Isolated Low-Income Students

How can highly selective colleges increase their low-income access rates and their mobility rates?

Clearly, given the impacts of student loan debt discussed in the previous post, people are willing to spend extraordinary amounts of money on higher education. The logical next questions are 1) if college is truly worth their money, especially for low-income students, and 2) what types of institutions are the best for social mobility. One important function of good quality universities is to assist teenagers who come from low-income backgrounds and give them an equal opportunity to their peers at reaching high earnings outcomes. However, many schools, especially the top tier (Ivy League plus a few others) have completely disproportionate amounts of very high-income students, and therefore seem to exacerbate the trend of rich people staying where they are and poor people lacking opportunity to move up. There are a few ways to help increase the number of students who attend high-level schools, including specifically targeting high-achieving low-income high school students with information and resources, and factoring in neighborhood and family backgrounds with test scores, in the model of the College Board’s Environmental Context score.

It is well-known that different types of schools attract and admit people of different socio-economic backgrounds. For instance, Ivy League schools typically has more of its student body from high incomes (around 70% of their population is from the top quintile) than large public schools like Michigan or UC Berkeley (50%). These, in turn, have more top quintile students than lower level public institutions like Cal State or SUNY. Community colleges generally have more low-income students than high-income ones, following the reverse trend of the three other categories. With those schools, the lower the parental income for the child, the fewer students at the college there were. And because tuition continues to rise at colleges across the country, a lot of schools have seen their low-income access rate decline over the past few years. For the college class of 2002, the bottom 40% of people in the income distribution represented about 10.5% of the population at the 80 colleges categorized as elite by Barron’s, while for the class of 2013 this proportion had declined to 8.5%. Meanwhile, the share of students at these schools from the top 1% increased from 10% to 11.5% in the same time period. Much research has shown that despite the class segregation at top-tier universities, students at the same school will have almost identical outcomes no matter where on the parental income distribution they fall. For instance, at Columbia University about 60% of students from every parental income quintile will reach the top quintile in their own earnings. A similar trend holds for other elite schools. Graduation rate also is not significantly affected by a student’s parental income when they were a child.

Since the difference in earnings outcomes appears to not be explained by differences across individual people in one school, it must be explained by differences across schools. Therefore, some schools must be better than others at allowing people to move up in the income distribution. In general, the best schools for social mobility (which have high low-income access rates and also high proportions of these students that end up much higher in the earnings distribution than where they started) include mostly mid-tier public schools, such as certain schools in the Cal State University system, the State University of New York system, and the University of Texas system. The average mobility rate for Ivy-Plus schools (Ivy League plus Stanford, Duke, UChicago, MIT) is almost 5 times lower than that of CSU-LA and almost 4 times lower than SUNY-Stony Brook.

Cal State University - Los Angeles

University of Chicago

So how can highly selective colleges increase their low-income access rate and hopefully, in the process, their mobility rate? A significant part of the problem seems to be a lack of applications from low-income, isolated high-achieving students. A lot of these students have a realistic chance at getting into a top-level school but choose to attend community college or a non-selective 4-year school instead. In the high school class of 2008, over 50% of the low-income students with a SAT or ACT score at or above the 90^th percentile and a GPA of at least an A- applied only to those two categories of schools. In addition, the admissions staff at highly selective schools see 8-15 high-income applicants for every low-income applicant, while the actual ratio of high-income high achievers to low-income high achievers is closer to 2 to 1. This phenomenon is not driven by tuition at selective schools, as the cost to attend college decreases as the school gets more competitive for a student whose parental income is at the 20^th percentile. The most competitive schools generally have the best financial aid resources, while non-selective schools have little to none. Therefore, the most likely explanation for the lack of applications is a lack of information and resources being provided to low-income high-achievers. These students are often isolated at their schools because they are the only one in the neighborhood who has the potential to get in to a highly selective college. The colleges are not likely to visit or provide crucial information about financial aid to their schools because it would not be worth the cost or time just for one student, so these high-achievers go without knowledge that might have made them more likely to apply. Research has shown that for certain highly selective schools, simply mailing information about financial aid programs to the high-achieving students can significantly increase their application rates. As a result, more low-income students are admitted and enrolled at these top-level schools then there would have been otherwise. A highly competitive college specifically targeting these high-achieving low-income students can go a long way towards increasing low-income access at the school and eventually, improving upward social mobility as well.

One potential policy to motivate colleges into targeting these low-income students is making schools lose their tax-exempt status if they don’t fulfill a certain quota of poor students. Similarly, they could institute an Affirmative Action-type system for low income students, such as implicitly boosting their test scores. Both policies would very likely reduce inequality in mobility rates and earnings outcomes. In 2019, the College Board expanded its Environmental Context score, which is separate from SAT scores but still visible to colleges, to become mainstream. The goal is to provide admissions officers with information regarding each student’s neighborhood and high school in order to put each test score in context. While it is still too early to determine whether the policy will reduce inequality in higher education, it appears to be a step in the direction of one of the policies mentioned above. Depending on the Environmental Context’s outcome and public perception in the next few years, there may be additional regulations from individual schools or the U.S. government to allow higher low-income access rates and potentially higher upward social mobility.

Works Cited

Chetty, Raj. "The Causal Effect of Colleges." 15 May 2019, Harvard University,      Boston. Lecture.      

"Environmental Context Dashboard." College Board, professionals.collegeboard.org/
     environmental-context-dashboard. Accessed 25 Aug. 2019.

Hoxby, Caroline M., and Christopher Avery. "The Missing 'One-Offs': The Hidden
     Supply of High-Achieving, Low Income Students." NBER Working Paper, no.
     18586, Dec. 2012, www.nber.org/papers/w18586.pdf. Accessed 17 Aug. 2019

Markovits, Daniel. "How Life Became an Endless, Terrible Competition." The
     Atlantic, Sept. 2019, www.theatlantic.com/magazine/archive/2019/09/
     meritocracys-miserable-winners/594760/. Accessed 25 Aug. 2019.

"Some Colleges Have More Students From the Top 1 Percent Than the Bottom 60.
     Find Yours." The New York Times, 18 Jan. 2017, www.nytimes.com/interactive/
     2017/01/18/upshot/
     some-colleges-have-more-students-from-the-top-1-percent-than-the-bottom-60.html.
     Accessed 16 Aug. 2019