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Should PUBLIC univs redistribute tuition revenue to fund FA for low income students?

GMTplus7GMTplus7 Posts: 6,033Registered User Senior Member
edited November 2012 in Parents Forum
Last month, the Board of Regents of the State of Iowa, which oversees the University of Iowa, Iowa State University, and the University of Northern Iowa, eliminated their policy of earmarking 20 percent of in-state tuition revenue for financial aid purposes. In doing so, the board launched a plan to reduce the sticker price of attending the three universities by $1,000 a year.
While most people in higher education are aware that institutions use some of their tuition revenue for financial aid, many boards are finding that, despite regular pronouncements that colleges were engaging in such practices, the public was unaware.

… Part of the backlash against such policies is attributable to the widespread concern about the increase in tuition prices and student debt.
Use of public tuition for financial aid likely to become a political issue in many states | Inside Higher Ed


Is it fair for PUBLIC universities to earmark tuition revenue from high- and middle-income students for the purpose of supporting low-income students?
Post edited by GMTplus7 on
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Replies to: Should PUBLIC univs redistribute tuition revenue to fund FA for low income students?

  • ucbalumnusucbalumnus Posts: 36,784Registered User Senior Member
    Regardless of whether there is a specific earmark, it all goes in and out of one big pot. Tuition goes into the school's money, and financial aid is one of the things that the school spends it on. Or you can alternatively look at it in terms of the school having a revenue goal (tuition net of financial aid plus any state subsidy) to meet to stay financially afloat; policies may change to cause some students to pay a higher net price while others pay a lower net price.

    The whole idea of public schools, including universities, is to ensure that the next generation has educational opportunity based on individual ability and effort, rather than being locked into a specific socioeconomic class that one was born into. Are you saying that we should give up on that idea?
  • minimini Posts: 26,431Registered User Senior Member
    It's not only fair; ensuring an educated workforce for the future is one of the purposes of government. Higher income folks are going to get college degrees in any case - so there is no inherent purpose in subsidizing them.
  • GMTplus7GMTplus7 Posts: 6,033Registered User Senior Member
    The issue is NOT whether lower income students should receive FA—I think most people have no issue with that.

    The issue raised in this article is whether it is fair to be raising the overall tuition to fund the FA. In contrast, some schools fund their FA from endowed funds.




    At public universities, it not just high income families that get charged full freight. Middle income families do so too-- a lot of middle class families are grousing about having to take out loans.
  • MSNDISMSNDIS Posts: 228Registered User Junior Member
    As a middle-class parent who has scrimped and saved so I can put my kids through college I can honestly say that I resent a portion of my daughter's tuition going to someone whose parent(s) chose to go on vacations, bought the latest technology, and lived beyond their means. Parents need to make paying for college a priority in their budget. A PUBLIC university should be financed through taxes and the tuition should be set the same for everyone attending (at least for in-state students who helped pay the taxes that fund the university). EVERYONE should be paying for a PUBLIC university, not just the middle-income and higher-income students through their tuition.
  • annasdadannasdad Posts: 4,825Registered User Senior Member
    Is it FAIR that some children are born into families of limited means and whose college choices are restricted by their parents' income whole others are born into wealthy families and can go anywhere they want?
  • sylvan8798sylvan8798 Posts: 4,430Registered User Senior Member
    MSNDIS wrote:
    As a middle-class parent who has scrimped and saved so I can put my kids through college I can honestly say that I resent a portion of my daughter's tuition going to someone whose parent(s) chose to go on vacations, bought the latest technology, and lived beyond their means. Parents need to make paying for college a priority in their budget. A PUBLIC university should be financed through taxes and the tuition should be set the same for everyone attending (at least for in-state students who helped pay the taxes that fund the university). EVERYONE should be paying for a PUBLIC university, not just the middle-income and higher-income students through their tuition.
    Seeing why there is no politics subforum on collegeconfidential...

    Wow. Just wow.
  • eireanneireann Posts: 1,373Registered User Senior Member
    someone whose parent(s) chose to go on vacations, bought the latest technology, and lived beyond their means

    I'm sure that that is the situation that everyone who receives financial aid is in. Especially at public universities, that give out pretty limited grant aid anyway.

    In fact, I'm sure that everyone who is below the poverty line is just blowing their money on extravagant vacations and ipads.
  • charlieschmcharlieschm Posts: 4,282Registered User Senior Member
    I believe most public colleges cost much more per student than their in-state tuition rates. Therefore, an in-state student paying full price is already getting a subsidy.
  • eireanneireann Posts: 1,373Registered User Senior Member
    Yeah, I think public university tuition is pretty heavily subsidized by taxpayers (which is why I think it's odd to say that the full-pay-kid is subsidizing the non-full-pay kid. Aren't they both being subsidized by taxpayers? Wouldn't it actually be correct to just say that the full-pay kid is less subsidized by taxpayers? The effect is the same, but I don't think that you can argue that the full-pay-kid's education only cost $9,000 so if tuition is $10,000 that extra $1,000 is just paying for somebody else. That full-pay-kid's education cost more than whatever he/she is paying for tuition).
  • SteveMASteveMA Posts: 6,079Registered User Senior Member
    MSNDIS--going on vacations and buying the latest of everything won't affect their financial aid in the slightest because if they can afford to do all of that to the extent you claim, their annual income will preclude them from getting any financial aid anyway. To really get significant financial aid a family has to make $40,000/year or less. In most parts of the country that is really poverty level--not federally defined but just reality. A family making that in our area would qualify for food stamps. Do you really begrudge people in that income level the chance to rise above that?
  • ChrisTKDChrisTKD Posts: 894Registered User Member
    charlieshm "I believe most public colleges cost much more per student than their in-state tuition rates. Therefore, an in-state student paying full price is already getting a subsidy."

    Well that's one way to look at it. Devil's advocate position is that the "subsidy" is being provided by taxpayers who happen to be the same demographic as the families paying full freight in-state tuition. The fundamental question is why should any good or service be priced differentially depending upon your income/assets? One might argue that the public university has the right to charge differentially because it theoretically serves a public good. A better question might be to what extent the state should support efforts to increase the income potential of low income students. Rather than raising tuition on 4 year colleges perhaps low income students should be encouraged to attend 2 year community colleges and then transfer to the 4 years schools (at considerably lower cost if they can maintain grades).

    Typically, financial aid is partially dependent upon assets. So MSNDIS is correct that parents that live beyond their means eventually benefit in the aid calculation. Nevetheless, I'd rather be the ant in Aesop's fable than the grasshopper.
  • mom2collegekidsmom2collegekids Posts: 62,381Registered User Senior Member
    Well, it's wrong to overcharge middle class and upper middle class people more money to fund FA....especially when BOTH parents' incomes aren't being used to determine need for lower income students.

    When middle class and upper middle class people have to take out loans to fund the over-charge, and some of the lower class people have NCP incomes that aren't being looked at, that isn't right.

    The UCs in Calif raised fees to fund FA. That means that a family of four that earns 85k per year is overcharged to fund a family of two that earns 75k...that is CRAZY. yes, the family of two gets FREE tuition, while the family of four does NOT.
  • momofthreeboysmomofthreeboys Posts: 11,545Registered User Senior Member
    I think because each state does things differently and the costs vary plus the state subsidies vary it is up to the people of each state to figure it out. Awhile back there was a thread about federal aid and I do think that should be adjustable to how each state sets it's tuition with caps to ensure states don't raise tuition intentionally to garner additional federal funds.
  • momof3greatgirlsmomof3greatgirls Posts: 816Registered User Member
    I think 1k is enough to make them stop the practice. There are way too many middleclass students not getting any aid for college. That 1k would certainly help.
  • ucbalumnusucbalumnus Posts: 36,784Registered User Senior Member
    GMTplus7 wrote:
    At public universities, it not just high income families that get charged full freight. Middle income families do so too-- a lot of middle class families are grousing about having to take out loans.

    It seems hard to believe that a median income household making about $50,000 per year can afford to spend $20,000 to $30,000 of it (after payroll and income taxes) paying full freight list price at an in-state public university, unless they have substantial savings. Or even $10,000 to $15,000 if it happens to be a local commutable one.
    GMTplus7 wrote:
    The UCs in Calif raised fees to fund FA. That means that a family of four that earns 85k per year is overcharged to fund a family of two that earns 75k...that is CRAZY. yes, the family of two gets FREE tuition, while the family of four does NOT.

    If the financial aid falls off a "cliff" at a certain income level, then they probably should redo it to avoid a "cliff"... but the $80,000 upper limit for full tuition financial aid at UC is at the 70th percentile of income.

    People here have a rather skewed sense of what "middle income" is. Most seem to think that it is substantially higher than what it actually is (though not up to $200,000 or $250,000 as at least one politician has said).
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