Stuck in the middle with U

Both tuition and aid at the University have risen in recent years. This “high-tuition, high-aid” model expands access for low-income for students but often shifts costs and loans to the middle class.

Stuck in the middle with U

Greta Kaul

 

Tommy Sager has a 16-hour-a-week work-study job. He brings in two annual scholarships — $400 from J.P. Morgan and $600 from the University of Minnesota.

Still, when he graduates in 2014, he’ll be $16,000 in debt. And that’s less than average for students at the University.

Sager said he considers his family middle class — a group experts say is left out from a model called “high-tuition, high-aid” that schools like the University have adopted to cope with budget cuts.

In-state tuition at the University of Minnesota increased 152 percent between 2000 and 2010. Despite an even faster increase in University aid to students — up 235 percent in the same period — the average University scholarship doesn’t stack up to tuition’s steep rise.

On one hand, high-tuition, high-aid keeps higher education accessible to low-income students. But it also puts a financial burden on the middle class and may be unstable given the uncertainty of student aid from the government and the shrinking appropriations from the state to the University.

Expanding access

As their state support drops, universities argue that high-tuition, high-aid levels the playing field for students and may be a more efficient use of money.

“You are not using taxpayer money to subsidize people who don’t need it and who would participate in higher education no matter what,” said Brendan Cantwell, an assistant professor studying higher education policy at Michigan State University’s College of Education.

Since 2002, state support has dropped from 31 percent of the University’s total operating expenses to 22 percent in 2010, which has triggered tuition hikes.

Next year, tuition is slated to rise another 3.5 percent.

“Not everybody can pay that higher tuition, and so you have to cover tuition increases for the populations that need it,” said Tom Mortenson, a senior scholar at the Pell Institute for the Study of Opportunity in Higher Education.

Without adequate state support and with college becoming almost an economic necessity, Mortenson said he doesn’t see an alternative in maintaining access to low-income students.

Accessibility has been a priority for both former President Bob Bruininks and current President Eric Kaler.

Since 2000, the University has nearly doubled its enrollment of students eligible for Pell grants, the federal need-based aid program. Those programs have provided access to more students like freshman Hodan Mohamud. Grants were a big factor in her decision to come to the University, she said.

“[Aid pays] for pretty much everything except books,” which amounted to about $200 this semester, she said.

But Mohamud’s story sits on one end of a spectrum. The high-tuition, high-aid model doesn’t make college more affordable for everyone.

Left out

On the high end of the income spectrum, wealth pays for college. On the low end, there are need-based grants and scholarships.

In the middle? Loans.

Critics say high-tuition, high-aid isn’t sustainable. The model shifts the burden of costs and loans to the middle class, relies heavily on unpredictable state and federal aid and causes “sticker shock,” deterring quality students from attending colleges because of the steep advertised price, they say.

Aid at the University is decided largely on a year-by-year basis, piggybacking on federal and state aid programs to make tuition affordable.

Big decreases to the state aid program or the federal Pell grant could put low-income students at the mercy of high University tuition, said Robert McMaster, vice provost and dean of undergraduate education.

“The middle class nationwide has become a problem in higher ed,” McMaster said.

With a cutoff at $50,000, Pell grants don’t cover most middle-income families.

“As you get up around [$60,000 and $70,000] there’s no Pell — there’s no state grant. A lot of the sources you need have dried up. And that’s where loans start to kick in, in a big way,” McMaster said. A relatively small amount of need-based University scholarships help students with family incomes of up to $100,000.

Like Sager, University architecture student Alex Jensen’s scholarships didn’t stack up to his tuition.

In his first year at the University, Jensen got a $1,800 state grant, a $750 University scholarship, a $600 Achieve award and a $500 academic scholarship.

Jensen’s University aid was based on his family’s middle-class income — but his parents didn’t cosign his loans or help pay for school.

“There’s a lot of students who don’t get any grants or need-based scholarships or whatever because their parents are well-off and don’t help them,” Jensen said.

Often, their only recourse is loans.

Jensen estimated that his undergraduate education will end up putting him $23,000 in debt.

Last year, students at the University graduated with an average of $25,786 in debt, excluding parent loans — on par with the national average at $25,250, according to the Project on Student Debt.

The high-tuition, high-aid model hasn’t attracted much public attention, but if trends continue, it’s likely to be scrutinized by policymakers and the middle class, said Daniel Hurley, director of state relations and policy analysis for the American Association of State Colleges and Universities. A proposal by Virginia Gov. Bob McDonnell, for example, would limit the amount of in-state tuition dollars going toward financial aid to curb tuition increases.

Uncertain future

Mortenson, from the Pell Institute, said the next generation of college students will need more aid as poverty rises. More families will, according to federal aid guidelines, have no money to contribute toward college, he said.

“There’s possibly a limit to [hikes] because sticker-price tuition can’t go up indefinitely,” Michigan State’s Cantwell said.

The number of K-12 students participating in the National School Lunch Program increased 12 percent from 2000 to 2010. That rise could strain need-based scholarship programs.

In 2010, the University’s largest need-based scholarship program, called U Promise, expanded to include more students in middle-income brackets.

But while the average award has increased in dollar value, it has shrunk in proportion to tuition — like the Pell grant.

In 2010-11, the average University scholarship overall was $3,599, covering about a third of tuition. In 2000, the average scholarship covered about 60 percent of tuition.

Despite slimming state appropriations to the University, Office of Student Finance Director Kris Wright is optimistic about state grants.

Without strong state aid, public universities will have to look to their endowments and increase outside scholarship funds to flatten or reverse the effects of high-tuition, high-aid, Hurley said.

Kaler has brought up the need to strengthen the University’s philanthropic and business ties.

In the meantime, the University will continue making student aid decisions on a year-to-year basis, Wright said.

“We’re a public institution, so we have a big commitment to making sure people can afford to come,” she said.

“One of the ways of doing that is trying to make sure we have enough money for the neediest students to cover tuition. And whether or not we’re always going to be able to do that — nobody wants to make bets.”