A study released today by the Institute for Higher Education Policy (IHEP) found that since no-loan financial aid programs were introduced in universities 15 years ago, nominal economic diversity has been achieved on college campuses. No-loan packages replace student loans with grants and scholarships for students whose families earn less than the national median income.
The report, “Economic Diversity Among Selective Colleges: Measuring the Enrollment Impact of ‘No-Loan’ Programs,” sought to discover what highly selective institutions could do to increase the attendance of high-achieving, low-income students.
Students from low-income families are underrepresented in higher education as a whole, the report states, though many are qualified to enroll. Low-income students are frequently overrepresented in community colleges and for-profit institutions, which, according to the report, have lower graduation rates, fewer academic resources for students, and more students per faculty member. More selective institutions can cater better to students because of the resources available to them, but because they charge higher tuition, low-income students don’t apply.
“An education system that allows this pattern to persist and that sorts students according to their ability to pay, rather than according to their academic performance, will only perpetuate economic inequality,” report authors state. “Such a system is not only inequitable but inefficient, because excluding talented students from the finest economic opportunities is a missed opportunity to invest in our nation’s collective talents. Policymakers and campus leaders should be concerned about the underrepresentation of low-income students within all sectors of higher education, but particularly among highly selective institutions, which often provide greater opportunities for students who attend.”
The report cites Princeton University as one example of a school that saw success through its no-loan financial aid packages. It was the first to establish a no-loan policy in 1998, when it replaced loans with grants and scholarships from the university’s budget, and pledges to meet all admitted students’ financial aid need without loans, for an estimated $1.7 million annually. Since the program was expanded in 2001 to include all students qualified for financial aid regardless of family income, the average graduate’s debt decreased dramatically: from more than $15,000 in 1999 to less than $4,000 in 2006.
Between 1998 and 2011, 69 highly selective institutions have followed suit in no-loan policies in efforts to reduce cost barriers to high-quality education. Schools with no-loan policies include well-known private institutions, such as Stanford, Northwestern, Emory, Harvard, and Tufts universities, but also are common among large and popular public schools, such as Arizona State University, University of Florida, and the University of North Carolina at Chapel Hill.
While each of the four key schools studied –Princeton, Harvard, UNC and the University of Virginia – saw increased enrollment of low-income students since implementing the policies by as much as 3%, the real impact of no-loan policies may be that more low-income students apply for admission rather than that more low-income students are enrolled. Authors found that institutions actually became more selective in the admission of low-income students, and, according to a similar study, the chosen admitted students are better suited for their new academic homes.
Based on the study’s findings, the IHEP recommends policy changes and actions for institutions and policymakers. It recommends schools promote their no-loan policies to students with the greatest need and diligently use all financial aid available. The federal and state governments should offer incentives for institutions to adopt such programs, the authors recommend.
Follow Anna Schumann on Twitter at @ASchumannCMN.