Even before the financial strain resulting from the pandemic, under-resourced students have struggled to afford their college education. While state and federal aid, institutional grants, scholarships, and student loans have assisted students for decades, it is not keeping up with the demand and rising costs, which stops low-income students from accessing higher education.
There Needs to be Transformational Change
According to Ben Corpus, the Vice Provost for Enrollment Management at Florida Polytechnic University, we need a dramatic national policy change or a new approach to address the spiraling college costs and the mounting student debt as a bachelor’s degree has become a requirement for careers and professional advancement in this country.
Change in national policies has been debated for decades with almost no impact on low-income students as costs continue to rise. Enter the income sharing account or ISAs. ISAs essentially provide funding for students to enroll in and graduate from college by financing their college education in exchange for regular payments from paychecks off future earned income after graduation. These are not loans, where a student must pay back the principal of a loan and interest. ISAs, which have been created at about 40 colleges across the country, are structured to attach directly to future income over a specified time frame.
For example, Colorado Mountain College, a public college with about 18,000 students, created Fund Suenos, which provides money to students who are eligible for in-state tuition and authorized to work. Almost all of these students can’t obtain federal financial aid as they are ineligible. Therefore, it is funded entirely from donations. Students can borrow up to $3,000 per year and after graduating, and if they earn at least $30,000, they pay 4% of that income to pay it back, but only for a maximum of five years. This program is ideal for students under 16 years old and brought to the United States illegally (DACA students).
We Must Reduce the Need for Borrowing
More and more colleges are giving scholarships to students based on board scores and academic accomplishments more so than financial need. Loans for college have grown out of control as over 45 million people wallow in student debt totaling over 1.6 trillion dollars. For many, loans have been normalized as a given within financial aid packages, as if there is no option to decline. Loans also weigh down decisions on which college to attend, as well as a choice of major and career aspirations, thus limiting opportunities for access and mobility.
Not much has changed since the Economic Policy Institute study that showed racial and gender differences over time. Black students borrow more than white students for college, most likely due to historic family income and earnings disparities.
About 80% of black students take on federal loans, as opposed to around 60% of white students. For a number of reasons, Black students are also more likely to drop out of college without completing their bachelor’s degree compared to white students. The Brookings Institute found that Black student-loan borrowers are five times more likely to default on student loans than white graduates. On average, black graduates also owe $7,400 more than white, Asian, and Latino students immediately after graduation. But it isn’t just Black students suffering from historical imbalances. Many students of color are well behind compared to Asian and White college graduates in repaying student loans 12 years after graduation.
For Hispanic students, even though their enrollments have skyrocketed in the past few years, graduation rates are well behind Whites. Approximately 43% of Hispanic students earn a bachelor’s degree compared to 68% of White students over the same six-year period.
Many Hispanic students report feeling far more stressed concerning their student loans compared to White students. Research on the FAFSA (the federal application for financial aid) shows that approximately 50% of all Hispanic students have an “expected family contribution” (EFC) to cover college costs of zero given low household incomes, and 70% are the first in their family to attend college. Therefore, the foundational elements of critical guidance and support for these students to enroll in college are already challenged.
Finally, student aversion to student loans impacts the developmental experience and the opportunity for academic benefits of higher education. About 30% of students who don’t take out student loans enroll part-time compared to only 14% of those who take out student loans. The campus experience is also impacted as 27% of students who don’t take out loans live with their parents compared to only 16% of borrowers.
Developing innovative alternatives to close these gaps, like ISAs, for more students to afford college on campus where they will be fully engaged, must be one of our national priorities in education. They can increase enrollments, retention, and graduation rates while also bolstering academic performance as the anxiety of student debt is lifted with an approach that incentivizes a stretch for higher demand careers.
Paternalistic Doubts Must be Overcome
Of course, the loan industry will lobby fiercely against alternatives like ISAs, given the billions that keep it afloat. Critics also fear ISAs may be positioned to consumers as a solution that is “interest-free,” sold to unknowing students as “debt-free.” But concerns of financial safety for college students and their families can be designed into the procedures that administer ISAs.
Critics claim ISAs should not be deployed because they will confuse low-income families, making it difficult for families to evaluate ISAs and alternative options, especially when compared to loans. But that is why we do financial aid counseling on college campuses. Colleges are required to have an office of financial assistance if they are to distribute federal financial aid. ISAs would be included in such financial counseling. ISAs should never be put in place without the support mechanisms and platforms for transparency and understanding that include counselors, web pages, emails, policies in college catalogs, and orientation sessions that explain all the details of ISAs. The assumption that ISAs would be rolled out with the appropriate training, education, and counseling is inaccurate for how institutions operate.
Groups in the majority always have lessons for those in the minority and, at times, prevent progress because of paternalistic beliefs for underserved communities of color, “They won’t understand or manage the complexities of ISAs.” Financial aid is complex and educational disparities are very much a reality. Yet, our goal should be empowerment and not lowering standards with the assumption that the bar must be lowered for underserved students. We need to continue to innovate ways to lift all, not just a few or a specific type.
Twenty years ago, an American president noted we may have addressed separate but equal, but now we have the separate and forgotten. He noted the “the soft bigotry of low expectations” has not helped the work needed to heal our divided society. George W. Bush asserted we could no longer be “segregated by low expectations, imprisoned by illiteracy, abandoned to frustration and the darkness of self-doubt.” We must push forward with ISAs as an important option for underserved students that stimulates economic participation and moves us away from the slow bigotry of low expectations and toward a deliberate strategy to address access and affordability for underserved students.
About Ben Corpus
Dr. Ben Corpus’ higher education experience spans over two decades. Notably, he served as an enrollment management consultant for Rhode Island School of Design (RISD), UC San Diego, Essex County College, UC Davis, Philadelphia University/Jefferson University, NJCU, and the College of Trinidad and Tobago, to name a few. Corpus was a clinical associate professor at the University of Texas and a tenured associate professor at Baruch. He served as chair of his department’s faculty appointment and promotions committee and co-chair with the Provost on the college’s Task Force on Academic Integrity and was awarded the 2009 Faculty Service Award by the Baruch College Alumni Association. He was a Leadership Fellow at the Hispanic Association for Colleges and Universities (HACU) in 2005 and an AASCU MLI Leadership Fellow in 2009.