May 24, 2016
The plight of low-income students is increasingly well-documented, and the higher education community is slowly but surely paying more attention to these students’ needs. From setting up on-campus food pantries for hungry students to partnering with early education programs to provide childcare while parents attend class, some colleges have found creative ways to address barriers to college attendance that are both inspiring and critical for student success. These in-kind services work in tandem with financial aid to help students cover their living costs, even in unpredictable situations.
But what these combined forces have meant is that higher education has become for many the de facto social safety net: through loans and grants, low-income students enrolled in school have access to pivotal financial support, and are in a better place to access other services. This is a mission, however, that most colleges were never designed for, and as a result are often not well suited to provide. Instead, an expanded and improved social safety net is needed to help low-income individuals meet their basic needs, whether they enroll in college or not.
The Changing Economics and Demographics of Higher Education:
Since the 1960s, undergraduate enrollment has risen nearly 10 fold: from a little over 3 million to well over 20 million today. At the same time, enrollment among women and minority students grew the fastest during this time. As a result, today’s students are more diverse than ever. But while enrollment is up, completion is still lower than many would like, and many of the students who would benefit the most from additional educational attainment do not have the financial resources to achieve their goals. These shifts have been driven by economic changes, with college success playing a more important role in financial security and upward mobility than ever before.
Annual earnings among those with degrees are higher than those without, and over the course of a lifetime these differences add up. In this way, higher education is a better investment for students and their families than ever but still involves significant risks, particularly for those in danger of not finishing school. At the same time, since these benefits to education accrue over the course of a lifetime, students often struggle to find ways to pay these upfront costs at the time they enroll. This disconnect between today’s costs and tomorrow’s earnings has provided the basis for much of our loan-based federal financial aid system, allowing students to leverage future earnings in order to fund education costs today.
For the neediest students, Pell Grants are also available to help cover their educational expenses, but these federal grants haven’t kept pace with rising tuition and other expenses. The maximum Pell Grant covered only 63 percent of the average tuition at public four-year colleges in 2013, to say nothing of housing and other expenses. As a result, low-income students, as well as their middle-class peers, generally have no other choice but to take on debt to pay for college. Much of our system of borrowing is highly subsidized by the federal government, providing families and students access to credit that might not otherwise be available given their individual resources.
Grants and Loans Designed to Promote Access are Often Insufficient for Those Who Need Help Most:
Though most forms of aid and loans have limits set by the federal government, students are also restricted by their institution’s estimated “cost of attendance” - or the total cost of a year of academic study for a given student at a particular school. As we’ve shown in this series, estimating students’ living costs is far removed from most institutions’ core educational mission, can become the subject of manipulation by colleges looking to further other institutional goals, and is difficult to do accurately for diverse groups of students. Yet, if institutions don’t accurately predict these expenses, students can end up borrowing more than they need. Or worse, students may find themselves unable to cover the basic costs of enrollment, making it difficult for them to complete their course of study.
On top of tuition payments, taking time out of the labor force imposes costs of its own, and unemployment or underemployment makes it difficult for students to make ends meet. Because this country lacks a robust social safety net, obtaining financial aid for higher education is often the only way to access money to pay for living expenses, particularly for low-income students whose alternative funding options are limited or nonexistent. Yet students often can’t achieve basic economic security with federal financial aid, much less academic success. Effectively, higher education institutions are providing a service they were never designed to undertake: a social safety net for impoverished students, conditional on satisfactory academic progress.
Research from the Wisconsin Hope Lab has documented this phenomenon extensively: researchers discovered a disturbingly high incidence of food and housing insecurity at community colleges, inadequate access to mental health services, and demonstrated that many low-income students are contributing money back to their families while enrolled. Addressing outside needs is far from the main purpose of higher education -- but if students are unable to learn without adequate food and housing, or are unable to cover their own costs due to supporting a family member, it ultimately becomes an issue that higher education institutions must learn to address.
For today’s low-income students, financial hardships extend well beyond tuition. The loans and grants that comprise our federal financial aid system are just one solution to their monetary struggles, and taking on debt comes with many risks. For students who are successful, these investments may well be worth it, but for those who drop out or do not acquire skills with labor market value, these loans provide short-term financial relief that may actually leave them worse off than they were before.
Low-Income Individuals Who Aren’t Enrolled Face Even More Dire Circumstances:
At least low-income students are able to access benefits, including loans and grants, to help defray their cost of living. Many transfer programs exist to support income alone, but since these each maintain distinct eligibility criteria and vary according to the state, not everyone can count on these. Attending college provides at least one point of connection into a broader system of social services, along with grant funding for qualified recipients that can be used to cover tuition and living costs, and loans that can be used for any remaining expenses. Some schools even help low-income students supplement their federal aid by working with benefits access organizations such as Single Stop to connect students with other types of support, such as food stamps, housing vouchers, unemployment insurance, cash assistance, or Medicaid. Initial research on the effectiveness of these models has shown promise. Individuals with similar incomes not enrolled in school are ineligible for financial aid dollars, but also have a harder time identifying and obtaining other forms of social assistance.
Unfortunately, underprivileged individuals who don’t go to college might have difficulty accessing benefits they’re eligible for on their own. In this way, higher education reinforces yet another artificial barrier among low-income individuals: those who are enrolled in college are able to receive quick assistance with their financial problems through grants, loans, and benefits access centers, while those who are not are left to their own devices to navigate eligibility, applications, and access to an assortment of other social programs. In other words, the patchwork nature of our country’s social safety net has created the need for higher education institutions that serve low-income students to fill the void to help their students be successful and has left many outside of higher education without any support at all.
Linking Education to Other Social Services Could Help Students Facing Severe Financial Strain:
At a minimum, higher education institutions that serve low-income students should work towards establishing a “one-stop” model in which students get help accessing benefits for which they are eligible, at the time they apply for financial aid. Food Stamps, Medicaid, and other programs could help lessen the financial stress for these students while ensuring their basic needs are met.
These services would be most effective if coupled with reforms outside the realm of higher education: improving access to more generous basic services for low-income people regardless of their enrollment status. This could be done by expanding eligibility, benefits, and outreach for a variety of different services, including food, healthcare, and housing. Doing so would require large spending increases, but would help low-income college students, while also providing support to those outside the higher education system. College students would then be able to tap into these resources while they are enrolled rather than relying on higher education institutions and their financial aid packages to fill this role. Designing and updating these disparate benefit programs would be a huge lift, particularly at a time when many states are cutting eligibility rather than expanding eligibility.
Under an expanded and improved social safety net, low-income and other nontraditional students would better be able to cover basic needs, allowing them to navigate the higher education space without worrying about where to find their next meal. Financial aid, including loans, would still be necessary for tuition, but living expenses would be covered through alternative means. This system would allow higher education institutions to focus on what they do best without depriving students of access to food, healthcare, and housing. At the same time, low-income individuals who aren’t enrolled in school would have access to these same basic services, eliminating any incentive to enroll in college as a method of accessing financial assistance.
Antipoverty programs can take many different shapes, all of which would address some or all of these problems with varying degrees of success. However, a Universal Basic Income--a guaranteed cash transfer to all residents or citizens of a particular country--set at an adequate level is well suited to perform many of these functions. Such a system would allow students and others to make their own decisions about where and how to spend money, and streamline the many existing programs available today. Additionally, since, it would not be means-tested, everyone would be eligible to benefit from it. While it may seem strange to guarantee a basic income to wealthy individuals and families, making it universal would help it win political support from middle and upper-income constituencies and reduce the stigma associated with other welfare programs. At the same time, the basic income would be taxed at the marginal rate making the benefit largest for those with the lowest incomes. Tuition assistance, public education, and some medical services would still be needed, but many other welfare programs would no longer be necessary. And since students would all have some guaranteed income, colleges would not face the same difficulty in estimating student living expenses.
Liberal and conservative intellectuals alike have expressed support for such a system, though often for very different reasons. Uncertainty about the specific details of a Universal Basic Income, as well as the impact and implementation of such a program remain a key obstacle to winning support for it. A Universal Basic Income system has never been implemented nationally, but small cities in both the U.S. and Canada have conducted experiments that have found generally positive effects. Evidence from these experiments has shown that the programs do show a modest decline in work effort, but much of this effect was found to be the result of an increase in school enrollment.Rethinking the ways in which we provide impoverished individuals with essential services would have repercussions well beyond the higher education community. But providing for basic living expenses for all students - regardless of family background - would help level the playing field for many low-income students, and allow colleges and universities to focus on what they do best.