MONEY Ask the Expert

Why You Might Want More Than One College Savings Account

Robert A. Di Ieso

Q: I have college savings for my children in both education savings accounts (ESAs) and 529s. Is there a difference in the way those accounts are calculated for potential financial aid? Would there be any benefit to consolidating into one type of account? — Mike Spofford, Green Bay, Wisc.

A: The good news: There is no difference in how Coverdell ESAs and 529 savings plans factor into your child’s student aid, says Mark Kantrowitz, publisher of Edvisors.com, a website that helps people plan and pay for college.

Both of these education accounts are considered qualified tuition plans. So as long as they are owned by a student or a parent, the plans are reported as an asset on financial aid forms and have a minimal impact on your aid eligibility (federal aid will be reduced by no more than 5.64% of the value of the account). What’s more, your account distributions are not considered income, Kantrowitz adds.

Education savings accounts and 529s share other appealing features: Your savings grows tax-deferred and withdrawals are tax free as long as the money goes toward qualified education expenses. If you spend it on anything else, you will be hit by income taxes on the earnings as well as a 10% penalty.

One of the biggest differences is how much you can put in. ESA contributions max out at $2,000 per child per year, while 529s have no contribution limits. However, if you put more than $14,000 a year into your child’s 529—or $28,000 as a couple—the excess counts against your lifetime gift tax exclusion and must be reported to the IRS. You can get around that by using five-year tax averaging, which treats the gift as if it were made over the next five years.

Coverdell ESAs give you more investment options—from certificates of deposit to individual stocks and bonds to mutual funds and ETFs; you’re usually limited to a small number of mutual funds in a 529 plan. But you don’t need that much investing flexibility, Kantrowitz notes, since you want to keep risks and fees to a minimum over the short time you have to save for college.

Another key difference is that ESA funds can be spent on K-12 expenses; 529s must wait until college. ESAs also come with age restrictions. You can contribute only while the beneficiary is under 18, and to avoid penalties and taxes you must spend the funds by the beneficiary’s 30th birthday (with a 30-day grace period).

You can get around this age limit by changing the beneficiary to an under-18 close relative of the beneficiary. Or you can roll it over into a 529 plan with no tax penalty. (You cannot roll your 529 into a Coverdell ESA, however.) In fact, later-in-life education is one of the only reasons to consolidate plans. Otherwise, says Kantrowitz, there is no compelling reason to combine your two savings accounts into one.

MONEY College

12 Things We Wish We’d Known When We Were 18

Girl moving off to college
Eric Raptosh Photography—Corbis

Suze Orman and other experts share their financial advice for the Class of 2018. Follow these tips to keep your college experience from becoming a major money mistake.

Prepping for freshman year at college typically includes activities like shopping for dorm essentials, reviewing orientation packets, and Googling your new roommate.

Most students don’t spend a lot of time thinking about how they’ll manage their money in this new phase of their lives.

And yet, what you do in those first few years of parental emancipation can affect you for years—or decades—to come. Students graduated last year with an average $35,200 in college-related debt, including federal, state and private loans, as well as debt owed to family and accumulated via credit cards, according to a Fidelity study. Half of those students said they were surprised by just how much debt they’d accumulated.

To make sure the class of 2018 gets off on the right foot, MONEY gathered sage advice from top financial experts about the lessons they wish they, their kids, or their friends had known before starting school.

1. Limit your loans. “Do not take out more in student loans than what you are projected to earn in your first year after college. If you only expect to make $40,000, you better not take out more than $40,000. The chances of you being able to pay it back is close to nil. If you need to take a private loan, you’re going to a college you can’t afford. Remember, going to an expensive school doesn’t guarantee success. The school never makes you, you make the school.” —Suze Orman, host of The Suze Orman Show and author of The Money Book for the Young, Fabulous & Broke

2. Finish in four. “Many kids are finishing school in five or six years. But every extra year is potentially an extra $30,000 to 40,000 in expenses. Map out your coursework and figure out exactly what you’ll need to do each semester. Be vigilant about sticking to your plan. Try to catch up on any credits by taking classes at a community college over the summer.” —Farnoosh Torabi, author of You’re So Money

3. Study money 101. “Sign up for an economics or personal finance course. This way, when you graduate, you’ll be better equipped to manage money for the rest of your life.” —Brittney Castro, CEO of Financially Wise Women

4. Leave the car at home. “Everyone feels like they need a car, but with the combination of sharing services like Uber, Lyft, Zipcar and public transport, that isn’t always the case. If you’re living in a major metropolitan center or on campus, consider leaving your car behind. It’s much cheaper to use one of these car services than it is to pay for insurance, gas, parking, car maintenance and car payments.” —Daniel Solin, author of The Smartest Money Book You’ll Ever Read

5. Lead rather than follow. “Especially in college, you’re going to be surrounded by people doing dumb things financially. You’ll see people financing their lifestyle with student loans or their parents’ money. Don’t feel bad if you can’t afford the same things as others. I knew a student who was financing his whole college experience with debt and he was always asking people to go shopping with him. If I’d tried to keep pace, I’d have ended up in the same debt-ridden place as him.”—Zac Bissonnette, author of Debt-Free U

6. Find free fun. “You can still do fun things at school, without spending a lot of money. You’re paying an activity fee in your tuition, so you ought to make sure you’re taking full advantage of whatever the school offers for free—be it concerts, trips, lectures. The school I went to provided grants to help students travel abroad and offered free plays and trips through different clubs.” —Farnoosh Torabi

7. Be purposeful with plastic. “The idea that you need to build credit in college is wildly overrated. It’s not a bad idea to build credit, but having built up a bad credit history will hurt you more than having no credit history. You don’t need to feel pressure to get a credit card. You can get by just fine with cash and a debit card; no one is expecting you to have a ton of borrowing history when you’re getting your first apartment anyway.” —Zac Bissonnette

8. Put your budget on autopilot. “Keep track of the money you’re getting in from loans and your parents, as well as your expenses. Use an app like Mint.com, which lets you link your debit and credit cards to your online account to track your spending and easily help you keep on budget.” —Daniel Solin

9. Enlist Mom and Dad. “Check in with your parents once a month and review your spending with them. Talking about this will help you to avoid what I call ‘budget creep,’ where all of a sudden you’re spending $30 a day on food and entertainment. All those little extras add up and you could be spending over a hundred a week… on what?”—Neale Godfrey, chairwoman of Children’s Financial Inc.

10. Protect your stuff. “College students may not think they have a lot of valuable possessions. But think about the value of electronic devices alone, not to mention textbooks, clothes, even that ratty futon. The good news is that renters insurance is typically inexpensive and can protect you from fires, theft and other incidents. The even better news is that students’ stuff may be covered by their parents’ homeowners insurance. Check the policy prior to hitting the books.”—Kara McGuire, author of The Teen Money Manual

11. Establish rules with roomies. “If you’re renting an apartment with friends, be sure everyone and their parents sign the lease. Try to have everyone’s name on the utilities bills as well. Kids will take advantage of other kids, and you don’t want to be the one who is stuck being responsible for everything. If you can’t attach everyone’s names to all the bills, have them prepay. Also, make sure everyone chips in for general expenses like cleaning supplies and toilet paper, so you don’t end up paying for all of that as well.” —Neale Godfrey

12. Share with discretion. “Social networks are a public record. Your future employers will look you up on your social sites and judge you based on what they see. So something that you thought was cute in college could keep you from getting the job. Know that every move you make on those sites could have a direct consequence on your ability to land a job.” —Suze Orman

 

TIME Saving & Spending

One (More) Shocking Way Colleges Are Ripping Off Kids

Marking up movie theater popcorn is one thing, but jacking the price of a laptop by more than 100% is another, especially when the would-be buyers are college kids. As students get ready to head to campus, college stores are making laptop shopping a buyer-beware endeavor.

An investigation by DealNews.com found that college bookstores hike prices on the laptops and tablets they sell by an average of 35% over the regular sale prices of retailers like Amazon, Best Buy and Staples. DealNews looked at prices for the cheapest tablets and laptops, plus the most expensive laptops, available at the online stores of five public and one private college, then compared those to back-to-school deals offered by other retailers on identical or very similar machines.

Not every single one is a rip-off, but more than two-thirds are, and some of the markups are pretty egregious.

DealNews finds that the University of Virginia sells a first-generation iPad mini for a staggering 135% more than the $199 sale price the site found on more than one occaision over the summer. The $469 price the campus store is charging is so high that even if you wanted to buy the newer model iPad mini, you could get it straight from Apple for $70 less.

As a matter of fact, if you’re a college kid (or the parent of one), you should probably just steer clear of the campus store entirely if you’re looking for electronics.

“Another example that stood out… were these headphones,” says DealNews’ Louis Ramirez. Although they cost $130 on Amazon, the University of Berkeley Student Store slaps a $49 markup on top of that.

We found other examples in just a cursory browsing of the sites supplied by DealNews, so it’s likely this just scratches the surface of a bigger issue in electronics markups.

One school site is selling a 32G Sandisk USB thumb drive for about $45. Wal-Mart sells the same model for less than $17. A wireless mouse sold by one school for just under $30 sells for half that amount at Office Depot. One Dell laptop “deal” on a school site was no cheaper than the price on Dell’s own website, and two schools’ “sale” prices on iPads are still $30 more than you’d pay at Wal-Mart.

College stores’ problems with electronics sales don’t end with the inflated prices, says Ramirez. While some schools sell up-to-date technology, the site’s investigation found that “others were selling older previous-generation tech at current-generation pricing,” he says. If you think you’re getting a deal, make sure to clarify the model — you could be paying top dollar for last year’s closeout.

And don’t be fooled into thinking that “student discount” translates to the best deal. Just like regular prices, you have to shop around because all student discounts aren’t created equal. “Campus stores aren’t the only retailers that offer student promos,” Ramirez says. As long as you have an active student account (one that ends in .edu), a number of other retailers offer discounts.

MONEY Ask the Expert

The Best Way to Give Your Grandkid Cash for College

140605_AskExpert_illo
Robert A. Di Ieso, Jr.

Q: “My wife and I will soon be first-time grandparents and would like to make monthly investments for our grandson. What are the benefits and limitations of 529 plans? We live in N.Y., but our grandson will be born in Massachusetts.” —Joe Kostka, Fairport, N.Y.

A: If you want to help with your grandchild’s college costs, a 529 plan is the best route, says Mark Kantrowitz, publisher of Edvisors.com, a website that helps people plan and pay for college.

These state college savings plans have significant tax advantages. Your contributions grow tax-deferred, and withdrawals are tax free as long as the money goes toward qualified higher education expenses such as tuition or books. (If you spend it on something else, you will be hit by both income taxes and a 10% penalty.)

Since you’re funding an education account, you can contribute even more than the annual gift tax exclusion—$14,000 in 2014, or $28,000 as a couple—without running the risk of owing gift taxes. You can gift five times the annual exclusion in a single year, or $70,000 for a single person and $140,000 for a couple (but you then can’t give that child more for the next four years).

In more than half of states, if you use your state’s 529 plan you can deduct at least a portion of your 529 contribution on your state income tax return. New York offers a deduction of up to $5,000 per year ($10,000 for married couples filing jointly). Massachusetts has no deduction. To find out which states offer tax benefits, check out Edvisors’ full list.

For you to get a tax break in New York, you need to be the account holder of the 529 plan (naming your grandchild as beneficiary). But you might want to forgo the deduction and make the parents the account holder (or the child, though custodial 529 plans have other drawbacks, including no option to later change the beneficiary).

When grandparents own 529 plans, the account is not reported as an asset on the student’s FAFSA application for financial aid, but any plan distributions count as income. This can reduce your grandchild’s aid eligibility by as much as half of the distribution amount.

If the parent or child owns the plan, the account is reported as a parental asset on the FAFSA and has a minimal impact on aid eligibility, says Kantrowitz (aid is reduced by no more than 5.64% of the value of the 529). And 529 distributions are not reported as income.

The savings from the state tax deduction are small compared to the harm it could cause to your grandchild’s financial aid, says Kantrowitz.

Other Ways to Stay In Control

To keep control of the account without jeopardizing future financial aid, you have a few options. You can retain ownership of the plan until right before your grandchild takes a distribution and then switch it to your children. While New York allows this kind of account change (not all states do), you risk having to pay back the your tax savings (talk to an accountant).

Another option to minimize the hit to financial aid while still getting the tax break: Wait to take out the money until the child’s senior year of college, after the last financial aid application has been filed. The only risk is that if their expenses don’t outweigh what’s in the account, you could be stuck with leftover funds.

Best Plan Options

While you can invest in any state’s 529 college savings plan, you should opt for a direct-sold 529 plan, which usually has much lower fees than adviser-sold 529 plans do.

“The best option is to focus on a 529 plan with low fees that has an age-based asset allocation that mixes an all-stock fund, such as a S&P 500 fund, with a fund that has no risk of loss to principal,” says Kantrowitz, who prefers plans run by Vanguard, Fidelity, or TIAA-CREF. New York’s plan is run by Vanguard, while the Massachusetts direct 529 is run by Fidelity.

To help you boost what’s in the 529, Kantrowitz also suggests joining a program like Upromise. You earn rebates on everyday purchases, which are automatically put into the 529 plan you specify. Kantrowitz says a family will typically earn between $1,000 to $2,000 in rebates over the lifetime of the account.

MONEY College

How Families Are Keeping a Lid on College Costs

Even though the price of a degree is steep, a new report finds that Americans are coming up with ways to limit the damage.

Despite the rising sticker price for a college education, American families are keeping higher education spending in check, according to Sallie Mae’s annual study of how students and their parents pay for college. One key reason: families are working hard to keep costs down.

This past academic year, families devoted an average of $20,882 toward a college degree, about the same amount they’ve paid for the past three years, and well below the 2010 high of $24,097.

“Even though we read stories about tuition going up, families are really holding the line on how much they’re spending,” says Sallie Mae’s Sarah Ducich, co-author of How America Pays for College. “They’re just not willing to write a blank check, and they are taking determined steps to make college affordable for them.”

They also relied less on debt. Borrowed funds covered an average of 22% of college costs this year, down from 27% the previous two years and the lowest level in five years. One of the main reasons for that, says Ducich, is that more students, especially low-income ones, were awarded grants and scholarships.

Overall, families are employing a number of cost-cutting measures, with the average family taking five different steps to bring expenses down, the report found. Among the biggest ways to trim education budgets:
  • Enrolling in two-year schools: In 2014 34% of students were enrolled in two-year public colleges, vs. 30% last year. That let them spend $10,060 less than four-year public school students did on average, and $23,843 less on average than their peers at four-year private schools.
  • Shopping by price: Two thirds of families reported eliminating colleges because of high costs. “This cost curve is something we saw jump post-recession, and it’s stayed at this high since,” Ducich says. Another 12% transferred to a less expensive school, up from 9% who did so last year. (For help finding a good education at the right price, check out our new ranking of the best college values.)
  • Changing majors: One in five families admitted to swapping majors to pursue a field that is more marketable, a trend that’s been steadily rising since 2012.
  • Lowering “fun” spending: Two-thirds of students said they cut personal spending to help shoulder college costs, vs. 60% who said the same last year.
  • Staying local: A full 69% of students opted for in-state tuition to save, and more than half chose to live at home or with relatives to cut down on housing bills.

More on how to save on college:

 

TIME Newsmaker

TIME Newsmaker Interview: Spelman President on Small College Success, the Flawed Fed Ranking Plan and How to Meet Smart Spelman Women

The Atlantic Presents:"The Shriver Report Live"
Beverly Daniel Tatum attends the Atlantic Presents:"The Shriver Report Live" at The Newseum on January 15, 2014 in Washington, DC. Kris Connor—Getty Images

During an hour long interview with TIME, retiring Spelman College President Dr. Beverly Tatum spoke about race, Historically Black Colleges, and her plans after she steps down next June.

In June 2015, Dr. Beverly Tatum will retire after 13 years as the ninth President of Spelman College. During her leadership of the historically black women’s college in Atlanta, Tatum, 59, raised annual alumni giving to 41%—one of the highest among historically black institutions. Tatum will leave the school having led a 10-year campaign that raised $157.8 million and garnered the support of 71% of the school nearly 17,000 alumnae.

Spelman is an exceptional school in more ways than one: it’s one of the oldest Historically Black Colleges and Universities (HBCUs) in the U.S., and it has an endowment of $357 million—the average private HBCU endowment is around $38 million. In 2014, Spelman ranked number 65 on U.S. News and World Report’s annual list of the nation’s top liberal arts colleges, the next highest ranked HBCU—Morehouse College—comes in at number 126.

But because Spelman is an HBCU, it’s often mentioned in discussions about the overall fate of black institutions, which face dire financial situations, declining enrollment and questions about their relevance in the 21st century. Tatum says the comparisons aren’t always fair. “Just as we as individuals tend to be stereotyped, lumped together as a group, in the same way the institutions that are serving African Americans are lumped together and are stereotyped as a group. We have to work very hard to penetrate that bias,” Tatum tells TIME.

In an hour-long wide-ranging interview, Tatum spoke about why we should not consider HBCU’s as a monolith, the problems with the Department of Education’s plan to marry financial aid and graduation rates, and what’s next for her post-retirement. The following interview has been condensed and edited for space.

 

You’re retiring in June of next year. Why now?

In the life of a college president 12, what will be 13 years is a long time. The average span of a college president is about 6 or 7 years. It’s a very demanding job—I’m just ready for a new chapter. But I think it’s also a great time to pass the baton. If you think about being a president as like running a relay race, you get the baton from one person and when you get it you run as fast as you can to make as much progress and then you have to pass it to somebody else. I wanted to pass it while there was a lot of momentum.

Your 10-year fundraising campaign raised $157.8 million, with contributions from 71% of alumnae. Forty-one percent of your alumnae give annually. Can Spelman be a model for other small liberal arts colleges and other HBCUs, specifically?

When I started in 2002 [annual giving] was about 13%. I knew that the future of the college really depended on strong alumni support on an annual basis because when you go to foundations, corporations, and other donors outside the alumnae community one of the first questions they’ll ask you is, “what is the level of support from your graduates?” If your graduates aren’t supporting you, why should anybody else? But, I do know that it’s very labor intensive. When you think about a donor who hasn’t been regularly giving to the college and you call her on the phone or you meet with her in person, the first gift she makes might be a small gift. Maybe $25, $50, or $100, but it’s not necessarily going to be a big check. And you spend a lot of time and energy just to get her to write that first check. There are schools that will likely say it’s not worth my time to focus on that little gift, I need to focus on those big gifts that are going to really help sustain me. What we did, which I think was really helpful, was we got one of our trustees to essentially match the gifts that we got from small donors over a period of time so that we knew we’d be able to build up the level of giving, knowing that there was a safety net, so to speak, of this other donors’ match. I think every school has a trustee who would, if you ask them to, help grow alumni giving by matching.

What does the future of Spelman look like?

I think the future of Spelman is bright. Strong philanthropic support, great students, a wonderful tradition of excellence that I’m sure will continue into the future. But I think the next President will certainly need to be thinking a lot about the impact of technology in terms of this rapidly changing world we live in. There are lots of conversations in higher education right now that any new president should be thinking about. I often say when I’m asked what the characteristics of that new president should be—and obviously it’s the board’s decision to choose— but it should be someone who can be a really fast runner; someone who can take that baton and just go with it.

What’s next for you?

It has been tremendous honor to serve as the President of Spelman College. It’s been a high point of my career and I’m looking forward to this coming year. Before I became the President of Spelman I was a professor, but I was also a writer. I want to return to writing. So my first project will be to work on my next book. One of the books I want to revisit is “Why are all the black kids sitting together in the cafeteria?” which was written in 1996. I want to reflect on the last 20 years and figure out what I will say differently, but I don’t know the answer to that question yet.

How has the overall college landscape changed during your time as the leader at Spelman?

I think the concern about cost and affordability has really gotten more intense. How can we provide [an education] in a cost effective way so that students can afford to come—whether that’s providing more financial aid or figuring out a way to offer it less expensively. Because we know that everyone needs an education, but a lot of today’s students can’t afford it. And I think that that conversation has really gotten more significant for everyone, not just at HBCUs, in part because the vast majority of today’s high school students are coming out of low to moderate income families and are often first generation college students. It’s not just an HBCU question. Everybody has to figure out, how do we make this more affordable?

I know that’s something First Lady Michelle Obama has been focusing on, increasing access to higher education, particularly among African American students. But at the same time the Obama Administration is working to distribute funding based on graduation rates, which have long been a problem for HBCUs. What do you make of that?

There’s an irony there. When you are serving low-income students there are many barriers to their completion, some of which have nothing to do with the school. There are all kinds of circumstantial situations that make it hard for students to persist. If you are providing services to students who are coming from high-risk backgrounds, the odds of their completion are going to be lower. One of the things we take great pride in at Spelman is our ability to graduate students at a high rate, but even at Spelman we have found since the Great Recession it’s become more difficult for us to maintain that graduation rate. More and more students are having to step out because of financial concern. I think when the Department of Education says to an institution that we’re going to judge you by your graduation rate— I hope that they will compare apples-to-apples. If you’re a well resourced institution serving a high-income student body, that graduation rate better be high. You have no reason for it not to be. But if you are looking at the performance of schools that are serving the most underserved student population, you should compare apples to apples to make sure that you are holding all of those variables constant.

Do you think that proposal will have an adverse impact on HBCUs in particular?

HBCUs have historically served those students who are most at-risk. Every HBCU is different. If you’re a school that has more open enrollment, more selective and students who are financially challenged you are hopefully going to transform their lives through the education you provide but your graduation rate is not going to be as high as someone who is dealing with a different socio-economic demographic. Graduation rates of institutions serving high percentages of under-served students should be evaluated in relationship to predicted retention rates for low income first generation students.

In previous interviews you have said people often talk about HBCUs as if they’re monolithic, as if they’re the same school. Where do you think the disconnect is in understanding HBCUs and addressing issues that face them?

That really has to do with understanding African Americans in general. Just as we as individuals tend to be stereotyped, lumped together as a group, in the same way the institutions that are serving African Americans are lumped together and are stereotyped as a group. We have to work very hard to penetrate that bias. You don’t regularly read articles about predominately white institutions are in trouble. You know what I mean? You don’t. So why is that when an HBCU closes its doors because of a loss of enrollment or loss of accreditation we read articles in which all of us get mentioned? That is, I think, just consistent with the stereotypes that have permeated our culture about people of color and the institutions of color.

What about the question of HBCU’s relevancy? Is that the same issue?

It’s a very interesting question. Why do people ask this question? We know that the history of HBCUs is that they were created at a time when there was no opportunity because of segregation, at a time when there was no educational access for African Americans. When Spelman was founded in 1881 in the city of Atlanta, there was no other opportunity for black women to get an education. So people will say, well now those majority institutions are available so why do we need those other institutions? But that fails to acknowledge the other purposes of HBCUs. An HBCU not only provides an educational opportunity for those who have been underserved, but it does so in a context in which the culture from which they come, the history that they’ve experienced is affirmed and acknowledged in a way that’s very empowering. And so the need for empowerment is always relevant.

I had a really interesting conversation with a white male educator and he asked me about the relevance. He went to an Ivy League school and said he would have really benefitted from having women like the women who choose Spelman at my college. He said that would have really benefitted his education. I understood what he was saying, but he failed to realize the privilege in his statement. The parent who writes that check for their daughter to go to college is not thinking, “she’s going to help someone else get a good education.” They’re writing that check because this is the best possible experience for their daughter. And one of the benefits for American higher education is that there are a lot of different schools to choose from. If that guy really wanted access to smart, Spelman women he could have enrolled at Morehouse. [laughs].

 

TIME Innovation

Five Best Ideas of the Day: July 16

1. To upgrade the reliability of the wisdom of crowds, look instead to the wisdom of the confident.

By the Editors of the MIT Technology Review

2. Marketing departments for technology firms should take the radical step of functioning like an outside agency, complete with their own engineers.

By First Round Review

3. According to Peter Orszag, the radical financial relief from the falling cost of health care in America means “everything you think you know about the nation’s long-term fiscal gap would be wrong.”

By Adrianna McIntyre in Vox

4. Robots writing dead simple news stories means journalists can use human intelligence on real, robust news that are worth reading.

By Kevin Roose in New York magazine

5. Is the bottomless thirst for Wall Street profits driving the soaring cost of higher education?

By Lisa Wade in Sociological Images

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Education

More International Students Are Studying at U.S. High Schools

Students
Fred Dufour—AFP/Getty Images

Many students hope to earn admissions to U.S. universities

International students are increasingly attending high school in the U.S. in part to improve their chances of gaining acceptance to American universities, according to a new study.

More than 70,000 international students attended secondary school in the U.S. as of October 2013, the majority of whom were pursuing a U.S. diploma, the Institute of International Education (IIE) study found.

While a diverse group of students pursue high school degrees in the U.S, the study suggests that certain regions are differently represented; Asian students are more likely to pursue diplomas, and Europeans are more likely to enroll in short-term programs.

Rajika Bhandari, who oversaw the study, attributed this disparity to a difference in goals.

“Asian students are very invested in obtaining a secondary education that really makes them academically competitive to enter college, probably in the U.S.” said Bhandari, deputy vice-president of research and evaluation at the IIE. “They probably perceive that receiving a U.S. diploma will help position them better.”

On the other hand, Bhandari says students from elsewhere were more likely to pursue “social and cultural” goals.

According to private college counselor Amy Sack, whose firm Admissions Accomplished advises foreign students, “It really depends on what country they’re coming from, and whether English is their first language. For Chinese families, improving one’s English is important: when they get here and in terms of essays.”

In addition, international students provide an easy pool for colleges to boost diversity, and so Bhandari does not think universities will abandon their overseas recruitment programs anytime soon. “Institutions need to start thinking about a multipronged approach where they think about different ways to get international students,” she said.

TIME Education

Historically Black Colleges Are Becoming More White

Graduates stand for the anthem "Lift Every Voice and Sing" during 2014 commencement ceremonies at Howard University in Washington May 10, 2014.
Graduates stand for the anthem "Lift Every Voice and Sing" during 2014 commencement ceremonies at Howard University in Washington May 10, 2014. Jonathan Ernst—Reuters

An average of one in four students at traditionally black schools in the U.S. is a different race than the one the college was intended to serve

When junior Brandon Kirby brought home an award from a national biomedical conference, it was a nice boost for his small college in a dying coal town in the heart of Appalachia.

It also seemed incongruous, given that the conference was for minorities, the college is historically black — and Kirby is white.

So are 82 percent of the students at West Virginia’s Bluefield State College, which nonetheless qualifies for a share of the more than a quarter of a billion dollars a year in special funding the federal government set aside for historically black colleges and universities in 2011, the last year for which figures are available. These schools, known as HBCUs, can also apply for federal loans through the Historically Black College and University Capital Financing Program. Last year, they got $303 million from that program, on top of $1.1 billion in previously approved loans.

The HBCU designation was created by Congress in 1965 to refer to any accredited school “established prior to 1964, whose principal mission was, and is, the education of black Americans.”

HBCU’s have always enrolled students of all races, but they are increasingly becoming less black. At some, like Bluefield, blacks now comprise less than half of the student body. At Lincoln University in Missouri, African-Americans account for 40 percent of enrollment while at Alabama’s Gadsden State Community College, 71 percent of the students are white and just 21 percent are black. The enrollment at St. Philip’s College in Texas is half Hispanic and 13 percent black, according to 2011 enrollment data from the U.S. Department of Education. Nationwide, an average of one in four HBCU students is a different race than the one the school was intended to serve, according to research conducted at the University of Pennsylvania’s Graduate School of Education.

Many HBCUs were started under segregation to provide African-Americans with higher education opportunities. After integration, they became seen as places for black students to overcome economic and educational inequities. Indeed, HBCUs have been instrumental in developing the black middle class, graduating substantial numbers of teachers, engineers and other professionals. But as schools that had been predominantly white opened their doors to other races, black students became scarcer at historically black colleges. To survive, the universities have had to market themselves to all students.

But George Cooper, the executive director of the White House Initiative on HBCUs, says such wild demographic swings are a testament to the modern-day flexibility of HBCUs. These schools still are, and always will be, legally considered historically black, he said.

“The definition is a federal definition,” Cooper says. “They’re living up to it.”

Congress has never stipulated whether an institution could continue to be considered historically black if it became mostly white. The legislation that gives the schools their largest pool of money says only that they have “contributed significantly to the effort to attain equal opportunity through postsecondary education for black, low-income, and educationally disadvantaged Americans.”

Not everyone agrees. Economist Richard Vedder favors eliminating special funding for HBCU’s on the grounds that all schools should receive money based on present realities, not historic mission. “If you’re going to give subsidies for institutions, you shouldn’t give it on the basis of some sort of historical [legacy],” says Vedder, director of the Center for College Affordability and Productivity.

At Bluefield, officials and students contend they haven’t strayed from their original mission for the same reason Kirby and his classmates are allowed to participate in the biomedical conference.

“We’re all considered minorities because we’re in a poverty state,” Kirby says, referring to West Virginia.

The university primarily draws rural students from Appalachia, many of them low income and the first in their families to attend college. “The students that we serve would not necessarily have other options for higher education,” Bluefield State President Marsha Krotseng says.

The schools, and many experts, are quick to point out that public HBCUs are often underfunded by their states. Even with the extra money they receive from the federal government, they argue, the schools get less than 3 percent of federal higher-education funding — slightly less than the proportion of students they enroll.

They also say there remains a need for historically black schools: to serve disadvantaged students of any color. Many of them are actively courting low-income students of all races. Their goal, they say, is unchanged: to help those who have few other college options.

HBCUs “are there to provide opportunity and avenues for education for people who were disenfranchised,” says Michael Sorrell, president of Paul Quinn College, an HBCU in Dallas. “Slavery has been over for a long time, so you can’t have such a narrow view point on this.”

Anthony Bradley, a professor at The King’s College in New York City who has written about HBCUs, disagrees. He says that broadly targeting disadvantaged students isn’t enough to merit continued special funding from the federal government, since many other colleges and universities also do this.

“That doesn’t set them apart from community colleges,” Bradley says. “Most colleges in the country have special programs to recruit and matriculate and graduate disadvantaged students.”

On a practical level, the increasing diversity of HBCUs has resulted from a need to fill seats to survive. Before desegregation, more than three-quarters of black college graduates went to HBCUs. Today, less than one-sixth of college-going blacks do, according to research by the Ford Foundation. (The Ford Foundation is a financial supporter of The Hechinger Report.)

These institutions, in general, are also having trouble attracting students because of financial problems, low graduation rates, and other poor outcomes, and their enrollment is shifting along with broader changes in the demographics of incoming college students. The number of Hispanics and Asians in particular at HBCUs is climbing. Asian enrollment rose 60 percent from 2001 to 2011, and Asians now comprise about 1 percent of HBCU students, according to the University of Pennsylvania research. Hispanics make up about 3 percent.

“The reality is that if HBCUs — with the exception of maybe the top five or six — do not diversify, they’re all going to die,” says Bradley. “While they may continue in their mission in respect to providing opportunities to African-Americans on paper, in reality they’re simply going to have to become more like any university in the country.”

That’s what happened at Bluefield State. The transformation began in the 1960s, when falling racial barriers meant blacks could attend any university or college, and the school recruited returning Korean War veterans just to stay open.

In 1968, after a student set off a bomb on campus, the state closed the dorms. That turned Bluefield State into a commuter campus in a predominantly white area, which grew even whiter when the coal industry left town.

By the mid 1990s, black enrollment had dipped to about 6 percent, and there were no black faculty.

One alumnus, William White, who graduated from the school in 1968, said returning to the campus in the 1990s, when it had become overwhelmingly white, was “the worst feeling I’ve ever had in my life.” Even so, he thinks the definition of HBCU should be flexible. It is possible for an HBCU to be minority black, he says, and the schools should “educate anybody that comes through their doors.”

This story was produced by The Hechinger Report, a nonprofit, nonpartisan news outlet affiliated with Teachers College, Columbia University.

Your browser, Internet Explorer 8 or below, is out of date. It has known security flaws and may not display all features of this and other websites.

Learn how to update your browser
Follow

Get every new post delivered to your Inbox.

Join 45,266 other followers