Most colleges are unaffordable for low-income students

Student loan forgiveness has occupied most of the airtime in higher education over the past year and currently faces an uncertain future after two court cases put the plan on hold. Unfortunately, these student loans are partly due to a lack of affordable college options for students, especially low-income students. Higher education is one of the best routes out of poverty for students from low-income households, but far too few colleges are affordable for the students who benefit most from a college education.

Public institutions aim to be the affordable choice for students who don’t have the luxury of being able to afford tens of thousands of dollars in tuition without hesitation. Unfortunately, only 24 percent of four-year and 40 percent of two-year public colleges can be considered affordable, according to a new report by the National College Attainment Network (NCAN). Students end up with too much credit debt when the supposedly affordable options aren’t anymore.

How does NCAN determine what is “affordable”?

NCAN considers a college affordable for the average Pell Grant recipient if the total college price plus $300 for emergency expenses is equal to or less than the following:

Source: National College Attainment Network

The items in the graph represent all of the different resources that low-income students have access to to finance their studies. The Expected Family Contribution (EFC) portion of the calculation represents the number students will receive after they complete their FAFSA, the federal form used to apply for most financial aid. EFC serves as an index metric. The lower this number, the more financial aid the student can usually receive.

Pell Grants are government scholarships awarded to students who have high financial needs based on the information they provide through the Free State Aid Application (FAFSA). FAFSA is the federal form that students must complete if they wish to receive financial aid from the federal government, state governments, and often their college or university.

The average affordability gap at four-year schools was over $2,600. For two-year schools, it was just over $900. NCAN uses $40,000 family income as a benchmark for the average Pell Grant-eligible student. Unfortunately, $40,000 a year leaves most families with no room for maneuver in their budgets, so it’s easy to see how difficult it is for college students to find an extra $2,600 after they’ve exhausted every other financial resource available.

It’s worth noting that the NCAN model includes federal student loans in its calculations. Ideally, public colleges should be affordable without requiring students to incur significant student loan debt. For many students, there is no question of taking out a loan to be able to afford their studies. The real question is where are they going to come from for additional funds even after taking out federal student loans.

There’s a lot of rhetoric about undeserving students in the world today, including the idea that college is already free for students in many states, but NCAN’s analysis makes it clear that even when determined students get it right, the current financial aid system isn’t helping enough support to be successful.

β€œToo many students and their families are rightly concerned about affording post-secondary education. And for students to gain the post-secondary skills they need for the jobs of the future, they need to be able to afford it,” said Kim Cook, CEO of NCAN. “These results reflect a sorry state of higher education affordability, even before the COVID-19 pandemic, and should raise alarms across the country.”

This report is the third time since 2015 that NCAN has conducted its affordability analysis. In that time, affordability has fallen in 42 states. Ten states β€” Massachusetts, North Dakota, New Hampshire, New Jersey, Oregon, Rhode Island, South Carolina, South Dakota, Vermont, and Wisconsin β€” do not have affordable four-year public institutions. Eighteen states had fewer than five affordable public biennial institutions.

Some states are more affordable than others

The report has some bright spots. California, Kentucky, Michigan, New York, Ohio and Texas had the most affordable public biennial institutions. Eight states have increased the number of affordable two-year institutions, but still have too many institutions that pose financial challenges for low-income students to access.

As for four-year colleges, California, Florida, Georgia, Missouri, North Carolina, Oklahoma, Texas and Washington had the most affordable four-year schools.

Overall, the NCAN report paints a bleak picture of affordability in higher education. A system in which public higher education is only affordable for the wealthy is both unsustainable and bad for a society that depends economically on people acquiring skills through higher education.

Students should be able to attend at least two-year colleges without incurring significant amounts of student loans, and ideally, four-year public schools should be just as affordable. This is currently impossible and must change. If we don’t, we’ll lose all the ground we’ve gained from forgiving student loans.