The role of higher education in reducing inequity: Using tuition, drop-out rates, and opportunity hoarding

This blog post isn’t about computing education.  You might want to simply delete this email, or skip over this post.  I’m using blog author’s prerogative to talk about things that fascinate me, even if they’re not in the title of the blog.

As frequent readers know, I increasingly read and think about economics, particularly with respect to higher education.  I’m going to collect in one blog post here (so that I don’t stray too far from the focus of the blog) some of the ideas and articles that have more interested me recently.

From Gladwell’s Revisionist History, we know that diverting tuition from the rich kids to the poor kids is common in schools that aim to bring in more lower-SES students and address issues of social inequity.  Unfortunately, this isn’t always possible. Here in Georgia, we’re forbidden by law to use tuition revenue to offer scholarships to less-advantaged children.  Puts us in a rough place when competing with schools that can.

Simply put, scholarship aid is not keeping pace with the rising price of college. While half of all families use a scholarship of some type to pay for college, much of that money is coming in the form of “discounts” off the tuition bill. Tuition discounts grew from $30 billion in 2007 to more than $50 billion in 2015, according to the College Board.While tuition discounts are marketed as scholarships in a student’s financial-aid package, they are not really scholarships. It’s not like a donor gave money to support a needy student with academic or musical talent. Rather, the scholarship money was diverted from another student’s tuition check. Last year, the average tuition discount for first-year students reached a staggering 47 percent — that’s nearly half off the published sticker price of tuition, up from about 40 percent just seven years ago.

Source: As College Tuitions Rise, Scholarships Fail to Keep Pace | Jeff Selingo | Pulse | LinkedIn

Without a doubt, one of saddest features of US higher education economics today: many of the kids saddled with higher education debt don’t even graduate! This is the awful perfect storm of increasing student debt and declining completion rates. Now, these students have massive debt, but don’t have the degree to get them a better paying job.

The author of the article linked below, Michael Crow, President of Arizona State University and author of Designing the New American University, visited at Georgia Tech this week, the day after Donald Trump became President-Elect of the US.  ASU has programs explicitly targeting those students, to help them get a degree that gives them entree to a better paying job that can help them to pay down their debt.  Crow said that the anger in this population is enormous — when they get saddled with debt, and higher ed fails them, they want to just blow up the system.  They’re through with how the existing system works.  Crow suggests that voices like that were what swept Trump to his surprising triumph.

Think about it: Tens of millions of people in the US are saddled with student debt and have no degree to help pay it off. They won’t get the substantial return on their investment—graduates with a bachelor’s degree earn about $1 million more in additional income over their lifetime than those with only a high school diploma—and they typically have not developed the adaptive learning skills that will help them prosper in a rapidly changing economy.In too many cases, they may never recover, leaving them feeling frustrated and bitter, disenfranchised and unable to find a way to better jobs and greater opportunity. Too many, saddled with debt and lacking a degree, feel trapped.

According to US Department of Education data, the ability to repay college loans depends more on whether a student graduated than on how much debt they are carrying. The research also found that students who don’t graduate are three times more likely to default on their loans than those who do.

Source: The Biggest Crisis in Higher Ed Isn’t Student Debt, It’s Students Who Don’t Graduate | Michael Crow | Pulse | LinkedIn

This last one is one that I saw linked to Emmanuel Schanzer’s wall in Facebook, and is deeply distressing. Rich kids who drop out of high school do as well as poor kids who complete college? Opportunity hoarding makes it difficult to really move the needle in terms of addressing economic inequity.  Crow talked about these kinds of inequalities in his talk, too.  If you’re in the bottom quartile in the US, you have an 8% chance of getting an undergraduate degree.  If you’re in the top quartile, you have an 80% chance — even if you do much worse in academics than the poor kids.

Even poor kids who do everything right don’t do much better than rich kids who do everything wrong. Advantages and disadvantages, in other words, tend to perpetuate themselves. You can see that in the above chart, based on a new paper from Richard Reeves and Isabel Sawhill, presented at the Federal Reserve Bank of Boston’s annual conference, which is underway.

Specifically, rich high school dropouts remain in the top about as much as poor college grads stay stuck in the bottom — 14 versus 16 percent, respectively. Not only that, but these low-income strivers are just as likely to end up in the bottom as these wealthy ne’er-do-wells. Some meritocracy.

What’s going on? Well, it’s all about glass floors and glass ceilings. Rich kids who can go work for the family business — and, in Canada at least, 70 percent of the sons of the top 1 percent do just that — or inherit the family estate don’t need a high school diploma to get ahead. It’s an extreme example of what economists call “opportunity hoarding.” That includes everything from legacy college admissions to unpaid internships that let affluent parents rig the game a little more in their children’s favor.

Source: Poor kids who do everything right don’t do better than rich kids who do everything wrong – The Washington Post