How to make good colleges want low-income students

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America has a college access problem. Selective private colleges and public flagship universities mostly want rich students.

How do we know? In 2017, we collected data on recruiting visits by 15 public flagship universities and 25 selective private colleges to high schools across the country. Private colleges concentrated on affluent, predominantly white high schools, with an emphasis on private schools. Surprisingly, 12 of the 15 public universities visited more out-of-state high schools than those within their own borders. And those visits also concentrated on affluent, predominantly white high schools, with an emphasis on private schools.

Why do these colleges primarily target rich students and overlook lower-income students? Because rich students pay the bills.

But there’s a policy fix on the horizon: The Pell Grant Preservation and Expansion Act, introduced in Congress last month, proposes to double the federal Pell Grant. Pell helps over 7 million low-income students pay for college each year, but has failed to keep pace with skyrocketing college costs. Momentum to double Pell has been mounting for months. The primary argument is that it will make college more affordable for low-income students. That’s true, but it’s only half the case for why we should double Pell.

The other half, which nobody is talking about, is that doubling Pell will finally make good colleges want to enroll poorer students.

Right now, even the highest Pell award doesn’t stretch very far for the lowest-income students — the maximum grant covers the average cost of tuition and fees at public four-year colleges in just three states. That means that many colleges must offer substantial need-based institutional aid to help Pell recipients afford the cost of attendance. If each Pell student represents a financial loss, universities have an incentive to enroll fewer of them — not more.

By doubling the maximum grant, Pell funding would fully cover in-state tuition and fees for grantees in 39 states, and 90 percent or more of those charges for recipients in six other states. Rather than shaming public universities into enrolling more low-income students, doubling Pell will instead make it so that low-income students contribute to the university budget like high-income students do. In other words, doubling Pell will make growing low-income enrollment a sensible business strategy.

We know this can work because we’ve seen it play out before in a different sector. In the 1990s and 2000s, as the federal student loan program ballooned, low-income students’ eligibility for both Pell Grants and loans made them financially attractive to for-profit colleges, which saw an easy way to tap into a growing pool of government funds. At its height in 2010, the sector accounted for about 14 percent of total full-time equivalent students, but nearly a quarter of federal grants and loans.

Meanwhile, public flagship universities — grappling with decades of eroding state appropriations — did not experience a similar incentive to grow low-income enrollment. Instead, they substituted for state budget cuts by enrolling more out-of-state students, who pay two to three times the price of in-state tuition. From 2006 to 2016, the share of out-of-state freshmen at public research universities increased from 18 percent to 27 percent, and flagships in states with lower state funding often enroll more out-of-state than in-state students.

Faced with the same incentives, why didn’t public institutions respond like for-profits? In part, because public universities spend more on educating each student, which means they require a larger investment in federal aid to induce a similar enrollment response. When the Obama administration massively expanded funding for Pell, public universities did substantially increase their Pell enrollment — and as Pell funding has since declined to nearly pre-Obama levels, Pell enrollment has likewise declined. These trends suggest that like for-profits, public universities are sensitive to Pell’s generosity — but it takes a bigger shift to move the needle.

That bigger shift will come from doubling Pell. Once colleges see they can enroll more low-income students and pay the bills, they will start to solve the college access problem themselves.

Ozan Jaquette is associate professor of higher education at UCLA.

Michelle Dimino is senior education policy advisor at Third Way.

Tags College Education Higher education Michelle Dimino Ozan Jaquette Pell Grant Scholarship University

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