Many selective private and large public universities are providing significant tuition discounts to high-income students, thereby steering low-income families to take on hefty Parent PLUS loan debt, according to a new analysis from Stephen Burd, senior writer and editor at New America.
In his report, Burd identifies 23 selective private universities and 18 public flagship and research institutions with major income disparities regarding how they distribute their institutional financial aid. According to his research, these 41 institutions spent $2.4 billion of their own financial aid dollars on students who lacked financial need in 2023. That year, nearly $2 for every $5 spent on institutional aid at these schools went to non-needy students. As a result, many families of Pell Grant recipients at these institutions took out loans to send their children to college, with a median Parent PLUS loan debt of nearly $30,000 for Pell recipient families.
At the 23 private universities included in Burd’s analysis, over 26,000 families who had children who either graduated or left these institutions in 2020 and 2021 borrowed PLUS loans. About 44 percent of these families were Pell recipients, who borrowed a median debt load of nearly $40,000.
In 2023, the median amount of non-need-based aid awarded by these 23 private institutions was about $61 million. St. John’s University in New York City gave out the most non-need-based aid ($218 million), followed by Drexel University in Philadelphia ($100 million), and Texas Christian University ($98 million). The median share of freshmen receiving non-need-based aid at these 23 private schools was 27 percent, with about $22,000 going to each student. The universities with the largest share of non-needy freshmen who received aid were the University of Miami (62 percent), Loyola Marymount University in Los Angeles (56 percent), and the University of Denver (54 percent).
The median share of financial aid that these private universities met of their freshman financial recipients was 85 percent. Quinnipiac University in Connecticut (66 percent), Hofstra University in New York (71 percent), and Loyola Marymount University (71 percent) met the lowest share of financial need for their freshman students. Students from families with annual incomes of $30,000 or less were charged an average tuition of $24,000 to attend one of these 23 private universities. The institutions that charged the lowest-income students the most were Pepperdine University in Malibu, California ($36,000), Quinnipiac University ($31,000), and Fordham University in the Bronx ($31,000).
At the 18 public universities included in Burd’s analysis, roughly 46,000 families who had children who either graduated or left these institutions in 2020 or 2021 borrowed PLUS loans. About 46 percent of these families were Pell recipients, who borrowed a median debt load of over $21,000.
In 2023, the median amount of non-need-based aid awarded by these 18 public institutions was about $36 million, with the University of Alabama ($185 million), the University of Arizona ($152 million), and Auburn University in Alabama ($66 million) awarding the most non-need-based aid. Compared to the aforementioned private schools, there was a slightly larger median share of freshmen receiving non-need-based aid at the 18 analyzed public universities (29 percent), with about $7,500 going to each student. The public universities with the largest share of non-needy freshmen who received aid were the University of Connecticut (88 percent), the University of Arizona (46 percent), and the University of South Carolina (42 percent).
The median share of financial need that these public institutions met of their freshman financial recipients was only 61 percent – significantly lower than the median financial need met at private institutions. The public universities that met the least need were the University of Cincinnati (46 percent), the University of Oregon (47 percent), and Clemson University (48 percent). Students from families with an annual income of $30,000 or were charged an average of $14,000 to attend one of the 18 public universities. Low-income students were charged the most to attend Temple University ($23,000), the University of Alabama ($19,000), and Auburn University ($16,000).
“The problems highlighted in this report won’t be solved until policymakers recognize that loading low-income families with Parent PLUS loans is part of the deliberate financial aid leveraging strategies that the country’s largest enrollment management firms have been selling colleges,” said Burd. “These firms and their clients must be held to account for the damage they have caused.”
He continued, “We need to help the majority of Americans who struggle to pay for college, instead of continuing to cater to the most fortunate portion of the student body, those who can already afford to attend college without anyone’s help.”
