The NELS:88 high school graduates who attended postsecondary education were asked whether they received financial aid, and if they received aid, to report the type of aid and the estimated total dollar amount. The responses of the low-income students are shown in table 3. The majority of low-income students reported receiving financial aid, with 66 percent of those at public two-year institutions, 90 percent at public four-year institutions, and 96 percent at private, not-for-profit\9\, four-year institutions reporting that they received aid. The average dollar amount of aid that was reported ranged from about $1,700 at public two-year to about $8,400 at private four-year institutions. While 10 percent of the low-income students at public two-year colleges reported having taken out student loans, over half at public four-year institutions had such loans and three-quarters at private four-year institutions had loans. Half the low-income students at private four-year institutions reported holding work-study jobs while enrolled\10\.
The amount of detail about college costs and financial aid collected in the NELS:88 interviews is limited and is based only on student-reported information. The National Postsecondary Student Aid Study (NPSAS:93), which is based primarily on financial aid transcripts from the institutions, provides a more complete picture of the educational finances of a comparable group of low-income high school seniors who started postsecondary education in 1992-93. Table 4 shows the types and total amount of financial aid received in 1992-93 by low-income first-year dependent students who graduated from high school in 1992 as reported in NPSAS:93. The percentage of low-income students receiving financial aid at public two-year (64 percent) and private four-year institutions (93 percent) is similar to that reported by the students in the NELS:88 survey, but is slightly lower at public four-year institutions (84 percent). The average dollar amounts of total aid reported by the public two-year and public four-year institutions for students in NPSAS:93 were somewhat higher than the totals recalled by the NELS students in the 1994 interviews\11\. Such differences are to be expected in comparing institution-reported financial aid dollar amounts to student responses in a telephone survey. Moreover, although the two groups have similar characteristics, they are not identical\12\.
The amounts of financial aid that the students received are arguably meaningful only in relation to tuition and other educational costs, which vary by type of institution. As shown in table 5, the average yearly tuition at the institutions attended by the low-income students in 1992-93 ranged from about $900 at two-year public colleges to almost $9,000 at four-year private institutions. To help cover their costs, three-quarters of the low-income students received grant aid, such as the federal Pell grants and a variety of grant and scholarship programs funded by states, the institutions, or other organizations.
One useful measure of how well financial aid reduces costs is "net tuition," the amount of tuition minus grant aid, which is the remaining amount that the student must pay to the institution for instruction\13\. As shown in table 5, more than half of the low-income students attending public institutions had their entire tuition charges covered by the grant and scholarship aid, compared to about one-quarter of the low-income students attending private four-year institutions\14\. The proportion of low-income students who owed any tuition after grant aid, and the average amount remaining to be paid from other sources, is also shown in table 5. For example, those low-income students whose private four-year tuition costs were not fully covered by grants (72 percent) had an average of $4,200 in tuition remaining to be paid from other sources and other types of aid, such as loans and work study.
In addition to tuition, however, students have other expenses related to attendance, such as books and supplies, room and board, transportation, and other personal living expenses. The total cost of attendance, which includes these expenses as well as tuition, is estimated in student budgets used by the institutions in awarding financial aid. In 1992-93, these average costs of attendance, shown in table 6, ranged from about $6,000 to attend a two-year public college to almost $15,000 to attend a four-year private institution. By subtracting the total amount of financial aid (including loans) received from the total cost of attendance, the "net cost" to the student after aid can be calculated. Although the average net cost to the low-income 1992 high school graduates ranged from about $4,900 at public two-year and four-year institutions to about $5,700 at private four-year institutions, the difference was not statistically significant\15\. For example, despite the difference in tuition between public two-year and four-year institutions, the average net costs of education for low-income students were similar at these types of institutions. One of the important effects of financial aid, therefore, is to reduce the differences in net costs between various institutions for low-income students, which may give them a greater choice of institutions to attend.
Since low-income students and their parents still had to pay an average of about $5,000 to cover expenses related to postsecondary education, the effect of financial aid on access is not as clear as the potential effect on college choice. Where did the additional $5,000 or more come from? Some of the sources of funds reported by low-income students are shown in table 7. Half the low-income students reported that they were living at home with their parents, which reduced their living expenses. In addition, about half reported direct contributions from their parents, averaging about $2,000, while nearly two-thirds (65 percent) reported working while enrolled, for an average of 24 hours per week. At the two-year public colleges, 70 percent of the students lived at home, and 80 percent worked an average of 27 hours per week while enrolled. Thus, through some combination of financial aid, parental contributions, work, and other strategies, these low-income students were able to meet their tuition and living expenses while enrolled.
There is little doubt that the cost of attending postsecondary education posed difficulties for low-income 1992 high school graduates, and while financial aid reduced the differences in the amounts required to attend different types of institutions, on average, several thousand dollars remained to be paid. Nevertheless, as shown earlier in table 2, nearly two-thirds of the low-income 1992 high school graduates were enrolled in postsecondary education within two years of high school graduation despite the financial burden.
9/ Although there are private, for-profit, four-year institutions, none of the NELS:88 high school graduates had enrolled in one by 1994. Henceforth the term "private" institution should be assumed to include only not-for-profit institutions.
10/ Private four-year institutions are able to provide a larger proportion of students with Federal College Work-Study jobs because the funds in this program are allocated to institutions according to a formula. However, institutions receive a guaranteed base amount which reflects participation in the program in the early 1970s.
11/ The NELS:88 survey asked students to estimate only a total aid amount, not amounts by type of aid. There was no difference in the average amount of aid reported by students in the two surveys who attended private four-year or other less-than-four-year institutions.
12/ The 6 percent of 1992 high school graduates in NPSAS:93 who were independent students were excluded from the comparison because their parents' income is not known. U.S. Department of Education, , 1992-93 National Postsecondary Student Aid Study (NPSAS:93), Data Analysis System.
13/ This approach is used by M. McPherson and M. Shapiro, Keeping College Affordable (Washington, D.C.: 1991): 60-63.
14/ If the grant and scholarship aid is greater than tuition, the additional amount is applied to other, non-tuition, educational costs.
15/ U.S. Department of Education, , How Low-Income Undergraduates Financed Postsecondary Education: 1992-93 (Washington, D.C.: 1996): 34, also reports net costs for dependent low-income students, but the definitions are not the same. In that report, low income is defined as 125 percent of poverty level (using income and family size); undergraduates in all class levels are included (rather than only first-year students who had just graduated from high school); and educational costs are based on student-reported estimates of monthly expenses (rather than institutional student budgets). The average net costs reported are $4,900 at public less-than-4 year, $5,400 at public 4-year, and $6,900 at private 4-year institutions.
