CD360 Notebook

Helping students from low-income families succeed in higher education

Strategies to overcome financial and academic challenges have promise to help students attain higher education degrees.

Rob Grunewald | Economist

Published December 20, 2018

Based on presentations and discussion at the concurrent session “Helping Lower-Income Students Succeed in Higher Education” at the Reinventing Our Communities Conference in Baltimore, Maryland, October 1–3, 2018.

Completing a post-secondary degree can help workers land a job that pays a living wage or more. However, students from low-income families often face challenges in securing such a degree. According to an analysis of education data by the College Board, 53 percent of students classified as low-socioeconomic-status (based on parental education, occupation, and family income) completed college, compared with 70 percent of high-socioeconomic-status students.1

Government grants and subsidized loans may not be enough to help pay the tuition bill. In addition, many of these students are the first in their families to go to college and may lack guidance on how to apply for, select, and complete a post-secondary degree program. Strategies to overcome financial, logistical, and academic challenges have promise to help students from low-income families attain higher education degrees.

In terms of financial barriers, government-based financial aid has not kept up with rising tuition costs at higher education institutions. In 1998, the maximum federal Pell Grant, which is available to low-income college students, covered 92 percent of average tuition and fees at a public, four-year, in-state college or university. By 2018, the maximum Pell Grant covered 60 percent of average tuition and fees. Non-tuition expenses, such as housing, food, and transportation, pile on top of these costs. In 2018, the maximum Pell Grant was equivalent to only 29 percent of the whole package of tuition, fees, room, and board (for more, see this report). The difference is made up by taking out loans or working while attending school.

To address the financial challenges of paying for college, a variety of college-promise programs have stepped in to help students pay for it. One example is the Kalamazoo Promise, where students who attend and graduate from Kalamazoo Public Schools in Michigan are eligible for college scholarships.2 According to PennAHEAD’s college-promise program database, there are nearly 400 promise programs in the country.

An example of a university-sponsored program is Bridging the Gap at the Camden campus of Rutgers, the State University of New Jersey, which reduces or eliminates tuition and campus fees for income-eligible students. Bridging the Gap uses a last-dollar strategy, which discounts all or part of the difference between the price for tuition and fees and the value of the student’s financial aid package. Students from families with annual income less than $60,000 have the difference fully discounted, while students from families with incomes between $60,000 and $100,000 pay no more than half of the difference.

Researchers at the Federal Reserve Bank of Philadelphia are studying the impact of Bridging the Gap using student interviews and anonymous student data. Initial study results show that Bridging the Gap helped boost the likelihood of enrollment at Rutgers-Camden among lower-income students and reduced reliance on loans and students’ wages during the school year. While financial stress was lower, many students still struggled to stay on top of expenses and navigate the bureaucratic nature of the financial aid system. Philadelphia Fed researchers will continue to interview students in the Bridging the Gap program and analyze academic performance over the next few years.

An example of a nonprofit organization that provides last-dollar financial support is The Scholarship Foundation of St. Louis, which provides interest- and fee-free loans and grants to students pursuing bachelor’s, associate’s, and technical degrees. In partnership with public and private schools and community service organizations, The Scholarship Foundation also provides advising services to 6,000 students. The organization guides students through the process of selecting higher education opportunities, and once students begin postsecondary education, ensures students receive support to address financial or academic challenges. According to 2017 data, recipients of The Scholarship Foundation’s services have a six-year graduation rate of 84 percent, compared with national rates of 59 percent for all students and 14 percent for low-income students.

Support networks and connections to degree-related job opportunities are both ingredients for success in higher education. The Academy Group works with 30 public schools across Chicago to augment the education experience for students, including year-round individualized support in literacy and mathematics, a five-week intensive summer program, and paid summer internships during high school. About 95 percent of students in The Academy identify as Black or Latinx.

Once students in The Academy reach the College Journey stage of their experience by enrolling in a higher-education institution, they receive year-round personalized advising and college-persistence support, access to a network of business leaders and mentors, and job experience with 1 or more of about 25 corporate partners. The combination of experiential learning, networking, and support is designed to give young people the skills to own and operate businesses and create wealth for their families and communities.

Ultimately, the ability of students to overcome barriers to college success will help boost their own futures and overall prospects for labor productivity and economic growth.

Endnotes

1 Both groups scored in the middle two quartiles of 12th grade standardized math test scores in 2004.

2 Scholarship value depends on the number of years children attend Kalamazoo Public Schools. Children must attend for a minimum of four years prior to graduation.