Bloomberg Philanthropies announced this week a new effort to help talented low- and middle-income students enroll in and graduate from top-tier colleges and universities. While every intervention is welcome, this one assumes that a major problem is getting these students to apply to these institutions. In fact, the real problem is that colleges can accept more of these students only by reallocating resources to need-based financial aid. And while the $10 million commitment to increasing awareness and applications is welcome, it is really a billion dollar problem, not a million-dollar one. If the billion dollar problem isn't dealt with, the million dollar investment will largely be wasted.
Here is the simple math. The project is targeting about 65,000 talented students annually from the bottom half of the income distribution who are qualified to attend about 265 selective colleges that do not currently enroll these students. Using data from Vassar College as an example, our average annual grant for financial aid students is about $40,000. If Vassar is similar to the other colleges in this group of 265, the financial aid costs of admitting an additional 65,000 students a year after four years would be $40,000 times 65,000 times four, or $10.4 billion. Of these 265 institutions, some are publics. Their financial-aid costs may be less, so this number may be overstated, although the $40,000 grant number is for all financial aid students at Vassar—not just those from the bottom half, whose needs are greater. Even if overstated by 100 percent, we're still talking about a $5.2 billion dollar problem.
Read more at The Chronicle of Higher Education: http://chronicle.com/article/A-Billion-Dollar-Problem/149725