Are New Financial Aid Policies Keeping College Affordable at Major Public Universities?

John Douglass
By John Aubrey Douglass, Ph.D. – Senior Research Fellow – Public Policy and Higher Education
Student Experience in the Research University (SERU) Consortium
Center for Studies in Higher Education – UC Berkeley

In an era of significant disinvestment in public higher education by state governments, many public universities are moving toward a “progressive tuition model” that attempts to invest approximately one-third of tuition income into institutional financial aid for lower-income and middle-class students. The objective is to mitigate the cost of tuition and keep college affordable. But is this model as currently formulated working? What levels of financial stress are students of all income groups experiencing? And are they changing their behaviors?

Utilizing data from the Student Experience in the Research University (SERU) Survey of undergraduates and other data sources, a new study by my colleague, Patrick Lapid, and I at Berkeley’s Center for Studies in Higher Education explores these issues by focusing on students at the University of California and ten Association of American Universities institutions that are members of the SERU Consortium. At least to date, the increase in tuition, and costs related to housing and other living expenses, have not had a negative impact on the number of lower-income students attending UC. Reflecting to some degree UC’s robust financial aid policies, and perhaps the growing number of lower-income families in California, there has been an actual increase in their number and as a percentage of total enrollment – a counterintuitive finding to the general perception that higher tuition equals less access to the economically vulnerable. At the same time, there is evidence of a “middle-class” squeeze, with a marginal drop in the number of students from this economic class. Students’ concerns for paying for higher education and accumulated student debt in the 2014 SERU are predictably higher among lower-income students, yet upper-middle income students (with annual family incomes from $80–125,000) are the least likely to agree that the cost of attendance is manageable.

With these and other nuances and caveats briefly discussed in our study, “College Affordability and the Emergence of Progressive Tuition Models,” we found that the relatively new model appears to be working at top-tier public universities in terms of affordability and with only moderate indicators of increased financial stress and changed student behaviors. These results are not necessarily predictive of the future if tuition rates go up further. But they do indicate the higher tuition rates at highly selective public universities, if accompanied by robust federal, state and institutional financial aid, may be the best path for maintaining access to lower-income students, and for generating income needed for institutions to maintain or improve student-to-faculty ratios and other markers of quality.

Freezing tuition, as currently proposed by some state lawmakers in California, does not appear to be based on any clear analysis of the correlation of tuition and affordability. It appears more as a politically attractive way to appeal to voters while ignoring the financial consequences for public colleges and universities and the quality of the student experience. Our findings also raise questions regarding how the “tuition free” and “debt free” policy proposals by presidential candidates would change or influence the progressive tuition model.

To read the full report click here.