Federal Student Aid Policies Benefit Upper-Middle-Class White Families, Says National Report

By The New England Council

DC Shuttle …

Generating an Unnecessary Inequity. “The federal student aid formula disproportionately benefits upper-middle-class white families,” according to a new paper by the National Bureau of Economic Research. The authors of the paper found that “racial disparities creep into the [federal student aid] system because the federal formula for estimating how much a family can afford to pay for college ignores a family’s home equity in their primary residence and the value of their retirement savings. Families that own more of these ‘uncounted’ assets have greater financial resources than families that do not.” Federal student aid awards are not determined by race, however this paper asserts that “how the financial aid system actually reflects and adds to disparities in wealth among demographic groups.” This paper has not yet been peer-reviewed.  Additional information can be found here.

We publish the DC Shuttle each week Congress is in session featuring higher ed news from Washington collected by the New England Council, of which NEBHE is a member. This edition is drawn from the Higher Education Update in the Council’s Weekly Washington Report of Oct. 3, 2022. For more information, please visit: www.newenglandcouncil.com.


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