Why colleges for poor students cost more

This story about need-based financial aid was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for Hechinger’s newsletter.  

MILWAUKEE — Sh’Tejah Ward needed to come up with $8,651 to pay the rest of her fall semester bill for the University of Wisconsin-Milwaukee. If she didn’t, she wouldn’t be able to return in the spring. Looking for answers, she stopped by the school’s financial aid office one October afternoon and succinctly summed up her situation to an adviser: “I’m lost.” 

Ward barely spoke for the rest of the meeting. She nodded along and grew increasingly overwhelmed as the adviser walked her through her options.

They were not promising. Ward had already received all the federal grant money she could get. The roughly $1.4 million in need-based financial aid the school can distribute among its nearly 25,000 undergraduates was long gone. So too was nearly all of the roughly $5.4 million in scholarships, most of which had at least some academic requirements attached. Still, Ward watched attentively as she was shown how to use the school’s scholarship portal and how to find information on private loan providers once she maxed out her federal ones. 

Stepping into the hallway after the meeting, Ward could no longer hold back her tears. The way she saw it, she had two options: cobble together enough loans to get her through her freshman year — likely the first of many times she would have to borrow — or drop out. She wondered how to tell her mother, who wanted her to be the first in the family to get a degree.

“If I can’t get this paid off, it’s over already,” Ward said. “That’s going to break her heart.”

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‘I wish I had money to give them’

Wrenching conversations like this are part of the weekly routine at UW-Milwaukee’s financial aid office. The harsh reality of affordability clashes with the school’s image – a university focused on access for first-generation and low-income students located right in the city to allow urban commuting students to live at home, work a job and save money.    

That reality is very different about 90 minutes to the west, at the state’s flagship school, the University of Wisconsin-Madison. The college, its academics and athletics ranked high nationally, is the dream school for many in Wisconsin – considered a place for high-achieving students from inside and outside the state. And for those who enroll, UW-Madison can be relatively affordable. The college gives out $71 million in grants to students with need — more than 10 times what UW-Milwaukee is able to provide. 

“I wish I had money to give them,” said Timothy Opgenorth, director of financial aid at UW-Milwaukee. With so little funding and so many students, “you can only do a little bit here and there.” 

In Wisconsin, and many other states, need-based institutional aid is largely an every-university-for-itself affair. When a state doesn’t level the playing field, its flagship — generally the state’s most elite public university, with far more resources at its disposal — can much more effectively keep students’ costs down than less-selective universities can. And that can have severe consequences for students who go elsewhere, including those who need help the most.

In 2017-18, the average cost of attendance at UW-Madison, including tuition, room and board and other expenses, was $5,445 for in-state freshmen coming from families making less than $30,000 a year. At UW-Milwaukee it was more than $12,000. In fact, all the other public universities in Wisconsin were more expensive for the poorest students than UW-Madison. 

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Nationwide, 41% of public four-year schools cost more than their state’s flagship for the lowest-income students. This pattern is likely driven, at least in part, by inequities in need-based financial aid, according to a Hechinger Report analysis of data from more than 180 schools in the states with the most egregious disparities in school costs. 

In Michigan, for example, the flagship campus at Ann Arbor gives out about $14,200 per full-time student with demonstrated financial need — the difference between what the federal government determines their family can be expected to pay for college and the actual cost. Michigan’s other state schools that reported data awarded an average of just $2,600 per student. In North Carolina, where the flagship at Chapel Hill has committed to meeting 100% of student need, the average student gets $11,300 in aid. Yet, at the 10 other state schools with available data, the average student gets $1,800. (These figures include academic scholarships and other money not given explicitly because of financial need.) 

The scope of the problem is compounded by the fact that the vast majority of these more expensive state schools enroll more low-income students than the flagships do. 

In the UW system, for instance, UW-Madison enrolls by far the lowest proportion — 14% — of students receiving Pell Grants, a federal form of aid that mostly goes to students from families making less than $40,000 a year. By contrast, nearly 37% of UW-Milwaukee’s students receive Pell Grants.

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The disparities in institutional aid fit into a larger pattern of inequity in higher education, said Nicholas Hillman, director of the Student Success Through Applied Research Lab at UW-Madison and an expert in higher education financing. “If there aren’t some really clear policy goals at the state and federal level, institutions are free to let the market rule itself, and that’s exactly how inequality in higher education works,” he said. 

Wisconsin does have a statewide need-based aid grant, which has climbed in recent years to a maximum of $3,150 annually. It defrays some costs, but still makes up only a small piece of the $19,000 or more a year it can cost to attend a four-year UW institution for an in-state student, including expenses such as room and board. 

The UW system provides $8.7 million for discretionary need-based financial aid across all its schools. Its administrators have discussed ways to address financial aid at a statewide level and are talking with its board and school chancellors during its current budget development. “This comes up often,” said Sean Nelson, vice president for finance of the UW system. “How do we improve our financial support?”

But a systemwide financial aid initiative would be costly, Nelson said. Its money would have to come from the state, which slashed UW’s funding by more than $200 million in 2015. Money for the colleges has increased since then, but remains well below the pre-2015 levels. This year, the legislature provided an additional $50 million in operating cash to the UW system, much less than the $150 million Gov. Tony Evers had requested. 

In recent years, Wisconsin legislators have introduced bills that would either increase money set aside for need-based financial aid or essentially make college tuition, room and board free for in-state students. Those pieces of legislation have yet to gain traction. If enacted, they would help Wisconsin students, but still leave others, like Ward — an Illinois resident — struggling to come up with money. (Because of tuition increases in Illinois and a reciprocity agreement between the two states, tuition and fees at Wisconsin schools, for students like Ward, were still lower than those at many of their in-state options.)

For now, each university is largely on its own, and UW-Madison’s ability to raise additional money dwarfs that of the other schools. 

UW-Madison’s nearly $4 billion foundation supplied $279 million to the school in 2018 alone. That’s $28 million more than UW-Milwaukee raised in a seven-year capital campaign that recently ended. Its foundation provided just $15 million to the university in 2018 – leaving few scholarships for a student like Ward.  

Drop out, or take out $41,000 in loans?

As Ward sat in the hallway outside the financial aid office contemplating what to do next, dropping out seemed like a real possibility. If she left, she’d be in the majority; fewer than half of incoming full-time freshmen graduate within six years at UW-Milwaukee. Van Harpen said that most students who drop out — when they provide a reason — tell them that they’re leaving school because of money. 

Still, when Ward arrived on campus only a couple months earlier, she thought she’d be one of the ones who made it. She was used to studying hard, having buckled down in high school to make up for a weak freshman year; she got straight A’s her last three semesters and flipped a 2.3 GPA into a 3.2. She had sacrificed time and friendships, all with her — and her mother’s — sights set on college. 

And UW-Milwaukee already felt like home. “I don’t want to stop now,” she said through tears.

But she also didn’t want to leave school tens of thousands of dollars in debt. That’s what happened to Emmanuel Villagomez, a 2017 UW-Milwaukee graduate who left school owing $41,000. 

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Villagomez first enrolled in 2011, straight from a Milwaukee public high school. UW-Milwaukee was close and it seemed “more financially accessible” than other schools. And indeed, at first it was. Two weeks before school started, while he was packing for an end-of-summer road trip with a friend, Villagomez learned that he had received a scholarship that would cover his room and board and leave him enough left over to pay for other expenses. Elated, he threw his laptop in his luggage to write a thank-you note to the donors from the road. 

The scholarship was renewed for Villagomez’s sophomore year, but his grades and his interest in his engineering courses had started to drop. He says the adviser he was assigned, someone from the Latino student service center, knew nothing about his field of study and didn’t help him connect with support services. 

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He decided to take a break, and when he returned the following year, the scholarship was gone. He received the maximum federal Pell Grant as well as the highest possible state need-based financial aid, known as the Wisconsin Grant, but that still wasn’t enough to cover tuition and fees, let alone other expenses. He lived with his grandparents to save on rent and commuted up to 45 minutes to the free UW-Milwaukee parking lot at rush hour every morning. From there, it was another 15 minutes on a shuttle bus to get to campus.

After classes, he’d go to his job — at a marketing company at first and, later, working with children with autism. For a couple of months, he even worked the overnight shift at a hotel and often went to class right after. On a good day, he could squeeze in a two-hour nap. 

“I never did anything of what UWM has to offer fun-wise,” he said, adding that he missed the school’s annual Spirit Week and giant fall semester kick-off concert every year. He would have loved to get tuition and fees fully covered. Any amount of extra money would have helped, but he would still have graduated deeply in debt because of steep living expenses.

UW-Milwaukee’s tuition and fees cost about $9,600 annually for a full-time, in-state student. Today, the maximum federal and state grants are nearly enough to pay that. But room and board on campus — where freshmen are required to live unless they receive a waiver — can cost more than $10,000. 

And while, after freshman year, students can find cheaper housing off-campus, there are still food and transportation costs to contend with, along with books and other expenses that crop up during the year. Villagomez said he spent about $350 a month on car expenses. At 26, he’s still living with his grandparents, putting a big chunk of his paycheck toward his $500-a-month loan payments. He has applied to graduate school for social work; his current employer will help pay, and having a master’s degree could double his earnings. “It’ll really help with loans,” he said. 

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One solution: Share scholarship details earlier

As UW-Milwaukee students deal with their own personal financial pressures, the university itself has been contending with major budget squeezes 

Enrollment has dropped from a high of 30,470 students in 2010 to fewer than 25,000 in 2018. And as high school enrollment numbers dip with demographic changes, the trend threatens to continue. Because of a tuition freeze for in-state students over the last six years, tuition revenue hasn’t kept up with the inflation of the school’s other costs, and there’s been less opportunity to subsidize low-income students by having wealthier in-state students pay more. 

“It’s really hard to fully adapt a strategy when you can’t set your tuition,” said Robin Van Harpen, vice chancellor of finance and administrative affairs. “Even a small amount of flexibility in establishing rates can create more room to provide need-based scholarships.”

In 2020, Milwaukee will use up to $800,000 in school funds to launch a new need-based grant program for first-time Wisconsin students. That will join the funds that the school receives from the state, but will still leave UW-Milwaukee putting far less money into need-based financial aid than UW-Madison. 

In 2018, the flagship announced Bucky’s Tuition Promise, which guarantees to pay all tuition and fees for Wisconsin students coming from families making less than $56,000 a year. (It’s since increased the threshold to $60,000.) It also has programs to meet the full need — including costs beyond tuition, such as room and board — for a proportion of students on public assistance. 

The school will pay for any expansion of Bucky’s Tuition Promise in part with its high tuition for out-of-state students. This revenue already supports the school’s financial aid.

Because the state’s tuition freeze only applies to in-state students, the flagship has been able to bring in more money from its substantial out-of-state population. Tuition and fees for most of these students is nearly $38,000 — about $11,000 more than what it was when the freeze was instituted and more than three and a half times the rate for in-state students. 

UW-Madison officials said that they regularly answer questions and offer support to other financial aid administrators in Wisconsin and across the country. And, they say, they have lessons to offer about talking to prospective students about the cost of college. In particular, the financial aid office has focused on helping students understand, before they even apply, that they might be able to afford schools with large sticker prices. 

“For schools that may not have the same resources, they still have the ability to more clearly communicate what commitments they can make to a student’s funding and earlier in the process,” Derek Kindle, director of financial aid, said in an email. 

UW-Milwaukee officials are working on that, but in their case the goal is to avoid situations like Ward’s.

She left the financial aid office and went straight to her student support services adviser, who was a first-generation college graduate herself. She helped calm Ward down and assured her they would find a solution. 

Later, when Ward broached the subject of loans with her mom, her response was clear: “We’re going to do anything to keep you there.”

She plans to apply for scholarships for next year, but in the meantime she took out several loans in her name. Her mother also took out one. They decided the debt was worth it to get a degree, Ward said. “I’d rather pay it later than not pay it at all.”

This story about need-based financial aid was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for Hechinger’s newsletter.