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Financial aid packages still burden students with debt, report finds

October 7, 2021
By Laura Krantz

Financial aid packages still burden students with debt, report finds

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Inadequate financial aid from Massachusetts colleges and universities often forces the neediest students in this state to saddle themselves with tens of thousands in loans to earn a college degree, a new report has found.

The insufficient funding, from both public and private institutions, disproportionately burdens low-income students and students of color, undermining their academic achievement and, ultimately, their financial future, the study said.

The report also discusses how state funding for public higher education has declined significantly over time. For example, the MassGrant program, which awards full-time needy students approximately $2,200 per year, covered 80 percent of tuition and fees in 1988 but today covers just 14 percent.

The report, produced by the nonprofit organization uAspire, focused on students whose families make so little money they are not required to pay anything toward their children’s education. It found that for these students, colleges rarely offered enough to pay the entire cost of attendance without loans.

“The pathway to a degree in Massachusetts brings high cost and debt,” said Anika Van Eaton, the Massachusetts policy director for uAspire, which advises students about financial aid offers here and in New York and California.

Massachusetts is known as the higher education capital, but the focus on the elite schools that call this region home often means the institutions that serve local students are overshadowed.

“We have a reputation as the education state, but, in reality, we have a ways to go before students are succeeding in college without the burden of high bills and crippling student loan debt,” Van Eaton said.

The study analyzed 2,253 financial aid offers from four-year colleges and universities in Massachusetts received by 1,111 low-income high school seniors in the graduating classes of 2018, 2019, and 2020. Thirty-six percent of the students were Black, 31 percent were Latino, 22 percent were Asian American, and 7 percent were white.

“This financial burden is a problem, and it’s an inequitably distributed problem,” Van Eaton said.

The study examined offers from both public and private institutions. More than half of four-year public colleges offered low-income students a package that included an estimated bill before loans of $10,000 or more.

For private colleges, the study found that very elite private institutions, like Harvard, often offer full aid packages free from loans, but that 79 percent of less-selective private colleges offered packages that left needy students with a bill of $10,000 or more.

The report also included recommendations to solve this longstanding issue. Top among them was greater investment in the public higher education system. Specifically, the report said, Massachusetts should reduce the indirect expenses of earning a degree, like housing, books, and fees at public institutions, and increase funding for need-based financial aid.

Schools should also redesign financial aid award letters so they are easier for students to understand, the report said. More broadly, the report urged leaders to design a debt-free public education system.

Although some believe it is important for students to pay at least a modest amount for their schooling, so they will feel more invested, the push for more affordable, or free, college has gained steam in recent years. President Biden has advocated for free community college.

There is an outdated perception, Van Eaton said, that students could simply get a summer job or live at home to make college cheaper, but college costs have increased so drastically that rarely does that yield enough money.

In addition, some students are not able to live at home, and the on-campus living experience can provide crucial access to professors, networking, and other intangible benefits, she said.

Massachusetts ranks 14th nationwide for the amount of debt that graduates carry when they leave public universities. Seventy-one percent of students in this state graduate with debt, the report said, and the average amount is nearly $31,000.

Student debt exacerbates the racial wealth gap because families of color are more likely to have to take out loans.

Ultimately, the report found, financial pressure and the stress of balancing school and work are among the top reasons students drop out of school, and these factors have a disproportionate impact on students of color. The stress also taxes students’ wellbeing; many experience food insecurity and homelessness.

New Jersey, a state with an only slightly larger population and similar GDP, invests nine times as much in need-based undergraduate aid, said Van Eaton, the report’s author. Washington state also recently added a sliding scale aid program that helps families earning up to the state’s median income.

State Education Secretary Jim Peyser said he is aware of these problems and the state has recently created a program to provide more aid to needy college students.

The MassGrant Plus program awards additional grant funding to cover all tuition and fees for low-income students who attend a community college or most of the state universities. It does not cover room and board, however, and, at least for now, does not apply to the UMass system.

Peyser said the Legislature over the past four years has increased financial aid 35 percent. During the prior 10 years, that line item had remained flat, he said.

Peyser believes that in some cases loans are appropriate, but he does not want the cost of a public education to burden low-income students.

“The mix of loans and grants is out of whack, especially for low-income students, and that’s what we’re trying to address,” he said.

Rob McCarron, president and CEO of the Association of Independent Colleges and Universities in Massachusetts, a trade association representing private schools, said in a statement that private colleges are committed to making college affordable.

“The uAspire report correctly points out that students need — and deserve — additional investments in financial aid programs at both the state and federal level,” he said in the statement, adding that the association is pushing state and federal lawmakers to increase the size of both the MassGrant and Pell Grant programs.

Ifrah Gurhan, 21, a junior at UMass Boston studying biology, remembers the stress of applying to college even as she wasn’t sure if she could afford it. She pored over her financial aid offers with her siblings and a high school adviser.

“Affordability was definitely the number one thing on my mind,” she said.

Gurhan wants to be a biology teacher. She loves the endless questions that scientific inquiry opens up, and one day she hopes to inspire her own students to ask questions, too.

She lives at home in Cambridge and works 12 hours a week as a home health aide, earning money she uses for food, transportation, and school supplies. So far she has avoided loans thanks to a patchwork of grants and outside scholarships she pieced together. Her estimated family contribution is zero, based on the federal formula used to determine financial aid.

She counts herself lucky to have been admitted to a relatively affordable school.

“I’m extremely privileged, but I know that for other college students, their situations might be different,” she said.

Janelle Sanon, 22, is a junior at UMass Dartmouth, where she studies psychology. Sanon, who graduated from City on a Hill Charter Public School in Roxbury, finds the financial aid system confusing and opaque. She receives $5,000 per semester in grants, she said, but must still pay another $10,000 each semester.

She has avoided loans only because, somehow, her mother always scrapes the money together, renting out their basement and increasing the rent at another apartment she owns. It leaves Sanon feeling grateful, but guilty.

“It’s still hard trying to afford it,” she said, “it’s still hard trying to balance everything.”

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