"The practice, known as financial aid leveraging, is a common tactic used by large enrollment management firms, and it aims to "determine the precise price points at which these institutions can enroll different groups of students without spending a dollar more than is necessary," according to the report, which was released Thursday. The largest amounts of aid go toward attracting wealthy and academically gifted students, while low-income students are given small aid packages, "steering" them toward Parent PLUS loans their families can't afford."
"He identified 41 that appeared to engage in this practice based on how many of their low-income students were using Parent PLUS loans and how much aid the institutions were giving those families. At all of the colleges that made the list, Pell Grant recipients made up at least one-third of the college's PLUS loan borrowers and the institution charged its lowest-income students an average net price of at least $12,000 annually."
Public records for over 300 selective colleges show 41 institutions appear to use financial aid leveraging, encouraging low-income families to rely on Parent PLUS loans while directing larger institutional aid to wealthier or academically gifted students. The tactic aims to determine precise price points at which institutions can enroll different student groups without spending more than necessary. At listed colleges, Pell Grant recipients comprised at least one-third of Parent PLUS borrowers and the institutions charged their lowest-income students an average net price of at least $12,000 annually. Most recent Parent PLUS data reflects students who left or graduated in 2021; financial-aid data is from 2023.
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