Unequal higher education
As Jane Austen might say today, it is a truth universally acknowledged that an American with desires of upward mobility is in need of a college degree. Having a college degree helps boost wages and leads to a variety of other steps onto higher rungs of the mobility ladder such as improved health and stronger marriages. But experiences with higher education, both the application process and the actual completion of the degree, vary quite a bit for Americans depending on the income level of their family. These differences have major consequences for our economy.
The travails of lower-income students are on display in a new New York Times Magazine article. The article focuses on the University of Texas at Austin and the efforts of several professors to help low-income students complete college. As the article points out, inequality may be propagated for low-income students before they ever set foot on campus during the application process. These students tend to “undermatch,” meaning they don’t apply to the most selective schools that would have accepted them. A student, for example, who could attend a selective state university such as UT-Austin instead applies to a community college.
Caroline Hoxby and Christopher Avery, both professors at Harvard University, have done research detailing this undermatching process. The graph below from Hoxby and Avery shows that high-achieving students from low-income homes often apply to schools with median scores far below their own. The x-axis shows the difference between the median standardized test score of a school and the test score for a student. A negative number means the student applied to a school that has a lower median score than her own. So we can see that high-achieving, low-income students are very likely to apply to schools for low-scoring students.
When students arrive on campus, inequality becomes a factor again. Low-income students are less likely to complete their program and graduate with a degree—an outcome that has increased over the past several decades. Martha Bailey and Susan Dynarski, both of the University of Michigan, have looked into the trends in college completion. They look at one cohort of Baby Boomers born in the early 1960s and compare their experience to a younger cohort of Millennials born about 1980. Bailey and Dynarski show that completion rates have increased over all, but the increase varies quite a bit by income level. The completion rate for low-income students increased by 4 percentage points, but it increased by 18 percentage points for high-income students.
This inequality of college completion may very well be a drag on economic growth. We’ve known for a while that the accumulation of human capital—economics jargon for education and skills—is an important driver of economic growth. If low-income students are “undermatching” to colleges and having difficulty completing school once they get there, our economy is missing out on untapped talent, a higher level of human capital, and higher levels of growth.
The programs to help low-income students detailed in the Times Magazine piece may be a good start to fixing this problem, but they are at best just a start. Leaving these students behind would not only be a tragedy for each student, but also one for our economy.