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Making Strides in College Affordability: The Rice Investment

It was a hot September day in Houston, Texas when high school senior Alex Nelson-Groocock opened Facebook. Kirsty Leach, Nelson-Groocock’s classmate, opened Twitter.

Just two weeks earlier, both Mirabeau B. Lamar High School seniors would have been in completely different states of mind. You may have found Nelson-Groocock, before his High School Democrats meetings, calculating the costs of each of the colleges to which he was applying. Leach could have been seen diligently working on her college essays before varsity volleyball practice. Now, they were each on the verge of discovering the most exciting college financial aid news of the season.

“It was actually kind of shocking,” Nelson-Groocock laughingly told The Politic in an interview. “There was just obviously a worry about how much I’m willing to pay for undergrad out of pocket.”

Leach echoed Nelson-Groocock’s enthusiasm. “I thought it was definitely a great step and sent a great message.”

On September 18, Rice University – considered Texas’ most prestigious private institution of higher learning – ushered in a new era of financial aid for its students. Starting in the fall of 2019, the university announced, Rice will commit to covering the full cost of tuition for students whose families’ income totals less than $130,000. Rice will additionally cover room and board for students whose families make less than $65,000 a year. To assist accepted middle-class applicants, Rice will offer half-tuition scholarships to student families earning between $130,000 and $200,000. The school will also replace any otherwise-necessary student loans with grants and scholarships for students whose combined family incomes don’t surpass $200,000.

“I think Rice’s new policy sends a really strong message about the school’s priorities and its mentality towards people who are less able to pay for college,” Leach told The Politic. “It shows that Rice is trying its hardest to allow anyone who has earned their place at Rice to be able to attend.”

Leach, a Rice applicant, is not considering financial aid in her college search due to her family’s income. However, her sentiments mirror those of a growing number of Americans who believe in creating better college opportunities for students whose families can’t pay the high price higher education out-of-pocket. According to a poll commissioned by WGBH News, the local NPR of Boston, MA, 70% of Americans believe more factors than just grades and test scores, including overcoming financial obstacles, should be viewed as positive considerations in college admissions.

Nelson-Groocock, who participates in high school debate on the state and national circuits, is also applying to Rice. He’s interested in studying political science and economics, and he says “a heavy academic focus” is the main factor he’s considering in his college search. Rice’s Baker Institute – an on-campus think tank – as well as the school’s academically-motivated student body are some of Nelson-Groocock’s additional considerations.

However, financial aid will be one of the biggest factors in Nelson-Groocock’s eventual college choice.

“If I had to put a number on it, probably about forty percent,” said Nelson-Groocock when asked about the degree to which he’s weighing the cost of college in his decision.

Nelson-Groocock is one of the many thousands of students embarking on the painstaking process of trying to both gain admittance to a private university and figure out how to pay for it. According to the nonprofit College Board – responsible for both the SAT exam and the CSS Financial Aid Profile – the average cost of tuition, room, board, and additional fees at an American nonprofit private institutions for the 2018-2019 school year is 48,510 dollars. Compare this figure to its equivalent from the 1968-1969 school year – when, adjusted for inflation, the total price of education at private institutions averaged 19,390 dollars.

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In July 2017, Michael Itzkowitz, a senior fellow of higher education research at the Washington, D.C.-based center-left think tank Third Way, published a report in which he discussed the growing need for affordable postsecondary education options. Considering the number of jobs in the 21st-century economy that require a college degree, the report concluded, receiving a quality college education has become a rite of passage towards maintaining or improving one’s socioeconomic status.

“Really, higher education has become one of the largest investments that someone will ever make in their life behind buying a house,” Itzkowitz told The Politic.

“States continue to invest less and less every single year in institutions of higher education,” he continued. “Institutions across the country oftentimes end up having to raise their net price, and what that means is that students end up paying more than they ever have year after year.”

Itzkowitz, who served in President Barack Obama’s Department of Education for six years, also views the failure of Pell Grants (federal aid packages provided to students who need assistance paying for college) to keep up with inflation as another factor contributing to the astronomical increase of the cost of higher education.

Though many don’t think government policies are relevant to American private universities, nearly all such schools rely heavily on governments – both state and federal – to support their operations. For example, Princeton receives about 10 times more government benefits per student than its neighboring public institution, the College of New Jersey. Private universities can fund new buildings because of the tax-deductibility of private donations, and they can shield their endowments from taxation through the tax-exempt status they enjoy from the IRS.

Perhaps most importantly, however, private universities can increase the fees they charge their students as a result of federal student loans, tuition tax credits, and Pell Grants. “Universities, knowing that the [federal aid] funds are available, raise tuition without worrying about whether students can afford it,” wrote Jenna A. Robinson, summarizing her own recently-published report. Robinson, President of the right-leaning Martin Center for Academic Renewal, is among the many researchers concerned with the “ugly cycle” of federal aid and tuition increases.

As a result of this cycle, many students like Nelson-Groocock find themselves paradoxically reliant on the government: they depend on government-offered financial aid to fund their college endeavors, but, in some respects, government activity is responsible for the high prices of their schools of choice to begin with.

Like Rice, Yale does not expect families making less than 65,000 dollars per year to contribute towards their child’s education, but families making between 65,000 and 200,000 dollars per year are expected to contribute a proportional amount of their yearly income towards the cost of college. This can range from 1 to 20 percent. At Princeton, students with yearly family incomes of 140,000 dollars or less receive free tuition, and students from families making less than 65,000 also receive free room and board. (According to College Board, the average cost of room and board at private colleges and universities is 12,210 dollars.) Through scholarships and grants, students from families making less than 125,000 a year receive free tuition at Stanford, while room and board costs are covered for families making less than 65,000.

Each of these elite universities attempts to cater to their lower income students in the same fashion, providing free tuition, room, and board to students whose families make less than 65,000 dollars per year. In this sense, Rice is merely another number in the pack. But the fact that Rice is joining the pack is emblematic of the broader push by elite private schools to make their institutions affordable to low-income students. This push comes at a time when high-achieving, low-income students constitute just 3 percent of enrollment at elite colleges, according to a report by the Jack Kent Cooke Foundation. The report, which cites high application fees and convoluted application processes as factors preventing low-income students from applying, states that the high cost of these colleges is perhaps the biggest deterrent of them all.

But where Rice has now separated itself from its high-ranking private college rivals is in the assistance it provides to middle class students. While Rice’s commitment to free tuition, room, and board for families making less than 65,000 dollars per year is not the first of its kind, its support for families making up to 200,000 dollars per year is by no means standard. Though the average income level considered “middle class” by the Pew Research center ranges from 40,500 to 122,000 dollars, residents of large, expensive cities such as San Francisco and Washington, D.C. can make up to 200,000 dollars and still be considered middle class.

This push for middle class affordability comes at a time when college students from middle-income families are more likely to end up with student loan debt than both their lower and upper-income peers, according to a study by Jason Houle of Dartmouth College. According to Houle, students from middle class families “often make too much money to qualify for student aid packages, but they do not have the means to cover the costs of college.”

As such, middle class students accepted into elite private institutions often face a conundrum: either don’t attend due to financial restraints, or go into debt by taking out student loans. The total amount of student debt in the United States reached a total of 1.52 trillion dollars in the second quarter of this year. Over 44 million people people own this debt, with the average student in the recently-graduated class of 2016 owing 37,172 dollars. About 13 percent of the total population carries at least one student loan. Considering the fact that student loan balances jumped 150 percent from 2007 to 2017, and they don’t show any signs of slowing down, borrowing money to attend college is becoming an unattractive option for middle class students.

“Talent deserves opportunity,” Rice University President David Lebron said when announcing the terms of The Rice Investment. “We’ve built on our already generous financial aid to provide more support to lower-income and middle-class families.” In service of this goal, The Rice Investment may provide a blueprint for remedying the plights of both lower and middle-income students on a national stage.

While encouraged by Rice’s progress, Itzkowitz remains unconvinced that The Rice Investment will achieve the success to which it aspires without also making a “concerted effort to reach out to lower and moderate-income students to let them know there’s a place for them at Rice.” Outreach, according to Itzkowitz, is key to preventing another underlying issue of “undermatching,” or the enrollment of highly-qualified low and middle-income students at institutions that don’t allow them to reach their full academic potentials.

While undeterred from applying to elite colleges due to their high costs, Alex Nelson-Groocock is nonetheless one of the many millions of qualified students weary of not being able to pay their high price tags. But now that Rice and similar institutions have alleviated many cost-related concerns of lower and middle income students, perhaps an aggressive outreach program targeting lower and middle-income students is the most important next step towards making admissions at these institutions fully meritocratic.