Pell grants reveal breadth of student income diversity

Financial aid at elite institutions like the College is an equalizer: It allows students otherwise unable to afford the high costs of attendance to gain access to an excellent education. In this way, financial aid directly influences economic diversity at a particular college or university. What remains unclear is if the lack of economic diversity at a particular institution is a direct consequence of financial aid policies.

An article published in The New York Times this summer argues that financial aid policies at elite colleges are partially culpable for the absence of socioeconomic diversity. “Efforts to Recruit Poor Students Lag at Some Elite Colleges” pointed to the distribution of Pell grants, a federal award of up to $5500 per year primarily given to students from families with annual earnings of less than $30,000 per year, as an indicator of an institution’s commitment to income diversity. Their analysis focused on the wide disparities of low-income enrollment at the most competitive private colleges, but their conclusions were rather tame. While there are many reasons that elite schools vary in their pursuit of low-income students, the dissonance between stated institutional priorities of diversified recruitment and matriculation of targeted groups raises questions.

Answering those questions at the College is a matter of self-examination: We must understand how and why our institution makes decisions about priorities in financial aid and admissions.

History of Pell grants

The Pell grant program grew out of the Higher Education Act (HEA) of 1965, which was the initial legislation targeted at benefiting students from low- and middle-income backgrounds. These became known as the “Title IV programs.” Preliminary HEA Title IV programming included grants for eligible low-income students as well as low interest loans for students who did not fully qualify for the grants. In addition to these grants and loans, HEA provided federal aid to universities and colleges to improve their educational offerings.

In 1972, Congress made major changes to the HEA program. Led by Senator Claiborne Pell of Rhode Island, the Opportunity Grant Program (Basic Grant) was redesigned to serve as the foundation of an undergraduate student’s financial aid package. Other federally sponsored aid was intended to work in conjunction with the Basic Grant, up to the limit of a student’s financial need. These grant systems were to undergo periodic reauthorization to allow Congress to examine programs on specific college campuses and decide whether to suspend or revise them.

The Higher Education Amendments of 1972 saw the reauthorization of three major grant programs: the National Defense Student Loan Program (today called the Federal Direct Student Loan Program), the Federal Supplemental Educational Opportunity Grant Program (SEOG) and the Educational Opportunity Grant Program (EOGP). Additionally, the EOGP became linked with the Basic Grant Program and profit-making schools became eligible for Title IV funds. The Middle Income Student Assistance Act of 1978 extended these programs even further by providing more generous grants and increasing aid eligibility for low-income families. These modifications, along with a name change for the Basic Educational Opportunity Grant in 1978 to honor Senator Pell’s work in federal funding for students in higher education, created the aid program we are familiar with today.

Pell grants were first awarded in Fiscal Year 1973, though they did not become available to all undergraduates until Fiscal Year 1976. The maximum amount allowed for a single grant in the pilot year was $1400 while the average award was $270. Between 1973 and 1976, the number of awards distributed jumped from 176,000 to 1,944,000 and the average award rose to $759. The total federal expenditure for Pell grants during the pilot year was $47,520,000, but the cost increased on average by 9.5 percent every year as the number of grants distributed grew.

Pell grants in contemporary higher education

In the present day, Pell grants are distributed to applicants based on their eligibility as determined by the Free Application for Federal Student Aid (FAFSA). An applicant must be an undergraduate student without a bachelor’s degree, a U.S. citizen or eligible non-citizen and a high school graduate or GED recipient. Based on the information an applicant provides, the Department of Education names an Expected Family Contribution (EFC) that takes into account the family’s annual earnings and assets. The actual grant amount reflects the calculated EFC, the cost of attendance at the institution, the amount of time the student plans to attend college and the extent of enrollment during the academic year.

Once eligibility is confirmed, Pell grants are disbursed in a variety of ways. A student’s institution can apply the grant funds to school costs, pay the student directly or use a combination of these methods. The school is required by law to notify the student in writing about the exact amount of the award along with the dates of disbursement. Pell grant money is typically first applied toward the student’s tuition, fees and room and board (if the student lives on campus). Any money remaining is given to the student for other expenses associated with his or her college attendance.

While the Pell grant program was awarded a larger sum of money during the economic crisis of 2008, this additional funding fell short of the need, as increasing numbers of students enrolled in college and qualified for aid due to the crisis. The maximum Pell grant awards allotted in the 2012-13 and 2013-14 aid years were $5500 and $5645, respectively. In addition, recent federal budget cuts along with legislation have drastically changed the program; making the amounts awarded even more insufficient. The Pell grant program was subjected to a $5.7 billion dollar decrease in federal allocations.

Underfunding issues have resulted in further restrictions on the Pell grant program. In Fiscal Year 2010, Pell grants could cover a maximum of 34 percent of the cost of attending a public university or college and only 15 percent of costs associated with private institutions. In addition to increased restrictions on eligibility for Pell grant funding, the Consolidated Appropriations Act of 2012 decreased the number of semesters a student could receive a Pell grant from 18 to 12 and eliminated funding for summer study.

Pell grants at elite private colleges 

As the Pell grant program experiences contraction, institutional financial aid takes on increased importance as an avenue for low-income college enrollment. Responses and financial aid policies at elite colleges and universities span a wide range of philosophies.

“Private, non-profit colleges and universities receive significant support from the federal and state governments, in the form of grants as well as tax privileges,” Catharine Hill ’76, president of Vassar, said. “Part of the justification for government support is to contribute to equal opportunity and social mobility, values that are important to our country. Ultimately, the government needs to target its subsidies more effectively.”

In the NESCAC, Pell grant allocations fall somewhere between 10 and 25 percent of the student body. In the 2011-12 aid year, Wesleyan had the highest percentage of undergraduates receiving Pell grants in the NESCAC, with 21 percent of its students qualifying for the federal subsidy. At 10 percent, Middlebury and Trinity had the smallest proportion of Pell grant recipients. Colby and Tufts followed close behind, reporting that 11 percent of undergraduates qualify for Pell funding. That same year at the College, 19 percent of undergraduate students received Pell grants, representing 33 percent of all recipients of institutional financial aid here. However, when looking at the average amount of Pell grant received within the NESCAC during the 2011-12 aid year, Amherst topped the list with an award of $4468 followed by the College’s mean allocation of $4442.

Though Pell grants represent just one avenue for promoting low-income enrollment at elite institutions, highly selective colleges and universities still struggle with making their educational offerings accessible to the broadest possible pool of applicants.

“One constraint is that there are fewer talented students coming from lower income families than from higher income families, with talent measured by achievement in high school and performance on standardized tests,” Hill said. “This is partly because higher income students are often coming from better high schools and have had greater resources devoted to their K-12 education.”

Pell grants and financial aid at the College

At the College, Pell grants have always worked in concert with the financial aid packages calculated by institutional methodology. However, economic accessibility for all applicants was not always a priority for the College. In fact, shifts in the institutional philosophy of distributing financial aid occurred as recently as 30 years ago.

“In the early ’80s, people used to collect fees for all kinds of things –   students came to entries and were expected to throw in a whole bunch of funds for social activities, which is completely unfair,” Dean Bolton said. “There were all kinds of things that were laid out across campus from Winter Study to other places where there were costs built in that made assumptions about students’ abilities to pay for not just tuition and fees but for other kinds of opportunities. As a result, many opportunities were not equitably accessable for all students.”

Presently, financial aid at the College takes into account a variety of economic and social factors in calculating a student’s and their family’s ability to afford attendance.

“We spend most of our time determining the family contribution, which looks at parent and student income and assets,” Paul Boyer, director of financial aid, said. “The family size and number of children in college also play an important role in determining how much a family can pay.”

For the 2013-14 aid year, 395 Pell grant recipients are enrolled at the College, representing about 18 percent of the total student population. About one-third of students who receive aid come from families who make below $60,000, with another third between $60,000 and $120,000. The final third of the income distribution of aid recipients marks those with family incomes above $120,000. Approximately 14 percent of all students have no or a very low parent contribution.

Pell grants and admissions at the College

The Office of Admission partners with the Office of Financial Aid to improve low-income enrollment just as they collaborate to recruit any and all types of students. Institutional shifts in priorities over time have facilitated this collaboration.

“The College made an explicit commitment in the mid ’90s to shift some of its efforts to increase the socioeconomic diversity of the campus,” Bolton said. “Those efforts involved changes in recruiting, in changing the places that admissions staff went to talk with high school students, changes in the ways that they made clear what the College’s financial aid commitments looked like.”

The College also has done research into the socioeconomic makeup of the student body, which has influenced admissions practices for recruiting a wide range of income distributions in each incoming class.

“Especially since 2005 we’ve intensified our efforts to attract high-ability low-income students,” said Richard Nesbitt ’74, director of admissions. “Research that was done by faculty here, [Catharine] Hill who is now the president of Vassar, Gordon Winston, David Zimmerman in the economics department, called the Williams Project in Higher Education. They did a lot of research that really showed that particularly the lowest two income percentiles are really underrepresented at highly selective colleges, including the flagship universities, not just the elite private colleges.”

One way the Office of Admission works to improve its outreach to the lower income quartiles is through institutional programming like Windows on Williams (WOW) as well as school visits. Each year the office coordinates two WOW weekends, a fly-in program targeted at first-generation, low-income and minority students that exposes prospective applicants to life at the College. In addition to WOW, the Office of Admission has internal practices like screening geo-demographic data for areas that are historically underrepresented that help them directly recruit new areas. However, due to their relatively small size, Admissions recognizes that it can maximize its outreach through collaborating with national and regional programs like Questbridge outside the College.

“We know that to get out and reach as many prospective students as possible, we really need to tap into resources and partnerships that exist beyond this office,” Elizabeth Creighton ’01, deputy director of admissions, said.

These efforts to improve all students’ experiences at the College and ensure that income is not a barrier to full participation in the community are constantly evolving.

“Oftentimes, when people talk about socioeconomic diversity, I think what they’re really describing is a commitment to recruiting high-achieving, low-income students. Needless to say, that commitment is central to the Admissions Office’s mission – and that of the College as a whole – but when we talk about socioeconomic diversity internally with our staff and with the public, we are deliberate in talking about the importance of having representation across the entire socioeconomic spectrum,” Creighton said.

As the College moves forward, considerations of maintaining and celebrating the socioeconomic spectrum represented on campus will remain a top priority.

“Williams has greater socioeconomic diversity among our student body than at any earlier point in our history,” President Falk said. “We’ve achieved that by investing deeply in financial aid over the past decade, increasing significantly both the fraction of students who receive financial assistance and the size of the average award. There is no more important investment that the College can make than in our student body. In a society in which income inequality continues to grow, we will be continually challenged to sustain the socioeconomic diversity that we have achieved. We are completely committed to meeting that challenge at Williams.”

Additional reporting by Megan Bantle ’14, managing editor.