I found out the hard way that family income alone doesn’t predict college financial aid needs

I found out the hard way that family income doesn’t predict a student’s college financial aid needs. As a first-generation college student, navigating the college financial aid system was very challenging. From the technical jargon to the tedious forms, I heavily relied on my mother, who previously sought student aid for herself and my older brother. Ultimately, I began my college career at the University of Georgia through a combination of federal, state, and private financial aid.

While I was at college, my mother received a promotion, and her income increased. I received a $3,600 Pell Grant, the largest federal undergraduate grant program, during my first year. The following year, my Pell Grant was about $600 less. By my junior year, the financial aid formula determined that I had no need, and I was denied—which meant I needed to borrow $11,968 in federal loans to close my unmet need gap and stay enrolled.

How is it that I didn’t demonstrate enough need to receive a Pell Grant, yet I still needed to borrow nearly $12,000? It’s because my Pell Grant eligibility was based on my then-Expected Family Contribution, which was largely tied to my family’s income.  However, although my family’s income increased, our ability to cover the costs of my education was not due to other financial obligations, such as my mother’s own student loan payments. So, borrowing federal loans was my only lifeline to stay in school.

As students fill out the newly updated Free Application for Federal Student Aid (FAFSA) form this fall, they’ll quickly realize the process zeroes in on a family’s income and overlooks a critical aspect of financial health: wealth. Wealth represents a family’s accumulated assets and financial resources, offering a more stable, broader financial view.

Wealth disparities are often more pronounced, persistent, and racialized than income disparities, with Black and Hispanic and Latino families holding only 4 percent and 2 percent of U.S. wealth, respectively. By not accounting for wealth, the financial aid system extends these disparities, assisting families who may not need it while leaving less for those who do.

Innovative solution

The Higher Education, Race, and the Economy (HERE) Lab, housed at the University of California-Merced, has taken a first step toward imagining a financial aid system that considers both income and wealth to more effectively target resources to those who most need them. The HERE Lab—supported by Lumina Foundation,  where I work to help all Americans benefit from the power of learning—created a framework for a supplemental wealth-based Pell Grant that can be layered onto the existing federal Pell Grant program to improve college affordability for families with incomes below the poverty line.

A supplemental, wealth-based Pell Grant could help solve several issues plaguing higher education. By providing equitable access to financial aid, it can substantially increase debt-free college enrollment for students from working- and middle-class backgrounds who get zero or too little aid, like me. It’s also a smart approach to the student loan crisis, significantly reducing the need for low-wealth students to take out loans.

To create a more fair and effective financial aid system, we must acknowledge the limitations of focusing primarily on income and better incorporate wealth into our assessments. By doing so, we can ensure that financial aid is distributed more equitably as we create a process that truly reflects the financial realities of all families, helping students—like me—achieve their college dreams.

[Janai Raphael is the strategy officer for participation at Lumina Foundation, an independent foundation that works to help all Americans keep learning beyond high school. This is her first piece for Lumina, where she works to increase enrollment and re-enrollment in bachelor’s degree programs. Throughout her career, she has helped students from all walks of life enroll in college and earn degrees. Most recently, she worked as Achieve Atlanta’s senior manager of scholarship and affordability, where she managed Georgia’s largest need-based aid program.]