Do more public dollars flow to higher-income students attending public universities?

Some critics of the current public higher-education model say that because wealthier students are more likely to attend well-funded, top-tier public universities, these well-off students essentially receive a generous taxpayer-funded subsidy. Such critics also point to the fact that lower-income students tend to enroll at less-selective colleges that receive far less state support.

Two researchers released an analysis today challenging this argument. Instead, their calculations show that, at the national level, both groups effectively receive comparable amounts of public support to pursue their educations.

The focus on the types of colleges students of different economic backgrounds attend is important. While tuition and grants help students pay for college, those funds don’t cover the full expenses needed for a university to provide an education. Those extra costs are referred to as “indirect subsidies”: state dollars that go straight to colleges and help to close the gap between the cost of educating a student and what might be paid in tuition and grants.

As a result, the authors of the report argue that looking at total student aid misses the nuances of college finance. For example, should research dollars—which tend to flow to more prestigious schools—count as an indirect subsidy? More importantly, is it fair to compare the per-pupil support rich and poor students receive based on the colleges they attend even when those two groups pay different tuition fees at the same institution? The report’s authors don’t think so, and they created a measurement based on two federal data sets that calculated the indirect subsidies minus what the students paid in tuition for the 2011-12 academic year. The result? “On average, in every category of selectivity, low-income students receive larger indirect subsidies because universities charge them lower net prices,” the authors wrote.