KARL MARX and Robin Hood may have fought against it, but the natural tendency in our world is for the gap between rich and poor to grow with time. The classic American solution to this dilemma, of course, is not to penalize the rich, but to ensure that equal opportunity for advancement remains for the poor. This ideal is threatened by a growing trend: the rapidly growing cost of college education.
According to the College Board, last year alone the average private and public college costs increased at real rates of three percent and 4.2 percent, respectively. While financial aid has been increasing too, often it fails to reach the students who need it the most. The money is out there, but the system needs to be reformed if that money can be distributed to low-income students.
The importance of a college education to a person's future is undeniably greater than at any other time in American history. Unfortunately, over the last two decades the greatest increase in financial aid has been for those who need it the least. From 1990 to 2004, according to the Chronicle of Higher Education, the average financial aid to a student from the poorest quartile of the population, families with income below $34,000, rose by $3,328, about a 55 percent increase. During that same period, however, aid to the richest quartile of the population -- which includes families that make over $95,000 in 2004 -- rose by $4,555, a nearly threefold increase.
Giving aid to students who can afford college is worse than just wasting themoney. There is a limited amount of financial aid dollars, and low income students need them more than ever. The aforementioned Chronicle article found that, from 1990 to 2004, the average unmet financial need for bottom quartile students grew to $5,527, an 80 percent increase. For these students, a few thousand dollars in financial aid can make the difference between attending college and not. As it is, by age 24 only 10 percent of Americans from the bottom quartile have received a bachelor's degree, compared to 71 percent from the top. There are two solutions to help low-income students complete college.
First, wealthy universities simply need to increase need-based aid to low-income students. Our own Access UVa program is a good model for this. It covers all financial need with grants for students within 200 percent of the federal poverty level, which about corresponds to the bottom quartile of income. According to Yvonne Hubbard, head of Student Financial Services, this plan has already had significant results. The proportion of low-income students in the class of 2009 is 187 percent higher than that of 2008. This figure is somewhat exaggerated by the raise of the ceiling for "low-income," which used to stop at 150 percent of the poverty level, but still reflect a real rise in applications from low income students. While official statistics for next year's class have not been released, Hubbard said that trend continued this year, and expects that "socio-economically, four years from now we'll see a very different student body."
While there is nothing revolutionary about a plan like Access UVa, it does go against a current movement among public universities. This is the trend of switching to merit-based aid, which results in schools shelling out money for smart students and tends to favor middle and higher income students. Public schools ought to cease these bidding wars and spend their money assisting the students who actually need it.
Universities also ought to stop playing number games with students, and lower both tuition and discount rates. The discount rate is the percentage of tuition revenue that is given back out as financial aid. It is common for universities that charge high tuition rates, to have a much lower average actual tuition when financial aid is included. For example, a private college may state that their tuition is $14,000, but have a discount rate of 60 percent. This may be confusing to readers, and that's exactly the problem with discount rates. Colleges will explain discount rates as a way to reduce the financial burden of tuition, but in fact they are simply attempts to make students think they are getting a good deal. They have the practical, if not the intended, effect of scaring away lower-income students with exaggerated tuition numbers. If tuition was lowered across the board, middle-income students wouldn't need financial aid, and this money could instead be given to lower-income students.
Rising college tuition is a complicated problem, but there are simple ways to address it. Universities ought to implement plans like Access UVa to make college affordable for lower income students. Additionally, tuition figures need to be simplified. Steps like these can move our country closer to the ideal of equal opportunity for all.
Stephen Parsley's column appears Wednesdays in the Cavalier Daily. He can be reached at sparsely@cavalierdaily.com.
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