Based on recent studies from both Sallie Mae, AKA SLM Corp (NASDAQ:SLM) and the New America Foundation, it’s becoming clearer that schools are in a competition to land wealthier students and are willing to award them disproportionate amounts of aid to do so. Often at the expense of lower income students, grants are being given to those of higher income in order to increase a college’s ranking and/or maximize its revenue.
A new study by Sallie Mae found that 36 percent of students from high-income families (with annual income of $100,000 or more) received scholarships averaging $10,213 for the school year just ended, while 35 percent of those from low-income families (earning less than $35,000 a year) received scholarships worth an average of $7,237.David Einhorn At The 2021 Sohn Investment Conference: Buy These Copper Plays
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A study released in May by the New America Foundation analyzed federal data on students out-of- pocket payments for school. It found that the share of those receiving merit aid at public colleges had more than doubled, from 8 percent to 18 percent, between the 1995-96 and 2007-08 academic years. The share at private colleges rose from 24 percent to 44 percent in the same period.
As we’ve seen time and again, students are already borrowing massive amounts of money to fund their educations. The bill to lower rates on federal loans working its way through Congress will help to slow the ballooning of existing debt, but may not slow the origination of future loans.