Thursday, April 30, 2015

Is College Worth the Investment?

Don Siegel
In my previous post, I tried to make the point that kids from wealthy and poor communities were essentially playing in a different game when we looked at the ways in which they are supported as they grow up. Kids from wealthier homes typically have an advantage with regard to the schools they attend, the extracurricular activities in which they engage, the types of enrichment experiences in which they partake, the interpersonal connections they make, and in the general organization of their family and community lives. Many attribute such advantages to maintaining the inequality and lack of social mobility that has recently been in the news and talked about by economists, political pundits, and social activists.

  Given the observation that kids coming from wealthier communities tend to have wind at their back as they grow up, in contrast to kids growing up in distressed communities, the concept of equal opportunity to achieve one’s full potential is problematic. Equal opportunity has been a basic tenet of the American Dream ideology. Work hard, show initiative, be industrious, persevere, and stay out of trouble, and you will be able to succeed beyond your wildest dreams. But, how does such an ideology get reconciled with data showing that a child born into the top economic decile has a 29.6% chance of remaining in the top decile when they become an adult, while a child born into the poorest decile has a 1.3% chance of making it to the top decile. On the other hand the child from the poorest decile has a 31.5% chance of remaining in the lowest decile; the richest kids have only a 1.5% chance of ending there1. It probably is a bit Pollyanna to suggest that outcomes (where one winds up) should be equally distributed with regard to where one starts life, but equal opportunity does connote that where one starts out is not correlated to where one finishes. That is to say, if equal opportunity exists, then a kid starting out in the lowest decile should have as much chance of winding up in the highest decile, as a kid who starts there, and a kid who starts in the highest decile should not be guaranteed higher socioeconomic status as a birthright. How then can we make a dent into these rigid demographic patterns?

There are many ideas that have been kicked around over the years, but one that continues to rise to the surface is the notion that if more kids from the lower deciles could get to and complete college, their job prospects and associated incomes would rise substantially, which would, in turn, help them to penetrate into higher deciles.  In actuality, there is compelling support for this idea. A recent Brookings Institute Report2  found that a child born into a family in the lowest quintile has a 45 percent chance of remaining in that quintile as an adult and only a 5 percent chance of moving into the highest quintile. On the other hand, children born into the lowest quintile who earn a college degree have only a 16 percent chance of remaining in the lowest quintile and a 19 percent chance of breaking into the top quintile. In other words, a low-income individual without a college degree will very likely remain in the lower part of the earnings distribution, whereas a low-income individual with a college degree could just as easily land in any income quintile—including the highest.

How much is a college degree actually worth? While many have debated this issue on philosophical grounds, with some arguing that going to college is not just about making more money upon graduation, others have assessed it as a financial investment. The results of a recent PEW Research Center study of Millenials (25-32 year olds)3 found that a college degree was worth an additional $17,500 in yearly pay above being just a high school graduate ($45,500 vs. $28,000). Furthermore, the report found that the gap between having only a high school diploma and a college degree has been increasing since 1965 when it was $7,499, $9,690 in 1979, $14,245 in 1986, and $15,780 in 1995.  Given that one’s work life is about 40 years, this would amount to $700,000 more in lifetime earning! Overall, as one can see in the following figure tracking median annual earnings for 25-34 year olds between 1995 – 2012, income is highly dependent on educational attainment.

Clearly, those who argue that inequality can be decreased, upward mobility enhanced, and equal opportunities realized through education seem to have a very powerful argument. For a quick and snappy overview of these data see the Youtube Video -  Is America Dreaming? Understanding Social Mobility. 

Getting to and Through College is Not so Simple for Poor Kids

While the evidence connecting education to income and upward mobility is compelling, getting poor kids to earn a bachelor’s degree is not so simple. The Pell Institute for the Study of Opportunity in Higher Education and The Alliance for Higher Education and Democracy at the University of Pennsylvania have recently published a comprehensive report entitled Indicators of Higher Education Equity in The United States  that explains the demographics of higher education, who earns bachelor’s degrees, the reasons why underserved students drop out at a much higher rate than their more privileged peers, and possible policy initiatives that might be deployed to enhance graduation rates in lower income students. 

First, one might ask the question regarding who in the 18-24 year old cohort, when broken down by income quartile,4 actually goes on to enroll in college. As shown below, and as one might expect, rather significant differences exist in rates of college attendance when family income is used as a factor. The gap in 2012 was 36% between the highest and lowest quartiles. Consequently, an initial question becomes how we might go about decreasing such disparities. Kids will not graduate from college if they do not enroll!

Not only is the gap large between 18-24 year olds who go to college, but it is even larger for those who go to college and actually graduate. As seen below, bachelor’s degree attainment is also highly correlated to family income, with 99% of those in the upper quartile earning a degree and only 21% of those in the lowest quartile earning one. 

Attendance and graduation statistics provide compelling data for framing the inequality-equal opportunity-upward mobility problem that we are facing. Given that we are searching for strategies to decrease inequality in America, and that education has been identified as a critical factor in pursuing upward mobility, we see in stark terms that family income, something that 18-24 year olds have little or no control over, plays a critical part in educational attainment. From an equal opportunity perspective, this is not the way things are supposed to be, as equal opportunity connotes that educational opportunity, as interpreted here as going to college and earning a bachelor’s degree, should be unrelated to a family’s income. 

The report from which these data are taken examines in greater detail the connection between income, financial aid, college attendance, and earning a degree. Perhaps, one of the most provocative findings, as shown below, is that the cost of college has risen at a much faster rate than the amount Pell Grants 5 support; federally subsidized grants to low income students. As stated in the report:

Average tuition and fees at colleges and universities in the U.S. more than doubled in constant dollars since 1970, rising from $9,625 in 1970 to $20,234 in 2012-13. Relative to the average cost of attendance, the maximum Pell Grant peaked in 1975 when the maximum Pell grant covered two-thirds (67 percent) of average costs. The maximum Pell Grant covered only 27 percent of costs in 2012, the lowest percentage since 1970. 

Another way to understand how costly college attendance is to low-income students, after all grant aid is computed, is to compute the net price of attendance as a percent of average family income. As shown below, in 2012 the percent of college costs of family income for the upper income quartile was 15%, while for the lowest income quartile it was 84%! Clearly, lower quartile folks do not have the discretionary income to pay for the college costs that their kids might incur.

What to Make of All of This

After reviewing all of these data one is struck by how compelling the relationship is between education, income, and mobility, but also by the challenges that lower income youth face in pursuing an educational track that will produce a college degree. The issue then becomes how we can best go about increasing the chances of a kid from the lowest quartile to pursue an educational trajectory that realistically is targeted at earning a college degree, or its equivalent. While money is a critical factor in providing direct support for college expenses to low income students, it is also a factor prior to college in supporting the educational and extracurricular experiences that pave the way for them to enroll in the first place. As those of us who work with lower income kids see everyday, there is a great deal of swimming upstream that is required to overcome the obstacles such kids face in enrolling in college and earning a degree.  Nonetheless, some suggestions that policy and decision makers might consider that can increase the probability of low income kids successfully attaining a meaningful post secondary school degree include the following four ideas derived from various research studies:6,7 

  • Promote College Readiness: This is a rather simple phrase that, in actuality, entails a great deal of complexity. Getting kids off the blocks as early as preschool, and supporting their academic and social aspirations and development throughout elementary, middle and high school is essential. Focusing on only one particular period, may show short-term results, but will probably not produce the longer-term sustained results of getting a youth college ready. Developing basic academic skills in elementary school is critical, providing guidance in middle school on selecting a high school, taking a college preparatory course in high school, and getting in-depth and sustained guidance on the college selection and admissions process are all critical to college readiness. As well, an objective should be to make the transition from high school to college as seamless as possible, given that data shows that students having to deal with remediation are more likely to drop out. Various studies have also suggested that pre-college high school programs like Talent Search, GEAR Up, and Upward Bound provide students with the guidance and support that they need to increase their chances for success during the critical first year of college. Furthermore, students headed for college are advised to take more rigorous honors and AP courses in high school in order to acquire the academic content knowledge, skills, and habits that they will need to succeed in their postsecondary courses of study. As an aggregate, all of this entails starting kids early and supporting them throughout their pre-college days to acquire the array of assets necessary for college success. 
  • Affordability: Clearly, paying for college is a much greater burden to the families of students in the lowest quartile (i.e., 84% of average annual family income) than those in the highest quartile (i.e., 15% of average annual family income). On average, in 2012, unmet need for students in the lowest quartile was $8,221, which over four years, or more, would mean leaving school with a debt of at least $32,884. Plainly, we as a society have to do more to make college attendance financially viable for poor youth. Given that graduating from college is now equivalent to what graduating from high school once was with regard to educating and training citizens for contributing to our social and economic well-being, we should consider providing universal free education to youth able to benefit from such. This is not a new idea, as the City University of New York has had various permutations over the years of need-based assistance that has amounted to free tuition for those meeting specified income criteria. Similarly, the University of California provides free tuition for in-state residents who come from families making less than $80,000 a year. Some wealthier institutions such as Harvard and Stanford also provide free tuition and room and board to students coming from families having annual incomes less than $65,000. Today’s movement for supporting universal tuition-free community college is a good start, but we also should enhance the size of Pell Grants, and other sources of funding to make college attendance financially feasible for all low-income students who are academically ready for college. 
Another idea that comes from South Africa and the Netherlands is to incentivize student performance by converting loans to grants, depending on stated criteria such as program completion, or program completion within a fixed time period. There are lots of ideas and programs that address how low-income students can finance their post secondary school educations, but the reality is that financial packages at most institutions are not so generous, when considering the real costs to most students. Consequently, our most practical strategy today is doing a better job in advising students on where to apply to college in order get the best value for the tuition and fees that they will need to pay after all sources of financial aid have been exhausted. Unsophisticated students may be provided complicated financial packages by some schools that charge hefty tuitions and provide what appears to be large scholarship awards, but after computing bottom line costs, may actually be significantly higher than attending state schools that have more modest tuition costs even after adjusting for their smaller scholarship awards. The ultimate objective in selecting and paying for college should be to find a school to which one can be admitted, that is capable of providing a rigorous course of study that is aligned with a student’s interests, where support is provided to make success highly probable, and that minimizes debt upon graduation. 
  • Support and Counseling: Just as students aspiring to college need support and guidance during the years leading up to elementary school, middle school, and high school, they need effective student support services once they get to college. Summer bridge programs have been identified as effective in helping students’ transition from their high school years to their first year of college. Such programs can help ease students into taking college level courses, provide writing workshops, teach achievement skills, and provide information and assistance about financial aid. Another strategy to keep low-income youth on track is to provide them with what is labeled proactive or intrusive advising. This actually entails a form of coaching in which staff members check-in with students on a weekly basis to help them deal with problems they may be encountering, before problems turn into failures that become deterrents to their success. This may go beyond academic help and include any aspect of college life that a student finds challenging. The bottom line here is that institutions need to be sensitive to the unique needs of their students, and with the high percentage of low-income students who start college and subsequently drop-out, there needs to be more personalized direct support for them from the time they start until they graduate.  
  • Support Full-time Attendance: Research has shown that part-time attendance in college is a risk factor for dropping-out. As one might imagine, part-timers typically must balance such things as family and job responsibilities with being able to focus on their academic work. As might be expected, the latter often suffers. While it is easy to propose that low-income students study full-time, it is more difficult to figure out how to make this happen, given their need to generate income for their living and school expenses. Clearly, there are few options here other than to provide adequate aid to cover these costs. From a public policy perspective, federal and state funds could be used to reward institutions that admit and graduate a higher percentage of low-income students, which, in turn, would mean providing more on-going support to them for making such a goal a priority. Wealthier institutions should also re-energize their efforts to recruit and support students from low-income families. Despite alleged efforts to bring costs down, a low-income student facing an average post graduate debt today of $32,884 provides little incentive for them to pursue a college education. If higher education really wishes to decrease inequality and enhance social mobility, they need to strike a better balance between their ever expanding costs and their missions to serve all segments of our society.  
Project Coach and College 

    The highest priority for us at Project Coach is to help our youth succeed beyond the playing fields where they coach. Initially, we targeted high-school graduation as a program goal. So far, our kids have been graduating at much higher rates than their peers attending Springfield Schools. As we learn more about inequality, upward mobility, and the role that college plays in the lives of kids coming from poorer families, we will be refocusing our energy on providing more guidance and support to them about how college works, what they can do to better prepare themselves for it, and how to negotiate the complexities of selecting an institution, applying to it, and finding ways to finance their educations.

1 Bowles, S., Gintis, H., Groves, M.,  (2005), Unequal Chances., Princeton University Press, p. 7.
Greenstone, M.,  Looney, A., Patashnik, J., and Yu, M., (2013), Thirteen Economic Facts about Social Mobility and the Role of Education., Brookings Institution,
3 The Rising Cost of Not Going to College, Pew Research Center;
4 Bottom Quartile = less than $34,160, second quartile = $34,160-$63,600, third quartile = $63,600-$108,650, top quartile = $108,650 and above.
5 Pell Grants are provided by the federal government to low income students.
6 Cahalan, Margaret, (2015), Sixteen strategies for widening equity of participation in higher education in the United States: Reflections from International Comparisons, in Indicators of Higher Education Equity in the United States , The Pell Institute for the Study of Opportunity in Higher Education,, pps 43 – 54.
7 Royster, P., Jacob, G, and Craig, H. (2015), Timing is everything: Getting students back on track to college readiness in high school. The High School Journal, Volume 98, Number 3, Spring 2015, pp. 208-225

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