College financial aid is based on what the customer can pay -- not financial need or academic excellence, writes Kevin Carey in Slate. It's a "sham."
He tells the tale of two cousins with similar high school records: "Ethan," with parents earning more than $200,000 a year was offered more financial aid than "Ashley," who was raised by a low-earning single mother.
. . . In December, Ursinus had offered Ethan a “Gateway Scholarship” of $35,000 to offset the college’s listed price of more than $72,000 for tuition, room, and board. Now it had added a “Grizzly Grant” (Ursinus’ mascot is a bear) of $3,500 to the mix.
. . . Penn State, a public land-grant university that allegedly has a mission to provide broad access to college, had recently sent (Ashley) a financial aid letter. Like Michael Corleone in The Godfather Part II, their offer was this: nothing. Tuition, room, and board would be $49,200 — almost $16,000 more than private Ursinus College wanted to charge her wealthier cousin.
A few very wealthy institutions provide excellent financial aid, writes Carey. Harvard would be free for Ashley. But very few low-income students get in.
In some states, such as North Carolina, public universities are affordable, he writes. Other states, such as New York, provide grants based on financial need and academic achievement.
But in many parts of the country, students from lower-income families have to go into debt to attend even a state university, and will get little help from non-elite private colleges.
. . . When one college after another sent Ethan a letter offering him tens of thousands of dollars in scholarship money, in most cases it probably had nothing to do with their evaluation of Ethan’s achievements. It was more likely because market research told them that students like the feeling of being awarded something, and the enrollment management algorithm suggested that full tuition minus $25,000 or $30,000 was a price his parents might be willing to pay.
When colleges find their enrollment numbers lagging, they act like a car dealer with too many of last year’s models on the lot, and put tuition on sale. Like most colleges, Ursinus’ $72,000 list price is an imaginary number; on average, it charges students only about one-third of that. It is not providing Gateway Scholarships and Grizzly Grants from a pot of actual money. It’s just pretending to, because that’s what students and parents like to hear.
Colleges see well-off, college-educated parents as savvy consumers of higher education, writes Carey. They're "able to drive a hard bargain, whereas lower-income, less-educated parents feel an enormous obligation to help their children move farther up the socioeconomic ladder and blindly trust that colleges have their best financial interests at heart."
“Wealthy families are more able and less willing to pay for college while the poorer families are more willing and less able,” wrote Richard DiFeliciantonio, a former Ursinus vice president for enrollment in Inside Higher Ed.
So colleges soak the poor -- or try to.
New York University offered Ashley admission, delayed until spring 2023, if she was willing to pay $79,070 a year, Carey writes. "Their aid offer? $0, take it or leave it, with 96 hours to respond."
NYU offered Ashley a $5,500 loan, the federal maximum, and a $1,500 work-study job. "Her mother was offered a $72,099 Parent PLUS loan — more than her gross annual salary, before taxes — for the first of four undergraduate years," he writes.
They chose a much cheaper public university instead of massive debt. "But as the countless individual stories that compose the nation’s $1.7 trillion student loan crisis show, many families make different choices," writes Carey. "They are drawn in by a combination of optimism, blind faith, and familial obligation, and end up with debts they cannot repay. Colleges know this will happen."