factors like parental education. For example, at the flagships 83 percent of students from the top half of the income distribution graduate within six years, but only 68 percent from the bottom half do so: a difference of 15 percentage points. The difference in four-year graduation rates is 19 points. We also find that differences across states in the net prices paid by students have significant effects on the odds that a low-income student will graduate: the higher the net price, the lower the completion rate (other things equal). On the other hand, there is no correlation between net price and completion rates for high-income students, a finding that raises real questions about the wisdom of merit-aid programs and policies aimed at keeping tuition low across the board.2

Because of the importance of financial aid to college attendance and completion, the College Board has recently argued that it is important to keep college affordable “by controlling college costs, using available aid and resources wisely and insisting that state governments meet their obligations for funding higher education.” More specifically, the College Board recommended “more need-based grant aid while simplifying and making financial aid processes more transparent.” The College Board (2009) noted that need-based aid should keep pace with inflation; student debt should be minimized; financial aid processes should be made more transparent and predictable; and institutions should be given incentives to enroll and graduate more low-income and first-generation students.3

Indeed, one of the most compelling factors affecting the supply of minority STEM graduates has involved financial incentives and the availability of targeted scholarships. Yet this has been one of the most highly debated and legally attacked issues in higher education. The highly visible federal court actions (Regents of the University of California v. Bakke, Hopwood v. Texas, Johnson v. Board of Regents, and Gratz v. Bollinger) mainly addressed race in admissions decisions.

While critically important for those selective institutions that consider race as part of the admissions process, the affirmative action issue in financial aid has significance—and potential impact—that extends beyond the question of admissions. First, minority students are more likely to come from low-income families. As a result, for most of these students, the availability of financial aid is a significant factor affecting their ability to go to college. Second, at a time of increasing national diversity, and with the recognition that we can “leave no child behind,” we face the prospect that by not providing the necessary financial aid supporting college and university

2

William Bowen, Matthew C. Chingos, and Michael S. McPherson. Helping Students Finish the 4-Year Run. The Chronicle of Higher Education. September 8, 2009. Available at http://chronicle.com/article/Helping-Students-Finish-the/48329.

3

College Board. 2009. Coming to Our Senses. New York, NY: College Board.



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