Will This “Solution” Eliminate Financial Barriers to a Bachelor’s Degree?

I received a copy of the Higher Education newsletter this week. Published by The Hechinger Report, the newsletter is distributed weekly. The headline article reported about the University of Central Arkansas’ rollout of the UCA Commitment.

To be eligible for the UCA Commitment, students must be residents of Arkansas whose family income falls below $100,000. They must also apply for the Arkansas Academic Challenge Scholarship (ACST) funded by the Arkansas Scholarship Lottery.

The ACST has a few strict requirements. Students must achieve a minimum of a 19 on the ACT or 990 on the SAT. They must complete 12 credit hours their first semester after high school and 15 credit hours every semester after the first. They must maintain a cumulative 2.5 GPA. They must log 10 hours of community service each semester.

The ACST provides eligible students with a $1,000 grant their freshman year, followed by a $4,000 grant their sophomore and junior years, and a $5,000 grant their senior year. After students have collected federal and state grants (presumably the ACST), the University of Central Arkansas will “cover the rest with scholarships and work study assignments.”

I pulled a few statistics about UCA from the College Navigator website. The following I chose to highlight:

  • There are 7,994 undergraduates enrolled.
  • 91% of its applicants are admitted.
  • 30% of admitted applicants enroll.
  • 74% of first year students return for their second year.
  • The 6-year graduation rate is 50%.
  • In-state tuition for 2022-2023 is $9,778.
  • In-state tuition and fees for 2022-2023 are $10,118.
  • Books and supplies are estimated to be $1,200.
  • On-campus room and board are $8,250.
  • Other expenses are $5,420.
  • Total Cost of Attendance for an in-state student is $24,648.
  • 44% of first year, full-time students receive Pell grants.
  • The average Pell grant awarded is $5,067.
  • 66% of first year, full-time students receive state/local grants.
  • The average state/local grant awarded is $1,812.
  • 51% of first year, full-time students receive federal loans.
  • The average federal loan per student for 2022-2023 is $5,167.
  • The average net price per student for 2022-2023 is $15,456.
  • The average net price for those with family income between $0-$30,000 is $13,601.
  • The average net price for those with family income between $30,001-$48,000 is $14,316.
  • The average net price for those with family income over $110,000 is $19,043.

The scholarship will cover tuition and fees. It will not cover textbooks, room and board, and transportation.

I think it’s important to note that the school requires the federal and state grants to be applied to the tuition and fees first before they apply scholarships and work study assignments.

Assuming a student receives the average state/local grant of $1,812 plus the average Pell grant of $5,067 ($6,879), the gap between that amount and total tuition and fees is $3,239. The national average work-study award is $1,850 which reduces the gap to $1,389.

The university estimates that 40 to 45 percent of freshmen will be eligible for their new program. That’s approximately the same percentage of students who receive Pell grants.

Let’s assume that only Pell grant students are the beneficiary of this new program. There were 797 Pell grant recipients in 2022-2023. If we multiply 797 times $1,389 (the gap), the incremental cost is $1.1M in 2024. Normally, I would multiply that number times four to account for the fully phased in cost.

However, the ACST program increases from $1,000 for freshmen to $4,000 for sophomores and juniors and $5,000 for seniors. This increment more than covers the funding gap and means that the only year that UCA must cover a shortfall is freshman year. Any increase in retention is a financial plus to UCA.

What we don’t know is whether more Pell eligible students will find the UCA program attractive enough to enroll. The program only covers the shortfall for tuition and fees. Tuition and fees are $10,118. The total cost of attendance is $24,648. The current net prices for the two lowest income quintiles are $13,601 and $14,316.

In my opinion, reducing the net price for low-income families to $12,212 and $12,927 is not likely to attract more low-income families to apply or enroll at UCA. The announcement of the program sounds great, but the numbers indicate the main flaw of our current financial aid system. Only the wealthiest colleges can afford to subsidize the poorest students. How many families with incomes less than $48,000 per year can consider borrowing $14,316 per year to send a child to college?

In recent blog articles, I’ve shown that the Ivy Plus institutions provide the best net prices for the three lowest income quintiles. Even though the costs of attendance for community colleges are 20% of the COA for the Ivy Plus institutions, their net prices are more than double the Ivy Plus colleges.

Compared to many other non-selective schools, UCA has a good first year to second year persistence rate of 74%. The six-year graduation rate is only 50%. It’s my opinion that the school could improve both of those rates if they were willing to provide a lower net price for low-income students over the last three years.

While in many cases, finances are the primary reason for students failing to complete college, lack of academic success is another. UCA should consider expanding (or adding) dual credit programs with public high schools in the state. Dual credit programs reduce the time to complete a degree as well as the cost to complete (with fewer courses to complete). That could incentivize local students as much as the announced grant program.

I suspect that the majority of the 26% of students who don’t return to UCA for sophomore year are Pell students or students who fail to maintain the 2.5 GPA for the ACST grant. Perhaps UCA can offer more online courses in order to eliminate the incremental room and board cost for students who are able to complete their studies and live at home.

As I pointed out in a recent post, the Ivy Plus institutions have the lowest net prices for the lowest income quintiles of any group of colleges I analyzed. The funding for that substantial subsidy either comes from earnings from their large endowments or from the percentage of full pay students whose tuition payments subsidize some of the institutional grants.

Based on the data from College Navigator, there are no full pay students at UCA. It’s unlikely that UCA has an endowment large enough to cover the annual average net price of $14,000 for 797  Pell students ($11,158,000 in annual costs requiring a $223,160,000 endowment balance at a 5% draw).

It appears that there are not any good options to lower the average net price for Pell students at UCA unless they commute from home or attend college online. Students who accumulate college credits while in high school will shorten their time to earn a degree but not their annual costs.

Will the UCA Commitment increase the number of Pell students enrolling at UCA or completing a degree at UCA? Sadly, I doubt it will.

Subjects of Interest


Higher Education

Independent Schools


Student Persistence