Elite Colleges Face Incentives Not To Enroll Low-Income Students

PHOTO: U.S. President Barack Obama (L) greets college student Troy Simon while first lady Michelle Obama (R) stands nearby during an event on college opportunities in the Eisenhower Executive Office building, on January 16, 2014 in Washington, DC.

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Amherst College is one of the oldest, most selective, and most prestigious liberal-arts colleges in the country. It has also made a huge commitment to recruiting talented students from all backgrounds, regardless of their ability to pay tuition. Today, nonwhite students outnumber white students on Amherst's central Massachusetts campus, and 23 percent of students qualify for federal Pell Grants.

President Obama wants more selective colleges to act like Amherst. "We want to restore the essential promise of opportunity and upward mobility that's at the heart of America," he told college presidents, nonprofit leaders and philanthropists at the White House last week. A college degree is the surest path to a middle-class life, he said.

Yet elite colleges face powerful incentives to enroll disproportionate numbers of wealthy students. Low-income students cost institutions money, rather than bringing in revenue; they don't tend to boost a college's ranking; and they can lack the resumes some admission offices look for.

Today, two-thirds of students at the nation's 193 most selective colleges come from the top income quartile and just 6 percent from the bottom quartile, according to the College Board. The White House has been taken with research that shows many high-achieving, low-income students are not heading to elite schools. Between 2008 and 2011, at least half of low-income students with high SAT scores didn't apply to a single selective institution that matched their ability, according to the College Board. Such students often head to nonselective community colleges and four-year schools, from which they're less likely to graduate.

Increasing access to top colleges isn't just a question of encouraging more students to apply, said Catharine Bond Hill, president of Vassar College. "Right now in the United States, there are not all that many schools that are need-blind and committed to meeting full need. So many schools are already rejecting talented low-income students because they can't make the commitment and don't want to make the commitment to pay the financial aid," she said.

Making a commitment to a financial-aid student not only requires committing a greater proportion of endowment dollars to grants; it also means forgoing the revenue that a full-paying student would bring in. Vassar reinstated need-blind admissions in 2007. After the financial crisis diminished colleges' financial assets, it became more difficult for many colleges to make that kind of commitment, Hill said.

Amherst's experience shows that recruiting students from all walks of life is, in and of itself, expensive. To meet its diversity commitments, Amherst has expanded its admissions staff, introduced a scholarship fund for veterans, set money aside to support community-college transfers, and essentially given the admissions office an unlimited budget to fly in prospective low-income students for campus visits.

With an endowment of more than $1.6 billion, Amherst can afford these investments. Yet it still has to make hard decisions: postponing a facilities upgrade, say, in order to maintain financial aid and recruitment programs. About 60 percent of Amherst students receive grants-only financial aid packages. For those who don't qualify for aid, a year at Amherst currently costs about $64,000 in tuition, room and board, fees and expenses.

Independent college rankings also don't reward colleges for socioeconomic diversity. "What I will say, really frankly, is U.S. News is the enemy of diversity," said Thomas Parker, dean of admission and financial aid at Amherst College. Institutions can easily manipulate factors like share of accepted students who enroll and average SAT score, often at the expense of low income applicants.

One way to boost key U.S. News and World Report metrics is to recruit students through early-decision programs, which bind students to attending. "If you look at the early-decision program—that's really a program for affluent kids. That's not a program for first-generation, low-income kids," Parker said. First-generation students may have no idea that college applications can be due as early as October of their senior year.

Making competitive colleges accessible to a wider swath of low-income students will mean addressing inequality throughout the educational system. Affluent students tend to get better K-12 preparation, build a more dazzling list of extracurricular accomplishments, and score higher on the SAT than their less wealthy peers-- a fact that can say more about a family's ability to afford test prep than a student's innate ability, Parker said. Both public and private colleges alike have been shifting financial aid money toward more affluent students, in a bid to both raise revenue and move up the rankings, the New America Foundation's Stephen Burd has documented.

"The toughest thing is to figure out what public policies would help encourage institutions—to face incentives to make decisions that would help us address this issue," Hill said. The federal government could tweak tax treatment of colleges. It might help if states changed their higher-education funding formulas to reward institutions for graduating low-income students.

The Obama administration is working on a college rating system that would score schools on a variety of criteria, including keeping tuition affordable and enrolling low-income students. The idea is to ask Congress to direct more financial-aid support toward institutions with high scores. Hill said she wasn't sure how much the proposed ratings would achieve. Obama could just call up U.S. News and ask it to change its ratings to reward diversity, she suggested.

The greatest push for change might come not from a White House request, but from college applicants themselves. "Smart kids want to be in a diverse environment," Parker said. They know American society is becoming more diverse. They want class discussions enlivened by different points of view.

Institutions that don't acknowledge that shift might find it hard to keep attracting the best and the brightest.

Republished with permission from National Journal, whose Next America project explores the political, economic and social impacts of profound racial and cultural change facing our nation.

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