Have We Protected Poor Students from Debt?

Administrative hand-wringing over access has been focused on the giant hole in the income donut where dwell "middle class" students with family incomes of between around $80,000 and $150,000 per year. For example, UC President Mark Yudof recently assured the anti-tax California Chamber of Commerce that UC's Blue and Gold plan makes UC tuition free for all students with family incomes under $80,000, effectively covered the $1,890 tuition increase in 2011-2012 for families making under $120,000, and in general makes average net tuition at UC only $4,000, or about a third of the current sticker price.  In December, UC Berkeley announced a Middle Class Access Plan (MCAP), designed to help those same Middle Earth students with family incomes in the $80,000-140,000 donut hole.

So why, when I was at UC Riverside to give a budget talk three weeks ago, were students trying to show the Regents signs like this?

 Here's the simple picture that illustrates the problem:

This chart is from the College Board's Trends in Student Aid 2011. It shows that low-income students borrow almost as much as do middle-class students.  In 2008 low-income Pell Grant students, who in some accounts have it good, "had an average debt of $24,800—nearly $2,000 more than the average for all seniors graduating with loans." The authors of Crossing the Finish Line, with their uniquely comprehensive data base, confirm this pattern and show that students from the bottom income quartile increase their annual borrowing by 50% from their first to their last year in college (chapter 9).  Low-income students are going broke as fast as middle-income students. Actually, given their lower income base, they're going broke even faster.

What about all that grant income that supposedly wafts poor students along?  It doesn't close the funding gap between financial aid for tuition and related expenses and the overall cost of attendance.  As background, take Berkeley's MCAP plan, which estimates Berkeley's cost of attendance as $32,000 per year.  In the new scheme, a student from a family grossing $80,000 pays net tuition of $8,000 and the family contributes a maximum of 15% of their gross income or $12,000.  The university comes up with the missing $12,000 ($4,000 coming from the existing return-to-aid program).  And yet the student and her family still pay $20,000 a year—a quarter of their gross income.  This requires the borrowing that appears in the College Board's data.

Median family income in California was not quite $55,000 in 2010 (slide 9).  Let's say that a student from this median family—certainly not technically poor—has all tuition covered through a partial Pell Grant combined with a Cal Grant (at least until Jerry Brown messes with it again.)  This saves another $8,000.  The student and her median family then need to find $12,000 per year.   Factor in this family's net income in relation to California mortgage or rent costs and just one other child in the family and their capacity to contribute disposable income rapidly approaches zero.  A student borrowing $4,000-5,000 per year for four or five years will rack up the total debt seen in the chart.  UC President Mark Yudof recently noted the debt figure for UC is close to $20,000.

When public university officials claim that access for low-income students is guaranteed by grants, they wrongly omit the overall cost of attendance.   This may have the negative effect of reducing public interest in fixing the whole access problem.