How Colleges Are Pushing Out the Poor To Court the Rich

An anonymous reader writes "A change from 'need' based financial aid to a 'merit' based system coupled with a 'high tuition, high aid,' model is making it harder for poor students to afford college. According to The Atlantic: 'Sometimes, colleges (and states) really are just competing to outbid each other on star students. But there are also economic incentives at play, particularly for small, endowment-poor institutions. "After all," Burd writes, "it's more profitable for schools to provide four scholarships of $5,000 each to induce affluent students who will be able to pay the balance than it is to provide a single $20,000 grant to one low-income student." The study notes that, according to the Department of Education's most recent study, 19 percent of undergrads at four-year colleges received merit aid despite scoring under 700 on the SAT. Their only merit, in some cases, might well have been mom and dad's bank account.'"

Comments

This is a new twist ...

[BitZtream]

Wait ... no, its not. Never in my life has college been anything other than a money grab. If you don't already know this, you're just living in the dark. The idea that its about education is perpetuated by the schools to stay in business, typical marketing.

Look at salaries versus time spent teaching and tell me how its about education.

Look at costs spent on administrative staff and compare those same salaries to other industries.

Nothing about college even indicates VIABLE businesses, they only continue to exist because people think its a good idea to indoctrinate their children into thinking college is about making a better life for yourself.

School is now about getting you to incur as much debt as possible in the time you are there.

Re:Q&A

[BitZtream]

I escaped from poverty on my own, without someone else paying my way. I really can't stand when some prick like you acts like its impossible for someone to pull themselves out of the slums in America. This isn't fucking Kenya. In America, contrary to what all you Occupy Wallstreet douchebags with your North Face backpacks and tents think, you make your own way in this place.

You can too. It just takes actual work rather than begging for and spending some elses money. This bullshit you spew is just an excuse to expect someone else to support what you believe you are entitled to.

I don't want to pay taxes to carry someone who thinks they are entitled to anything in life. You are not, and I'm sure as hell not going to support your ass with my hard work. Even worse, I don't particularly want any more American's tainted into thinking that college isn't about money for lazy professors and administrators who also think they are entitled to this fantasy world that acts like a big hippie commune.

Re:Goodbye

[roman_mir]

The stock markets are high due to enormous inflation?

yes, of-course. That's where inflation went, bonds and stock market. That's what the Fed does when it gives the banks free money, so that they would buy Treasuries and stocks pushing those prices higher.

By the way, food is getting more expensive, so is energy, so is shelter, so is medical insurance and care, so is any type of insurance, so is transport, utilities, everything.

That you are not observing huge spikes in the consumer sector is the result of the foreigners still absorbing US created inflation (lately Japan, EU, Australia, New Zealand, Mongolia, Poland just to name a few) of-course China is still buying US dollars and Treasuries and exporting goods to USA. They are still absorbing US inflation, but now plenty of it is in the stock market, in the bond market, in housing (Fed is pushing).

What do you think it is, you think USA companies are so much more productive that the US stock markets are going up? That much more productive? How is that possible, full time employment is record low in history of USA. Energy consumption is lowest in over a decade, energy imports are lowest in 25 years.

USA is so much more productive with lowest employees, lowest amount of energy imported and used, highest number of people on social welfare programs, disability, food stamps (sorry, it's called SNAP today, that's the PC term)? I don't think so.

It's not productivity that pushes the stock market up, it's inflation. That's where inflation is going, that's the assets the new money is chasing, NOT YET the consumer items as much.

And of course I want to pay extremely expensive tuition, and then strategically live like a pauper so I don't have to pay back loans. Then, after the first 10 years are up, I can go to any employer with my decade old education, and expect to make a bunch of money. It seems like a foolproof plan of action, because not only are 10 year old degrees very important, but humans are great at delaying gratification.

- what you want is irrelevant, you are going to respond to INCENTIVES.

Here are your incentives:

Pay as you Earn plan limits federal loan repayment obligations to 10% of "discretionary income" defined as total income above 150% of the federal poverty level.

That's $16,000 for individual, $33,500 for a family of 4.

If you earn $80,000, then you'll be paying about 4,500 per year.
If you earn $50,000, then you'll be paying $1,500 per year.

So given that, and the fact that the more you earn, the less of the interest you'll be able to deduct from your taxes, the incentive is not to maximise pre-tax, pre-loan repayment earnings but instead to maximise the post-tax, post-loan payment earnings and those are different goals with different incentive structures.

Sure, if your choices are 50K or 150K you should go for 150K salary.

If your choices are 40K or 65K then it's absolutely not clear that you will take 65K over 40K once you calculate what you'll be taking home (and of-course there are other considerations, such as where you have to live to make a higher salary, what will your other expenses be, other taxes).

Basically paying a loan is exactly the same as paying a tax and people act to minimise paying taxes all the time when the choices are: work harder and get almost no (or no) extra benefit or work less, live cheaper and get the same monetary outcome at the end.