Independent, objective, nonpartisan research
Press Release · October 15, 2014

Grants, Scholarships Lag Rising College Costs

For Low-income Students, Aid Is Key To Access, Can Boost Graduation Rates

SAN FRANCISCO, October 15, 2014—Grants and scholarships have not kept pace with sharp increases in the full cost of attending the California colleges that enroll most low-income students, according to a report released today by the Public Policy Institute of California (PPIC). Yet this type of aid has become increasingly necessary to make college accessible and affordable in the state—where nearly 60 percent of K–12 students qualify for free and reduced price lunch programs.

At a time when the state’s economy needs more college graduates, the PPIC report examines the role of grants and scholarships in making higher education accessible and helping students graduate. It finds that while total financial assistance available through federal grants, Cal Grants, institutional aid, and private scholarships has increased, the actual cost of attending community college or the California State University has also increased for low-income students—those whose family income is $30,000 or less.

“Grant and scholarship aid has grown and helped offset sharp increases in tuition and fees at state colleges and universities,” said Hans Johnson, author of the report and Bren Fellow at PPIC. “But it does not fully make up for the rising cost of educational and living expenses at the colleges that enroll the majority of low-income students.”

The report finds that grants and scholarships can improve college completion rates. Students who receive this type of aid are more likely to graduate, regardless of the college they attend, their family income, or their grade point average. In addition, grants and scholarships make it possible for low-income students to attend four-year colleges. This can be important, the report shows. Students who begin their college careers at a four-year institution are much more likely to earn a bachelor’s degree than those who attend a community college and later try to transfer.

Higher education is largely a public endeavor in California. The state’s public colleges and universities enroll 85 percent of low-income students in the state. Just three public universities—CSU Northridge, UC Irvine, and CSU Los Angeles—enrolled more low-income freshmen in 2011–2012 than all of the state’s private nonprofit colleges combined. About half the students at CSU Dominguez Hills and CSU Los Angeles, for example, were from low-income families. In contrast, private nonprofit Stanford University ranks near the bottom of the list of California colleges in the enrollment of low-income students. Stanford is one of the few institutions that fully meets students’ financial needs, largely with grants. But low-income students made up just 5 percent of freshmen there.

At the community colleges and CSU—the public colleges attended by the bulk of the state’s low-income students—increases in total student costs exceeded increases in grant aid between the 2008-09 school year and 2011-12. As a result, the actual cost to students rose by 6 percent, when adjusted for inflation. In dollars, these increases were significant, totaling more than $600 at the community colleges and almost $1,000 at CSU. The news is better at UC, with virtually no change in actual cost. In comparison, prices declined by almost $1,000 at private nonprofit colleges. Prices dropped more sharply at private for-profit institutions, which may reflect declining enrollment as many have faced scrutiny for low completion rates and high loan default rates.

California is relatively more generous than other states in supplementing federal grants with state grants, the report finds. Moreover, California’s grant aid targets low-income students at public institutions. Compared to other states, California public universities are among the least costly for low-income students and among the most costly for high-income students.

“In other words, these institutions have relatively high sticker prices compared to public universities in other states,” said Johnson, “But sharp discounting through grant and scholarship aid makes net prices for low-income students quite low by national standards. Compared to private colleges, public higher education is less expensive for students at all income levels.”

Even though student aid is comparatively generous in California and focused on low-income students, these students still must dedicate a higher share of their income to college than other students. For example, on average, students from low-income families at UC are expected to contribute more than one-third of their income to pay for college, while the share for students from high-income families is around 20 percent.

The report includes recommendations for making college more accessible and affordable. They include adopting policies that help more students complete financial aid forms, increasing the size of grants to keep pace with inflation, and ensuring that aid does not worsen higher education cost inflation, by, perhaps, requiring that colleges keep actual costs below a certain amount for grant recipients.

The report is titled Making College Possible for Low-Income Students: Grant and Scholarship Aid in California. It is supported with funding from the College Access Foundation of California and the Donald Bren Foundation.


PPIC is dedicated to informing and improving public policy in California through independent, objective, nonpartisan research on major economic, social, and political issues. The institute was established in 1994 with an endowment from William R. Hewlett. PPIC does not take or support positions on any ballot measure or on any local, state, or federal legislation, nor does it endorse, support, or oppose any political parties or candidates for public office.