Studies Show That Getting Low Income Teens To College Requires More Than Just Money

How do we close the gap in college attendance between children from low-income families and those from middle and upper-class backgrounds? Existing research shows that providing financial support is critical to helping students afford college (and feel financially comfortable enough that they choose to attend), but new studies suggest that money alone may not be sufficient.

A cross-national analysis shows that while out-of-pocket educational costs for low-income college students are lower in the U.S. than in Canada, significantly fewer young adults from low-income backgrounds attend college in the U.S. The gap between the share of young adults from the lowest income bracket who attend college and the share from the highest income bracket who attend is about twice as large in the U.S. as in Canada (20 percentage points versus 45 percentage points). This pattern persists despite the fact that educational costs for low-income students are lower in the U.S. than in Canada** and even after controlling for other differences between Canadian and American students. While financial aid is obviously critical to making it affordable for low-income students to attend college, it is not enough to close the gap between low- and high-income students (if it was, we would expect to see a smaller gap in the U.S. than in Canada).

Another set of studies looks at the impact of students’ college savings on their likelihood to attend university. The researchers find that young adults from low and middle-income families who, as teenagers, set aside their own savings to pay for college are almost twice as likely to end up attending school as those who don’t. Further exploration reveals that this finding only holds true for students who, as teenagers, report being fairly certain that they will one day graduate college. For those who report being unsure whether they will graduate from college, saving money for university has no impact on whether they eventually attend.

Both of these studies suggest that financial support, while extremely important, is not enough to close the college attendance gap. Attitudes, self-perception, and other non-economic factors continue to play a role. As advocates press for increased financial aid and funding for programs like CDAs that help young people save for college, they should consider what efforts might complement these financial supports by helping students envision themselves as people who can and will attend college.

The Role of Financial Aid Policy in Shaping Income and Post-secondary Attendance Patterns in the US and Canada
Philippe Belley, Marc Frenette, Lance Lochner // September 24, 2011

Toward a Children’s Savings and College-bound Identity Intervention for Raising College Attendance Rates: A Multilevel Propensity Score Analysis
Washington University Center for Social Development // William Elliott III, Gina Chowa, Vernon Loke // September 2011

** There is a common perception that attending university costs much less in Canada than the U.S., but this is true mainly for students from middle and upper-income backgrounds. While America’s private colleges are much more expensive than Canada’s colleges, when you look at public schools the difference is smaller. In addition, the U.S. government provides more generous financial aid to low-income students, which more than offsets the difference in costs, while Canada provides more generous aid to middle-income students.

New Study Shows Military Service Increases Earnings Up To 40%, But Doesn’t Help You Get A College Degree

For a young person just finishing high school, unsure about what he (or she) wants to do in life, the military offers glory, adventure, and the chance to serve one’s country. It also promises more tangible rewards: a steady job, money for college, the potential for career advancement. Military recruiters and advertisements rely on images of heroism and duty, but they also tout the practical benefits of service. The question is, do these promises pan out?

A new study from RAND finds that there are long-term career benefits to joining the military. Individuals who enlist see a short-term jump in earnings of about 40% and a longer-term income boost of about 10%, compared to what they would be expected to earn if they didn’t enlist. The long-term boost is mostly among people who stay in the military, suggesting that military service may not help you find a better-paying job outside the armed forces but can pay better than the private sector if you stick with it. (This analysis doesn’t even factor in the free healthcare and other valuable benefits veterans receive.)

Interestingly, military service has a limited impact on the likelihood of completing college. Funding for postsecondary education has been a big enticement to potential soldiers since the G.I. Bill passed over 60 years ago. The RAND study finds, however, that those who serve are slightly more likely to complete a two-year college degree but slightly less likely to complete a four-year degree than those who don’t enlist.

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Families Spend 17% Of Their Income On Healthcare-Related Costs

One of our biggest long-term economic challenges is the exploding cost of healthcare. From 1999 to 2009, per capita healthcare spending grew at two and a half times the rate of inflation. Healthcare spending now constitutes 17.6% of our GDP, compared to 13.8% in 1999, and is expected to account for half of GDP by 2082 if current trends continue.

A new study from RAND quantifies how these rapid increases in healthcare costs affect a typical family. Continue reading