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Explaining the Rising Attainment Gaps among Disadvantaged Students

What accounts for the rising gap in educational attainment between disadvantaged and other students in the past 30 years?

Importantly, we must distinguish enrollment rates in higher education from completion rates among those who enroll. The data show quite large increases in enrollments over time among the poor and minorities as well as nonpoor and/or White students. Indeed, some evidence suggests that enrollment rates have come close to converging across these groups, conditional on graduating from high school. And, since high school graduation rates have improved markedly for the poor in the past few decades (Murnane 2013), and certain high school reforms show great success in improving the access of the poor and minorities to college enrollment (Bloom and Unterman 2014), college enrollment rates among minorities and the poor should continue to grow over time. Even among the dwindling numbers of high school dropouts, college enrollment options might also grow among those who obtain a GED as the preparation and tests that determine receipt of this degree grow more rigorous over time. [1]

But college completion rates among enrollees have worsened over time (Bound et al. 2009), with large gaps evident by race and family income, especially at fouryear colleges and universities (Holzer and Dunlop 2013). For instance, Holzer and Dunlop show that completion rates at four-year colleges and universities (within approximately 8 years of graduating from high school) average over 60 % for the entire population but just over 30 % for disadvantaged students. [2] At A.A. programs in two-year colleges, completion rates are more comparable across these groups (at about 35 %) but are generally low for all students, and the concentration of disadvantaged or minority young people is much higher at these schools than for middleclass students or Whites. [3]

What accounts for these gaps? The research by Bound, Lovenheim, and Turner and others shows that a number of factors contribute to lower college completion rates among the disadvantaged. These include:

• weaker academic preparation in the K-12 years;

• lower wealth and associated liquidity constraints limiting ability to pay tuition and other college expenses;

• worse information about and lower familiarity with higher education; and

• pressure to support a family by working full-time during enrollment.

If anything, the gaps in earlier academic achievement, and therefore preparation for college, across family income groups have also grown over time (though they have fallen somewhat by race—Magnuson and Waldfogel 2008; Reardon 2011), thus contributing to differences in their educational outcomes. But, even within groups of students with fairly uniform achievement levels, large gaps in completion rates between poor and other students are observed (Backes et al. 2014).

What role is played by the rising costs of higher education in America (College Board 2013b)? If capital markets operated fully efficiently, academically able students from low-income families would be able to fully borrow for whatever human capital investments they were capable of making. But evidence has shown that accumulated family wealth (especially through the housing market) and access to financial aid have some impact on student enrollment and attainment (Lovenheim 2011; Brown et al. 2009), thus suggesting that capital markets are highly imperfect in overcoming wealth differences across families and lack of access to liquid wealth (often known as “liquidity constraints”) among the disadvantaged. [4] And, as the financial costs of twoand four-year public institutions continue to rise, because of reductions in state financial assistance to these institutions (College Board 2013b), these constraints may grow more serious over time.

It is also clear that information about the world of higher education is highly imperfect, especially among first-generation college enrollees from disadvantaged families. Indeed, when applying to college, low-income students are much more likely to attend the twoor four-year colleges located closest to where they live, which (for poorer and minority students) are likely lower-tier public colleges; as a result, there is often some significant undermatching between high-achieving students from low-income families and the colleges they attend (Bowen et al. 2005, 2009). Such undermatching appears to at least partly reflect differences in information about school quality available to the disadvantaged compared to other students, as well as in the likelihood of being accepted to higher-quality schools. [5] Accordingly, fairly small increments in information on higher education can have sizable effects not only on whether such students enroll but also where (Goodman 2013; Hoxby and Turner 2014), while assistance with filling out financial aid forms can have a significant impact as well (Bettinger et al. 2012).

Also, full-time work, and therefore part-time enrollment, is strongly associated with lower completion rates (College Board 2013a); this pressure to work is no doubt especially strong among single parents of small children. And a greater lack of social capital and supports among such students likely impedes their ability to successfully complete classes and accumulate credits as well.

On top of these personal factors, the institutions they attend matter as well (Bound et al. 2009). Even controlling for K-12 achievement, students who attend four-year colleges have much higher completion rates than those at two-year colleges, as we noted above, and within the former group, completion rates rise with college quality. In other words, given groups of students are more likely to graduate when they attend elite private colleges and universities, as well as the flagship state universities, than when they attend less selective public colleges. And it is in the less selective colleges and universities that much of the recent increases in college enrollments have occurred. Thus, raising the access of lower-income youth to fourinstead of two-year colleges, and to more selective ones within the former, might actually raise their graduation rates. [6]

Why do completion rates vary by institution? For one thing, the elite colleges have much more resources per student and can provide a range of academic and personal supports that cannot be matched at less selective schools. They also provide other benefits to students struggling to finish their degree programs. For instance, the more affluent schools can afford more sections of courses, thus enabling more students to fit them into their schedules; at the less selective schools, more rigid scheduling makes it harder for students to complete their chosen programs—especially if the students are working full time. The higher quality of the student peer groups at the more selective schools likely also contributes to these effects (Sacerdote 2001).

Even within institutions, finishing a program depends on what supports are available to students and also to their chosen fields of study. The data tell us that, all else equal, those majoring in science, technology, engineering or math (STEM) have somewhat lower completion rates, as the level and difficulty of work required in STEM classes is higher and requires greater levels of earlier math preparation (Backes et al. 2014).

But, perhaps more surprisingly, the harder fields of study are not always the ones with the lowest completion rates. Using administrative data from the state of Florida, Backes, Holzer, and Velez find the lowest completion rates in both twoand fouryear colleges among those majoring in fairly nondescript humanities fields like “general studies” or “liberal studies.” And large subsets of students end up in these fields, especially in A.A. degree programs and among disadvantaged students. [7] Rates of completion are also higher in more technical certificate programs than in A.A. programs, perhaps partly because the former are completed much more quickly.

Another type of institution is the for-profit colleges, which have recently grown in size and now consume quite large fractions of federal student aid. [8] Recent analysis (Cellini 2012; Deming et al. 2013) shows lower completion rates in the for-profit schools, somewhat lower earnings among those who complete them, and higher debt burdens among those who do not complete them.

  • [1] The effects of the more traditional GED on college attainment or earnings appeared to be modest at best (Murnane and Tyler 2000; Heckman et al. 2010). Those who pass the newer, more rigorous one will likely show greater impacts on these outcomes, though we do not yet know if pass rates will decline.
  • [2] Disadvantaged students in this study refer to those from the bottom quarter of the socioeconomic status distribution, which presumably measures longer-term family income better than annual income. The data on completion are derived from the 2000 panel of the National Educational Longitudinal Survey (NELS).
  • [3] Completion rates are somewhat higher if measured for those in certificate as well as A.A. programs at two-year colleges, though the average wages they generate are lower. On the other hand, completion rates calculated for community college enrollment populations that include adults and not just a cohort of youth out of high school are usually much lower than 35 %.
  • [4] In perfect capital markets, high-ability students should have no difficulty borrowing the funds needed to cover the costs of investing in college, as such investments should be regarded by the markets as relatively safe and generating a strong return. But very imperfect information about student ability or other factors reduces the funding available for investments in higher education; this, in turn, forces students to rely more heavily on their own family income or wealth, which causes many from lower-income or lower-wealth families to be “liquidity constrained.” It is also likely that disadvantaged students choose to rely less heavily on loans, the repayment and debt servicing of which might be more burdensome to, and impose more risk on, those with lower incomes (unless repayment were fully income-contingent).
  • [5] Undermatching could, of course, also reflect personal preferences if disadvantaged students might feel more out of place at more elite schools socially or worry about the higher costs of attending.
  • [6] This argument, of course, runs counter to the one frequently made that affirmative action actually hurts the educational attainment of minorities by enabling them to attend school where they are too disadvantaged academically to succeed. The evidence in support of this claim does not appear persuasive (Holzer and Neumark 2006).
  • [7] In the Florida data, 55 % of students in A.A. programs overall major in the humanities, usually reflecting “general studies” or “liberal studies,” while for disadvantaged students (defined here as those eligible for free or reduced-price lunch) the comparable fraction is 60 %.
  • [8] For instance, over a quarter of Pell financial aid now goes to students at for-profit schools (College Board 2013b).
 
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