Guest Commentary: Don’t Make College Free — Increase Need-Based Aid

Guest Commentary: Don’t Make College Free — Increase Need-Based Aid

Making elite colleges like Harvard tuition-free, writes guest columnist Catharine Hill, would mostly benefit wealthier students. She'd rather see increased grants to students who really need the help. (Joseph Williams/Flickr)

Making elite colleges like Harvard tuition-free, writes guest columnist Catharine Hill, would mostly benefit wealthier students. She’d rather see increased grants to students who really need the help. (Joseph Williams/Flickr)

By Catharine Hill

Increases in college costs and concerns about student debt have led to a variety of proposals for free tuition across American higher education.

Several alumni hoping to be elected to Harvard University’s Board of Overseers are now campaigning on a platform of zero tuition for Harvard students. Other proposals focus on community college tuitions, which are already relatively low compared to other types of colleges and universities. And U.S. Rep. Tom Reed (R-N.Y.) is going after the country’s selective private colleges with large endowments. His draft legislation would require these schools to increase spending from their endowments in an effort to hold down tuition and reduce student debt burdens.

But who will actually benefit from these proposals?

Reducing tuition at the well-endowed schools would primarily benefit students from the top 20 percent of the income distribution, students and their families who can already pay much or all of the tuition. To help lower- and middle-income students and their families, it makes more sense to focus on expanding need-based financial aid, rather than lowering tuition levels.

Starting with data in the Department of Education College Scorecard, we can find net prices at colleges across the country by family income. The net price is the actual amount that families at different income levels are asked to pay, after grants are taken into account.

At the selective colleges and universities with large endowments, the net price differs significantly from the sticker price for families with incomes in all but the top 10 percent of the income distribution, because of financial aid grants that are tied to family income. Families with the lowest incomes are asked to pay the least (in some cases zero), and only the highest-income families pay the full sticker price.

The College Scorecard does not include the shares of students at these top schools by income level, because these data are not reported to the federal government. It does include the share of students that receive Pell Grants. Pell Grant recipients are students with household incomes approximately below the median in the United States, around $54,000.

At the selective privates, at most about 23 percent of students receive Pell Grants, suggesting that at least 77 percent of students at these schools come from the top half of the income distribution. Earlier work of mine on 30 highly selective private nonprofit institutions reported on the distribution of students by income quintile, and suggested that in 2008 almost 70 percent came from the top 20 percent of the income distribution.

A policy to use endowment resources to reduce tuitions to zero would primarily benefit those families in the top 20 percent of the income distribution. Those who would benefit the least would be lower- and middle-income students. Those students are already receiving significant need-based financial aid, so the net price would be lowered by significantly less for them than for higher-income students. And there aren’t as many lower- and middle-income students attending these top schools.

A better strategy would be to allocate greater resources to need-based financial aid, rather than to reducing tuition levels. By increasing need-based financial aid, we could either further reduce the net price facing lower- and middle-income families, increase the share of these students attending schools with large endowments, or both. We could lower the net price even more for low- and middle-income students by substituting additional grants for loans in students’ financial aid packages, also helping to reduce their loan burdens.

All of these are good outcomes for students who most need our help.

Catharine Hill is the president and an economics professor at Vassar College and the former provost of Williams College.

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  • J__o__h__n

    No, keep the prices down for public colleges. Let the market deal with private schools. Tax money should be 100% for public colleges and not to subsidize private schools that can’t control their costs.

    • Jasoturner

      The only problem with this is that private schools like Harvard and Yale would then become exclusive incubators for the ruling class. The graduates I know from schools like Harvard have unbelievable access and connections in the job market compared with those who attend less rarefied schools.

      However, I understand the sentiment you express. Particularly when I think of the great land grant colleges that provide excellent public education elsewhere in the nation.

      • J__o__h__n

        Then the ruling class will get dumber and dumber. Let them pay to remain relevant. How much did the rest of society get back when Clarence Thomas went to Yale? With money and the best students, the public colleges will rise to the top which is better than a handful of poor kids joining the elite.

  • A in Sharon

    Firstly, we should not factor Harvard, Yale, or any other highly selective and expensive private school in ideas about high tuition costs. Most US middle class students with merely decent academic records do not attend these schools. I also have no problem that these schools are elite. They will find a way to service the best students. And yes, there are students that are better performers than others. That’s life. In addition, a fact of life is these schools are enrolling increasing numbers of rich foreign students that can easily afford the tuition over our American students. With a child in a modestly priced state school I see the problem exists in those schools less selective than the elites.

    The problem with the author’s argument is that it still results in colleges getting the same amount of money, and that has to come from somewhere. It makes sense a college president would recommend solutions which keep the money pipeline flowing into college coffers. I place the primary blame for huge college debt on we, the consumers. Colleges will continue to take the money as long as we keep paying it. What is needed is a re-assessment of the true value of a college education, especially those which are earned as a 4-year full-time matriculated student living on campus. You won’t hear many say this but new graduates of modest means need to re-assess what they can afford and stop thinking they need to pay $150,000 to get a decent education. The grown-ups I know spend little time mentioning where we all went to school.

  • disqus_76C0PFpw8x

    The problem with our higher education system is mutli-faceted. Tuition is too high, yes. Debt is too high, yes. I agree that we should focus on making it possible for all capable and interested students to attend college and get that kind of education.

    However, we have to look at what we are paying for vs. what we are getting. Do all of the jobs we need in today’s economy and the economy of the future REQUIRE four additional years of education beyond high school? It used to be the case that basic jobs would go to high school graduates. College was for the “smart” people. Why was that? Because high school prepared students to go out into the working world, companies expected to hire high school graduates, and so having a college degree was not the basic necessity for supporting yourself that it has become.

    Maybe we should refocus on why that changed, and what adjustments to the high school curriculum and graduation requirements might be made so that more students are prepared to work in jobs that we need them to right out of high school, and creating incentives to encourage companies to recruit successful high school students into their workforce.

    We already spend our public money on high school students, and instead of asking ourselves how to collectively pay for all of our students to get another two or four years of education–whether that be publicly or privately funded–we should ask ourselves what we have paid for for grades nine, ten, eleven, and twelve.

    While there are plenty of college students who desire more learning after high school, many college students are there simply because they believe it is the only way to get a good job (and, sadly, even this college degree is losing value as we churn out more and more college graduates). If our high school education were improved such that these students could support themselves with decent jobs after high school, we wouldn’t need to spend so much on college.

  • Bob Hildreth

    I agree with the author‘s rationale that reducing or eliminating tuition at the well-endowed colleges would provide little benefit to middle- and low-income students. The best alternative would be to adjust the upper limit of income qualification for need-based financial aid and to provide increased grant funding to accepted middle- and low-income students, thus lowering their net price. The result would be similar to the calls for free-tuition in that more students who feel that the more well-endowed colleges are not accessible to them will realize that they are in fact within reach. I also believe that, at the same time, the primary focus of the effort to make college more financially accessible should be on the public colleges and universities as they serve the greatest portion of the students who can least afford to pay the high net price of attendance.