Middle income students miss family funds, school aid options

For the typical college student, post-graduate salary means a lot of things: success, status, livelihood. But family income pre-enrollment could mean just as much for a student’s future.

Despite increased financial aid efforts at many universities — UNC included — students from affluent backgrounds continue to attend college in higher numbers than students from moderate- and low-income backgrounds and graduate in higher rates.

In 2015, 30.7 percent of incoming first-years at all public universities estimated their parents earned $150,000 or more a year, according to survey data from the Higher Education Research Institute. At UNC, that number was 38.2 percent in 2014, the most recent year for which the data is available.

Melissa Lewis, a researcher for the Office of Institutional Research and Assessment, said the Cooperative Institutional Research Program survey provides the most comprehensive data on family income, although it is not the most scientifically accurate because participants self-report.

But she maintained that her office still relies on CIRP data for insights into the economic backgrounds of the student body as a whole because families who are not applying for financial aid have no obligation to report financial information.

The 2015 survey shows 15.4 percent of incoming first-years to public universities estimated their parents earn less than $40,000 a year. At UNC, in 2014, that same income bracket represented 11 percent of incoming first-years.

“Generally, the more selective and elite institution, the more it’s skewed toward higher income students,” said Donald Heller, provost at the University of San Francisco and a national expert on financial aid.

UNC is ranked among public universities with “high selectivity” by the HERI for the purposes of categorizing CIRP data. In comparison to other public universities with “high selectivity,” the income distribution of UNC’s incoming first-years is closer to the norm.

That might not be expected, since UNC’s Carolina Covenant Scholars Program is praised as one of the best financial aid programs for low-income students.

The Carolina Covenant program was the first of its kind at a public university and guarantees a debt-free education to students whose families earn less than 200 percent of federal poverty guidelines — for a family of three, that would mean an annual income of $40,180 or less.

“Carolina was the only way that I was going to go to school, feasibly,” said Alysa Delgado, a senior Covenant scholar.

Delgado’s parents, divorced and both self-employed, were not able to contribute anything to her education.

“I got offered money from a lot of places, but none of them were a complete full-ride — you had to take out loans,” Delgado said.

The decision for a low-income student to attend college, even with financial support, can be complicated, particularly when the institution can’t guarantee a loan-free four years, said Sandy Baum, a higher education researcher.

“For low-income students, it’s true that they get more aid, but it doesn’t make them better off than middle-income students,” Baum said.

Baum said psychological and lifestyle factors play into a low-income student’s decision to accept financial aid. The assumption of debt that affluent families are more familiar with — like taking out a mortgage or business loan — can act as a barrier for lower-income families facing student loans.

When asked on financial aid applications how much the family is willing to contribute to the educational costs, low-income families typically offer to contribute more than middle-income families, Baum said. Part of the reason, she said, is that even a little financial support can motivate a low-income family to pay the remainder.

“Some schools find that if they give people just like $2,000, it makes a big difference,” she said. “If they don’t get any aid, they feel sort of disappointed and abandoned.”

Baum said many institutions fall into a pattern of disproportionately aiding low-income students and ignoring middle-income students. As a result, private and flagship public institutions often report a lack of middle-income students.

“There is a perception out there that it’s the middle-class students who have been harmed by financial aid policies and rising tuition, and to some extent that’s true,” Heller said. “But many of them do get support from their institutions, either merit aid or sometimes even need-based aid.”

If anything, Heller said, middle-income students lag behind in degree completion rather than initial college entry.

“They borrow for their first or their second year, and they figure ‘OK, I’ll borrow and I can do this,’” he said. “But after a couple years of borrowing, they look and see how much loan debt they have, and then they say, ‘Oh I don’t know if I can do this for two or three more years.’”

Heller said there are constant discussions in the financial aid world about how to reform the financial aid system to better serve middle- and low-income students. The alternative to doing so, he said, is the continuation of a national income gap.

“Education is the key to being able to make more money and making money will allow them to close the gap with wealthier people,” he said.

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