Recently it was announced that the Obama administration will offer super rich companies a chance to bring back billions of dollars to the U.S. and the government will incentivize them to do so.
The American lawmakers that made it legal for U.S. companies to operate outside the U.S. and to hold millions and billions in tax protected locations around the world like Switzerland or Ireland now want to give those same companies yet another break. I guess it shouldn’t be surprising that these advantages are compounded over and over and over again for wealthy Americans.
Now a research study from Sallie Mae, funders of college tuition for students, reveals that students from more affluent families receive more incentive money from colleges than students from families lower on the income scale. Historically, we were lead to believe that discretionary money from colleges were aimed at low income students and therefore, theoretically affording the opportunity to “break the cycle of poverty.” If current trends hold into the future, the stairway to upward social mobility may be partially occluded or eliminated altogether.
The Sallie Mae study found that students from wealthier families on average, received college awards of $10,213 while their low income counterparts received $7,127. The New America Study author Stephen Burd wrote that, “With the relentless pursuit of prestige and revenue, the nation’s public and private colleges are in danger of shutting down what has long been a path to the middle class.”
As colleges compete for students with an eye on profit, preference may be afforded to wealthier students. The New America study found that 10 percent of college admissions directors at four year colleges and nearly 20 percent of those at private liberal arts colleges report that they give affluent students a significant preference in the admissions process. Grants and scholarships covered 37 percent of low income student expense in 2012-2013 down from 46 percent in 2008-2009.
Some colleges are looking for students whose families are at or above a $150,000 annual income. This is truly a departure from the days when only needy students, super smart students or super athletic students received rich scholarships or merit awards. Colleges and universities are also aware that image matters. There is a litany of organizations that evaluate colleges for their selectiveness, affordability and GPA scores or SAT scores. These scores appeal to students and parents alike.
One of the best ways to create and maintain an attractive profile in the U.S. News College Report is to lure students with the highest GPA and SAT scores to their school and thereby maintaining their elite status. Frequently these high scoring students come from affluent families with plenty of resources. These desirable students are frequently offered scholarships and tuition discounts.
Many private colleges are offering affluent students generous discounts so that they too can compete for elite students in effort to improve their national ranking and profile. Ivy League schools like Columbia, Harvard and Princeton remain the preference of many wealthy students and the lack of financial discounts has not diminished enrollments at any of the Ivy League schools.
Only 5 percent of students at Ivy League schools qualify for Pell grants which support needy students. In contrast, 38 percent of students at the University of California at Los Angeles, a state school, receive Pell grants. As a parent, if your son or daughter has great SAT scores and an outstanding GPA many top tier colleges will be interested and will afford them a tuition discount or a scholarship. Ivy League schools have more than enough high scoring students apply every year to be able to cherry pick from a field of top students without regard to incentivizing admission.
Many Ivy League schools also preserve a good number of spots for legacy admissions where mom or dad may have attended the school previously. As the American middle class continues to shrink, recent trends in increasing college scholarships and tuition discounts for the wealthy seem to support further shrinking of the middle class.
On the surface it appears that this may be yet another piece of the American horizon looks less expectant and less hopeful for many Americans.
Remember, all kids count.
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