Is your college truly meeting the financial needs of low-income students?
Is the financial support your institution provides truly equitable for all students? Strategies such as tuition freezes and scholarships might appear transformational, but students from socioeconomically disadvantaged families likely need more assistance in getting to completion and leaving school without a pool of debt.
A new study out of Portland State University proposes that the liabilities those borrowers incur and must pay back after graduation create disparities that never truly put them on par with higher-income students. Despite attaining similar outcomes in postsecondary education, they often struggle to build wealth while their privileged counterparts more easily overcome financial hurdles and build status.
One of the core elements of the research done by Portland State sociology fellow Byeongdon Oh is the issue of universal student debt forgiveness. Several Senators, including Elizabeth Warren and Bernie Sanders, a year ago proposed a one-time elimination of $50,000 in loan debt, but that would only be a Band-Aid to a spiraling problem, Oh said.
“Even though we may have one-time student loan forgiveness, new generations will still go to college and, considering rising college tuition, they’ll have to borrow more than previous generations and the inequalities will be reproduced over and over again,” Oh says. “The fundamental solution would be to provide more accessible financial aid for college students from lower-income families.”
Utilizing data from the National Survey of College Graduates, Oh points out that students whose parents or guardians are lower-income or without degrees often struggle with “long-lasting negative impacts during adulthood.” Many are often called on to help out with support, so even those who might have similar incomes and positions after graduation, have more burdens. Some may default on payments, especially during times of crisis such as the COVID-19 pandemic. So the theory that a college degree is a great equalizer, he says, is not always true because of embedded lower socioeconomic status (SES) of families.
Not insignificant to the discussion is that higher education has lost one million students over two years and there have been increased questions of the value of college degrees compared with non-traditional options. Though four-year degree holders might earn more than $1 million more in a lifetime than those without degrees, debt early on can mean the difference in true wealth building, the ability to afford housing and pay for childcare.
What affects change for low-income students, Oh says, is colleges that can provide more annual financial aid and offer programs that can cover both tuition and fees. Portland State has an initiative called Four Years Free that effectively eliminates the portion owed by students after financial aid. Texas State University also covers tuition and fees for those who meet income and other requirements. However, even some “free tuition” offers come with caveats, such as the Excelsior program at the State University of New York system, which doesn’t cover room and board, for example, and that can add up to nearly $50,000 in four years.
Amrit Ahluwalia, Director of Strategic Insights at learner engagement platform Modern Campus, noted in a recent column in University Business that institutions not only have a role to play in terms of helping meet financial need for students but also in helping them assess the costs and value of the career paths they are choosing. He says colleges and universities should be outlining respective fields in detail, with market analysis and outcomes, on their websites so students can more effectively assess paths and their value. The other benefit is that by making costs and aid transparent, families can better compare future outcomes against those non-traditional options.