Low-Income Students Face Growing Barriers to College

A college degree is deemed by many to be a key to economic success. However, a new study suggests that for low-income students and minorities, higher education is increasingly out of reach.

This education gap is wide and growing, according to the two policy research groups that conducted the study: the Pell Institute for the Study of Opportunity in Higher Education and the University of Pennsylvania’s Alliance for Higher Education and Democracy.

For instance, the study found that students from families in the highest income quartile were almost five times more likely to get their bachelor’s degree by age 24 than students from families in the lowest income quartile (62% compared to 13%).

Not only that, but first-generation students who are also classified as low-income have only a 21% chance of completing college with a bachelor’s degree in six years, while those who are neither low-income nor first-generation students have a 57% chance of doing so.

The findings were part of the policy research groups’ annual “Indicators of Higher Education Equity in the United States” study, based on data from the U.S. Census Bureau, Department of Education and other sources.

One reason college is becoming more unattainable for low-income students is because the financial burden on families is growing in general. In 2017, families were responsible for coming up with 48% of college costs, while from 1975 to 1981, families typically were only accountable for 33% of the costs.

Also in 2017, families with financial needs were able to turn to state and local sources to account for 42% of college expenditures, down from the 58% that they could rely on from these sources in 1975.

And just as financial support is shrinking, education costs are growing, eating up more and more of families’ income. The cost of college after grants and other discounts was the equivalent of 94% of an average family’s income for students in the lowest income quartile in 2016. But back in 1990, those same education costs would have been the equivalent of 45% of family income for students in that quartile.

The study also found that lower-income students, who are more likely to depend on Pell and other federal grants, are also less likely to attend the most selective schools. According to the findings, 42% of college students nationwide have some federal grants, while only about 16% of students at the most selective schools have such grants.

And those grants aren’t covering the costs that they used to. In fact, in 2017, Pell grants on average covered just 25% of college costs, down dramatically from covering 67% of college costs in 1976.

It’s no secret that students are having to borrow more for college, but minority students are being hit harder by the student loan crisis. The study found that black graduates with a bachelor’s degree had the highest borrowing rates, with an average of $34,000 in loans, compared to the $30,000 average loan debt for all students.

With college costs growing, families must plan early when it comes to figuring out how to pay for higher education. Not only should you explore options for grants and scholarships, but if you can, take advantage of tax-advantaged savings vehicles such as 529 plans as well. And if you do have to take out student loans, make sure you educate yourself about all of your options.