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Due to flawed financial aid policies, students from middle-income families benefit more from higher education scholarship and grant programs than the low-income pupils the financial aid was designed to help, argues a new report from The Education Trust.

The report, “Priced Out: How the Wrong Financial Aid Policies Hurt Low-Income Students,” (.pdf) charges the nation's private, public and for-profit colleges and universities with failing to successfully serve the low-income population, saying the price of a four-year college education for low-income students is cost-prohibitive, based on how much they are expected to fork over after grant aid is used up.

“This opportunity gap for low-income students should alarm all Americans, particularly policymakers and institutional leaders seeking to tame budget deficits at the expense of our neediest citizens. In this new era of austerity, we must ask ourselves whether we can afford to keep subsidizing college for students from families for whom the question is not whether to attend, but where,” states the report.

After exhausting all sources of grant aid, the typical low-income student must come up with more than $11,000 a year to attend a public or private non-profit college, according to the report. This results in low-income families paying or borrowing an amount equivalent to nearly three-quarters of their family income for just one child to attend a four-year college.

In contrast, middle-class students must finance the equivalent of 27 percent of their family income to go to college, while high-income students must finance just 14 percent. “Students, institutions of higher learning, and ultimately, the country all suffer from the regressive nature of financial aid policies and their negative, aggregate effect,” states the report.

The five four-year schools making the grade

Authors of the report analyzed 1,186 four-year institutions, assessing enrollment, net price and graduation rates, and found that only five are successfully serving low-income students. They are: the Fullerton and Long Beach campuses of the California State University system, Queens College and Bernard M. Baruch College in the City University of New York system and the University of North Carolina at Greensboro.

The report criticized the public flagship institutions that didn’t make the cut for funneling their grant aid to programs that target high-achieving students who are not the best candidates for financial assistance.

“Because they are comparatively rich, with far more resources than other public institutions, all 50 flagships should be affordable,” the authors, Mamie Lynch, Jennifer Engle and José L. Cruz, wrote in a section titled, “Where are the public flagships?” They go on to say that all but five flagship public universities charged a net price above $4,600, and those universities enrolled low-income students at a below-average rate.

Private universities also need to improve. Though a year at Harvard, Stanford and Princeton costs about $3,000 after grant aid, the report says that these elite institutions need to boost enrollment levels of low-income pupils – fewer than 15 percent of students attending these universities come from low-income households.

The for-profit colleges are also roundly criticized. For-profits are called out for having high net prices – the amount paid after aid – and low graduation rates.

For related news and other resources from Schools.com, see:

• Charter school and for-profit college enrollments surged over past decade
• Upward Bound supports first-generation, college-bound high schoolers
• Degree value in dollars: It pays to be unpopular (infographic)
• Student finances: Today's students are poor, yet optimistic (infographic)