WASHINGTON — A new paper seeks to contravene the “conventional wisdom” that states subsidies for public universities favor wealthy students, but one leading labor economist says it’s not a big deal if they don’t because poor students need more.
The paper — released last week through Brookings Institution, a think tank — deals with “indirect subsidies,” that is, money that colleges get from the state to cover the cost of education and which is then passed on to students in the form of tuition discounts.
The paper attacks the argument that since selective institutions tend to get a bigger slice of the pie, that it favors wealthy students because wealthy students are more likely to attend selective institutions than their low-income counterparts.
In the final analysis, the paper found that — at least when it comes to students at public four-year universities — indirect subsidies “do not disproportionately benefit high-income students.”
“On a per-student basis, indirect subsidies are smaller for high-income students at public universities than for low-income students, even at the most selective schools,” the paper states. “Furthermore, low-income students are well represented at public universities across the selectivity spectrum such that they receive a total amount of indirect subsidies that is slightly greater than their share of enrollment.”
The paper found that at the nation’s most selective universities, the average indirect subsidy is nearly 25 percent larger — or $2,286 more — for a low-income student than for a high-income student.
“That gap is even wider in the second-most selective category, where low-income students receive an average $7,995 indirect subsidy and high-income students receive just $4,546,” the paper states. “On average, in every category of selectivity, low-income students receive larger indirect subsidies because universities charge them lower net prices.”
