Unmet financial need a major barrier to higher education for low-income students, students of color

Most students face a gap between college costs (tuition, room and board, course materials, transportation, and other expenses) and what they can actually pay to attend, according to a new analysis from the Institute for Higher Education Policy (IHEP), Inside Higher Ed reports.

That gap between total college costs and the funds available to a student through grants, financial aid, and family resources is known as “unmet need.” After analyzing data from the U.S. Department of Education’s 2019-20 National Postsecondary Student Aid Study, IHEP found that while the majority of students across all racial and ethnic groups face these gaps, students of color and low-income students experience higher degrees of unmet need than white students.

Unmet need is part of a larger cycle of financial stressors that prevent students from enrolling in college or completing their degree, IHEP says. Pell Grants, federal financial aid for students from low-income households, have not kept up with rising college costs, leaving low-income students taking out more loans, working more hours, and struggling with higher rates of food or housing insecurity.

Related: Financial aid shifting from lower-income students to higher-income students, analysis finds >

Unmet need for low-income students and students of color

IHEP looked at three measures of college affordability in the data: the share of students with unmet need, average unmet need, and the portion of household income required to pay for college. Ninety percent of students who had received a Pell Grant at least once had unmet need, compared to 56% of students who never received a Pell Grant. Additionally, students who received a Pell Grant at least once had the highest unmet need, with a $9,791 gap between what they could cover through grant aid and family contributions and the actual cost of attending a four-year college full-time. Students who never received Pell Grants could cover their college costs with family resources and grants with $4,956 left over.

American Indian or Alaska Native, Asian, Black, Latine, and Native Hawaiian or Pacific Islander students were more likely to have unmet need than white students. Black students were the most likely to see a gap between their ability to pay for college and the cost of attending college, with 88% experiencing unmet need; Black students also had the highest rates of student debt after graduation. They also had the highest average unmet need at $8,942, while white students on average were able to cover college costs with $315 to spare.

Related: The enduring, widening disparities that limit Black students’ degree attainment >

IHEP’s analysis also indicates that students with the lowest incomes would need to contribute almost 148% of their household income to cover the net price of college, defined as the full cost of attendance minus grants and scholarships, compared to low income (51%), middle income (35%), and high income families (24%).

To reduce financial barriers to higher education, the report suggests doubling the Pell Grant, which has not kept up with rising college costs, and investing in free-college programs that use the first-dollar approach, which allow low-income students to apply state promise funds to tuition and fees, before using other state and federal aid, such as Pell Grants.

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