Written by Wil del Pilar, PhD

Part of this challenge is the complexity of the application process, and another challenge is due to the low wealth of Latinx families in the United States. According to a study by McKinsey1, Latinx households have one-fifth of the median wealth compared to their White peers (36,000 compared to $188,200). This significant wealth gap creates a dependence for those who are eligible, on federal financial aid to pay for college. As a first-generation, low-income, Latinx student from Los Angeles, California, I had to navigate the difficulties of financial aid. Today, as a higher education advocate for low-income students and students of color, I work to try and create affordable pathways for students to realize their academic dreams without falling into the student debt trap.

The three largest sources of federal financial aid are the Pell Grant2, the Work-Study Program, and student loans. As a student, I took advantage of all three of these sources of financial aid. However, changes to these programs are needed if we are committed to making higher education affordable for Latinx students.

Doubling the Pell Grant

According to a recent fact sheet released by the White House, 65% of Latino undergrads finance their education through the Pell Grant. The Pell Grant has been the main source of financial aid for students from low-income backgrounds since it was established as the Basic Educational Opportunity Grant in the 1972 reauthorization of the Higher Education Act3. That year the grant was awarded to over 176,000 students and the average award was 269 dollars. Today over 7 million students receive Pell Grants and the average award is over 4,400 dollars4. Sadly, the Pell Grant has not kept pace with the cost of education: today the Pell Grant only covers about one-third of the cost of tuition, room and board at a four-year public institution, compared to 42% in 2001-025. If we are committed to creating affordable pathways for Latinx students, we must double the Pell Grant. That would fully cover the cost of in-state tuition and fees at public community colleges in all 50 states6 and would cover over half the cost of tuition, room and board at public four-year colleges7.

A more equitable Work-Study Program

As a former work-study student, I have a deep appreciation for the program, but if more Latinx students and students who struggle the most to pay are to benefit from work-study, there must be significant changes to the program. According to the Community College Research Center, “a low-income student at a private four-year institution has nearly a 50% chance of receiving federal work-study, compared to just a 5% chance for a low-income student at a community college.”8 And “a high-income student at a private four-year college is more likely to receive federal work-study than a low-income student at a public four-year college.” Many advocates agree that the formula used to assign federal work-study distributes these funds inequitably, and the students who would stand to benefit the most often have to depend on student loans or work to make up gaps in funding. To correct this historical inequity, Congress must better target the institutions serving the neediest students. Currently only 18% of funds go to community colleges and 51% go to private non-profit institutions9. A formula similar to the one used to distribute federal Higher Education Emergency Relief Funds10, based on enrollment of Pell Grant eligible students, would provide a fairer distribution of limited resources to the students who need them the most.

Bold steps to reduce student debt

Finally, nearly 7 in 10 (67%) of Latinx students take on debt to pay for their education.11 The average debt of Latinx students after graduation is nearly $39,00012. The burden of this debt on Latinx students is significant. According to UnidosUS, 60% of Latinx borrowers’ student debt has affected their ability to save for retirement, 57% reported that their debt had affected their decision to buy a house and 52% of borrowers without a degree reported that student loan debt had affected their ability to finish their degree.13 On August 24th President Biden announced a plan to cancel up to $20,000 of student debt for loans held by the U.S. Department of Education. While this is incredible news for borrowers, many hoped the administration would have gone further in debt cancellation to address the $1.7 billion student debt crisis that burdens so many borrowers with unpayable debt. Given the average debt of Latinx borrowers ($39,000), even if borrowers receive the maximum of $20,000, they will still be left with nearly half their debt. If the administration is committed to providing Latinx borrowers with a fresh start, up to $20,000 of cancellation is not enough.

In the current system of higher education funding, the disparity between states is truly problematic. If we are committed to addressing affordability for Latinx students in an equitable way nationally, we would first take bold steps and cancel at least $50,000 in student debt, which would truly provide borrowers with a fresh start. Secondly, to prevent falling into the same student debt trap, we must establish a federal state partnership that makes college tuition free for students in states that have failed to make higher education affordable for their residents, and have thus burdened them with unmanageable debt.

If we are committed to making higher education affordable for Latinx students, we must take bold and comprehensive steps to reform the way these students currently fund their higher education. If we do not take serious steps to put the Federal Pell Grant on a path to be doubled, make reforms to the distribution of Federal Work-Study, cancel up to $50,000 of student loan debt, and create a federal state partnership to make college tuition free, we will fail to create an accessible and affordable pathway to higher education for Latinx students. 

Author Bio:

Wil Del Pilar, Ph.D., serves as Ed Trust’s vice president of higher education. In this role, Wil spearheads Ed Trust’s mission to highlight inequities and outline solutions to improve access, success, affordability, and completion in higher education for low-income students and students of color. Prior to joining Ed Trust, Wil served in Pennsylvania Governor Tom Wolf’s administration as deputy secretary of postsecondary and higher education, where he developed and implemented the state’s strategic vision for higher education. wdelpilar@edtrust.org (310-850-6834)

1. https://www.mckinsey.com/featured-insights/sustainable-inclusive-growth/the-economic-state-of-latinos-in-america-the-american-dream-deferred

2. https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/20/fact-sheet-the-biden-harris-administrations-plan-for-student-debt-relief-could-benefit-tens-of-millions-of-borrowers-in-all-fifty-states/

3. https://www.luminafoundation.org/history-of-federal-student-aid/chapter-three/

4. https://www2.ed.gov/finaid/prof/resources/data/pell-historical/hist-3.html

5. https://www.statista.com/statistics/222444/share-of-us-students-expenses-covered-by-pell-grant/

6. https://www.thirdway.org/memo/how-doubling-the-pell-grant-could-be-a-down-payment-on-free-college.

7. https://www.ncan.org/page/Pell

8. https://ccrc.tc.columbia.edu/media/k2/attachments/participation-federal-work-study.pdf

9. https://www.urban.org/sites/default/files/publication/100007/rethinking_federal_work_study_0.pdf

10. https://www.gao.gov/blog/higher-education-covid-19-relief-funding-who-got-what-and-what-went-wrong

11. https://educationdata.org/student-loan-debt-by-race#:~:text=Hispanic%20and%20Latino%20students%20are,organizations%20borrow%20%2440%2C000%20or%20more

12. https://www.bankrate.com/loans/student-loans/student-loan-debt-statistics-by-race/

13. https://www.unidosus.org/press-releases/new-survey-shows-student-loans-are-hampering-latinos-ability-to-thrive-economically/