Are For-Profit Colleges A Scam?

For-profit colleges are no stranger to controversy about whether they provide a quality education and the kind the career advancement promised in their marketing campaigns. A new study by Harvard economists will only add to the debate over whether students (and the federal government) are getting what they pay for. Continue reading

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.

How Much Is A College Degree Worth? The Answer Depends On How You Look At It…

Image Source: The Brookings Institution, Michael Greenstone & Adam Looney

Many young people chose to weather the recession by hiding out within the confines of a classroom, hoping the economy would improve by the time they graduated. College enrollment jumped 6% between fall 2007 and fall 2008 (the largest increase in 40 years), driven primarily by increased enrollment among minority students and at two-year community colleges.

Flash forward a few years and unemployment is still high, especially among young people. So did these college students make the right choice? According to a new Brookings Institution analysis of employment and earnings among 23 and 24 year olds in 2010, they did. Despite the fact that recent college graduates are earning less and are more likely to be unemployed than they were in 2007, those with a college education are still faring much better than those without. Among young adults, more education continues to translate into significantly higher earnings and employment rates, as can be seen in the graph above, suggesting that it may not take long for college grads to make up any earnings they sacrificed by choosing to focus on their education.

While the economic benefit of a college degree is significant, I think the authors of this analysis overstate it slightly. They present two advantages of a college degree: the employment advantage (college graduates are more likely to be employed) and the earnings advantage (college graduates earn higher wages). But because their earnings figures include the entire population of 23 and 24 year olds, even those who don’t have a job, the employment advantage also gets folded into the earnings advantage. If you extrapolate from their data and look only at 23 and 24 year olds who are employed, those with a college degree make $660 a week and those with a high school degree make $477 a week. The earnings of employed college graduates are 40% higher than those of employed high school graduates, a slightly smaller figure than the 90% earnings advantage we see with Greenstone and Looney’s numbers.

How Do Recent College Grads Really Stack Up? Employment and Earnings for Graduates of the Great Recession
The Brookings Institution // Michael Greenstone & Adam Looney // June 3, 2011