice: shell out more of their earnings
to pay for the cost of attendance, take out loans or forgo attending a
four-year college altogether.
More students are picking one of the latter two options. Middle-income
students borrow money for college at a rate similar to that of
low-income students (39% and 38%, respectively, for undergraduates),
according to the Pew Research Center. And their share of the
undergraduate student body has decreased at both private and public
universities during the last two decades.
The University of California, Los Angeles (UCLA) has a solution. Last
month, the elite public college announced it landed a $10 million gift
to help students from middle-income families afford to attend.
Half of the donation, which was given by film producer Steve Tisch,
will support 24 scholarships of about $10,000 each annually for
students with demonstrated need over the next five years. Recipients
are expected to have family incomes between $60,000 and $120,000, a
university spokesperson said.
The remaining money will be used to set up an endowed fund to continue the awards indefinitely.
With the new program, UCLA becomes one of the latest universities to
either offer new scholarships or slash tuition specifically for
middle-income students.
Colleges with such programs define middle-income in different ways,
with some including students with family incomes as high as $200,000.
But many share the goal of supporting students who don't qualify for
the Pell Grant but struggle to afford their expected family
contribution.
A college education has become more out of reach for middle-income
families, especially in some states and at certain institution types.
For example, families earning between $48,001 and $75,000 would be
expected to pay 31% of their income to enroll a full-time student at a
public research university in Alabama, according to a 2016 report from
the University of Pennsylvania's Institute for Research on Higher
Education. For a private nonprofit college in Rhode Island, that
expected contribution could be 45% of the family's income.
As enrollment continues to decline and public support for higher
education wavers, some institutions are offering more financial support
to attract and retain this critical demographic, who may be put off by
high sticker prices.
"(What) some of these programs really do is they basically make clear
what the colleges were more or less already doing," said Robert
Kelchen, a higher education professor at Seton Hall University. "The
price tags for some of these programs end up being pretty low."
Several universities have added benefits for middle-income students in the past year.
Last November, for example, Liberty University announced it was
freezing its costs for tuition and room and board for the first time in
a decade, and it rolled out a new scholarship for students whose
families earn between $35,000 and $95,000 per year.
Around the same time, the University of Virginia said it would waive
tuition for in-state students whose families earned less than $80,000
annually, while Stanford University dropped home equity from its
financial aid calculations in recognition that home values have risen
faster than median incomes.
Such policies are meant to assure middle-income students that they can
afford to attend. Their share of enrollment has declined at both
selective institutions and flagship universities during the last two
decades, while high-income students' share has increased slightly,
according to a July 2018 report from the American Enterprise Institute,
a right-leaning think thank.
Although these policies are touted as new, in some cases they may not
be much of a financial stretch for colleges, higher education experts
said.
For schools that already offer aid packages to middle-income students,
it can be "a smart PR strategy" to create a program that guarantees
those benefits to all qualifying students, Colleen Campbell, director
for postsecondary education at the Center for American Progress, a
left-leaning think tank, told Education Dive in an interview.
Such programs can also be used as a fundraising tool, Kelchen said.
"Donors like giving to particular projects, and financial aid for
middle-income students is pretty popular."
Colleges that are expanding scholarships or discounting tuition for
middle-income students, such as UCLA, usually can make up the cost by
raising money or by being more selective about who they admit, Campbell
said.
Not all colleges can afford to do that, however. Open-access
institutions may lack the means to offer these types of benefits.
Increased state and federal funding could provide low- and
middle-income students with more aid, however, Campbell noted.
Cracking open the 'black box'
At the University of North Carolina at Chapel Hill, a $5 million
donation set up its new Blue Sky Scholars program, which is designed to
financially assist students who qualify for financial aid but not for
the institution's program for low-income students. The Blue Sky program
includes $2,500 yearly in work-study employment and a one-time grant of
$2,500 to help students afford experiences such as internships and
study abroad.
"This is sending and will send a signal to middle-income North
Carolinians that their university is on their side, and we're here to
help them," Stephen Farmer, the university's vice provost for
enrollment and undergraduate admissions, told Education Dive in an
interview.
The program's first cohort has 20 students — a number officials hope to
increase to 100 during the next five years, with the help of more
donations.
So far, donors have been receptive to the program's goals, Farmer said.
"Others who've been attracted to the fund really have a heart for the
low-income students here as well, but they wanted to make sure that we
weren't leaving anyone else out."
Other college leaders have seen interest in their institutions surge
among prospective students after rolling out new benefits for
middle-income students. For example, Rice University — which has posted
tuition and fees of about $49,000 — saw a 29% year-over-year increase
in applications after it offered free tuition to families earning up to
$130,000 and scholarships covering at least half of tuition to students
whose families earn up to $200,000.
The private institution spent an additional $7 million on need-based
aid for undergraduates this year to cover the cost of the program,
called the Rice Investment, and it is planning to create an endowed
fund to pay for the program going forward.
The program helps bring clarity to what students and their families can
expect to pay, Yvonne Romero da Silva, the university's vice president
for enrollment, told Education Dive in an interview.
"For many institutions, financial aid was a black box," she said. "You
had to first apply for admission and then wait to find out if you're
admitted — and only if admitted and all your forms were complete did
you find out what your financial aid package was. That's a lot of
unknown for families."
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