College Affordability Still Out of Reach for Students with Lowest Incomes, Students of Color

IHEP analysis of new federal data show stark disparities in unmet need  

By: Marián Vargas and Kim Dancy 

In today’s rapidly evolving higher education landscape, high-quality postsecondary data can provide critical insights that inform decision-making and advance equitable outcomes. New IHEP analysis of data from the U.S. Department of Education’s 2019-20 National Postsecondary Student Aid Study (NPSAS:20) underscores a disconcerting reality: most students face a gap between what their families can afford and what they must pay to attend college. That gap, often referred to as “unmet need,” is much larger for American Indian or Alaska Native, Asian, Black, Latinx and/or Hispanic, and Native Hawaiian or Pacific Islander students compared to White students, on average. Additionally, students who received a federal Pell Grant at least once face almost $10,000 of unmet need, on average, while students who never received Pell Grants are typically able to fully cover their financial need with resources to spare. Affordability barriers are especially stark for students from the lowest income backgrounds, who would need to contribute almost 150% of their household income to cover the full-time cost of a four-year college, even after accounting for grant and scholarship aid.   

Utilizing the NPSAS:20 data, IHEP analyzed three measures of postsecondary affordability: the share of students with unmet need, average unmet need, and the portion of household income required to pay for college. Our findings reveal major differences in college affordability by race and ethnicity and by income.  

Pell Grant Recipients and Students of Color More Likely to Face Unmet Need 

One critical measure of college affordability—unmet need—refers to the gap between students’ total college costs (including both tuition and non-tuition expenses) and the funds available to them through grant aid and family resources (measured as their “expected family contribution”). Students with unmet need take out more loans, work more hours, face higher degrees of food and housing insecurity, and are at greater risk of forgoing higher education or leaving school without a credential.  

Each year, Pell Grants help approximately 6 million students from low-income backgrounds pursue a postsecondary education. However, Pell Grants have not kept pace with rising costs — now covering the lowest share of college costs in the program’s history. Data from NPSAS:20 reveal a stark picture: 90 percent of students who received a federal Pell Grant at least once face unmet need, compared to 56 percent of students who never received a Pell Grant.  

Additionally, while the majority of students across all racial and ethnic groups struggle with unmet need, American Indian or Alaska Native, Asian, Black, Latinx and/or Hispanic, and Native Hawaiian or Pacific Islander students are more likely than White students to have unmet need. Black students are the most likely to have unmet need, with almost nine in ten Black students facing a gap between college costs and estimates of available resources, contributing to disproportionately high levels of student loan debt post-graduation in comparison to all other racial and ethnic groups.

Pell Grant Recipients and Students of Color Face Large Amounts of Unmet Need  

The average amount of unmet need varies widely based on race, ethnicity, and Pell Grant receipt. Students who received a Pell Grant at least once face the highest average unmet need of about $9,800, while students who never received a Pell Grant are typically able to fully cover college costs using grants and family resources, with an estimated $5,000 to spare.  

Black students face the highest average unmet need among all racial and ethnic groups, with about a $9,000 gap between college costs and what students can cover through grant aid and estimated family resources. American Indian or Alaska Native, Asian, Latinx and/or Hispanic, and Native Hawaiian or Pacific Islander students also face large amounts of average unmet need. In contrast, White students are often able to cover their college costs with grants and estimated family resources, with an average of about $300 of resources left over.  

Students with Lowest Incomes Need Almost 150% of Household Income to Cover College Costs  

Another measure of college affordability is the share of household income students would need to contribute to cover the net price of college, which is defined as the full cost of attendance minus grants and scholarships. Our analysis shows that the average net price for dependent students enrolled full time at a four-year college vastly exceeds the resources available to students from families from the bottom two income quintiles. In fact, to pay the cost of full-time attendance at a four-year college, families with the lowest incomes would need to contribute 148% of their household income.  

Policy Changes Needed to Improve Affordability for Historically Underserved Students  

The latest federal data demonstrate that college remains unaffordable for many students, especially American Indian or Alaska Native, Asian, Black, Latinx and/or Hispanic, and Native Hawaiian or Pacific Islander students and students from low-income backgrounds. Financial aid policies such as doubling the Pell Grant or funding first-dollar free college programs are critical to ensuring students from low-income backgrounds and historically underserved communities can access, afford, and succeed in college. 

Join @PostsecData for a Twitter chat on Thursday, August 17th at 2:00 pm ET to discuss IHEP’s analysis of NPSAS:20 data, and share your own findings, insights, and policy recommendations to address financial barriers in higher education in higher education.