crossposted from
unbossed
The prior post noted that one report found that one higher education statistic outs the US on a par with Mexico - the percentage of students who begin a college education and end up with a degree - 50%. One reason for that dismal statistic - in the world's richest country - is financial barriers to education. Truly, we are Mortgaging Our Future - How Financial Barriers to College Undercut America's Global Competitiveness.
Mortgaging Our Future How Financial Barriers to College Undercut America's Global Competitiveness - a new report by the
Advisory Committee on Student Financial Assistance is an indictment of this country's education policies and priorities. The report repeatedly states that its conclusions are conservative and that, as bad as its news is, the reality is much worse. It says that financial barriers to college are now so high they undermine every other effort to increase college enrollment.
The report begins:
As in recent decades, financial barriers are a major factor in preventing large numbers of college-qualified students from earning a bachelor's degree, particularly those from low- and moderate-income families. These bachelor's degree losses are an unmistakable signal that our nation has yet to make the full investment in student aid necessary to secure our economic future -- a dire warning that we are requiring millions of students to mortgage their future and ours as well.
We have failed to take accurate account of the impact of price barriers on our lowest income students, especially those who have prepared and planned for college:
* During the 1990s, between nearly 1 million and 1.6 million bachelor's degrees were lost among college-qualified high school graduates from low- and moderate-income families.
* During the current decade, between 1.4 million and 2.4 million more bachelor's degrees will likely be lost, as the number of high school graduates increases and academic preparation improves.
For example, the study excludes from consideration the huge numbers of "low- and moderate-income 8th graders who either do not graduate from high school orgraduate but are not college-qualified under at least one of these measures." Therefore, the report bases losses on "the cream of the nation's highschool graduate crop." And yet the picture is dismal.
Follow the Money
The key barrier is money - or lack thereof. As a result, students are working record hours and are carrying huge loan burdens. The report says this is caused by "rising college prices and insufficient need-based grant aid".
In my experience, the increase in costs and loss of need-based aid, is at least in part due to the pernicious effects of college rankings by outfits such as US News and World Report.
They force colleges to spend large amounts of money in certain ways and to buy students with high scores. Grant money is oh so finite, so the result is moving aid money from the needy to the high scorers, regardless of need.
The report effectively agrees with this assessment. It recommends:
* reinvigorate the access and persistence partnership to increase need-based aid from all sources,
* restrain increases in the price of college and offset necessary increases with need-based aid,
* moderate the trend -- at all levels -- toward merit-based aid and increasing reliance on loans,
* reduce financial barriers to transfer from two-year to four-year colleges,
* strengthen early intervention programs for low- and moderate-income middle school students,
* invest in efficient and productive remediation in college.
Congress' response has been terrible and has all been in the direction of making things worse. link
The report does find a bright spot but not where one would expect it:
Fortunately, the broad outline of a solution is already known and at least partially in place in states like Indiana, Oklahoma, and Washington. In those states, low-income middle school students and their families are assured of financial access to four-year public colleges. With such an assurance, they know that adequate financial resources will be there if they work hard to become academically prepared. They know that grant aid in particular will be sufficient to keep work and loan burden to manageable levels upon enrollment in college and through degree completion.
Grants - Not Loans
An August Canadian meta-study - Grants for Students - What They Do, Why They Work - analyzed many studies in the area concluded that grants are the best way to tackle the problem:
Grants perform two functions in terms of access to education. First, they increase students' purchasing power in the short-term, hence reducing the "out-of-pocket" (i.e. the amount students pay from current income) costs of education. They also reduce the net price of education in real terms. That is to say, grants increase the benefit-to-cost ratio of education by offsetting educational costs such as tuition and foregone income. This may seem like an idle distinction but it is far from that: student loans, for instance, reduce out-of-pocket costs as easily as grants (and at a much lower cost to government), but only grants can change net price and affect cost-benefit ratios.
The report goes on to explain this conclusion:
This review has found that grants appear to be effective at increasing retention among low-income students, and by inference they are likely to be effective at increasing access for low-income students. We have not been able to determine how efficient grants are in achieving these tasks (that is, whether the cost of providing grants is outweighed by the benefits of increasing low income students' access to post-secondary education), but as this presumably would be a function of program targeting, which necessarily varies from program to program, this is a task that can be left to future research.
Moreover, this review has shown why grants work for low-income students. It is not because they are short of money at the time they go to post-secondary education; if that were the problem, then loans would likely suffice since debt aversion does not seem to be a problem. Rather, it is because low-income youth evaluate the cost-benefit ratio of post-secondary education in a systematically different way from wealthier youth. This makes them less likely to see post-secondary education in a positive light and therefore more in need of financial inducements to "tip the balance" of the decision in favour of enrolling and remaining in PSE.
What policy conclusions can we draw from this? Recall from our discussion of grant programs in section 1 that there are a number of different ways that "grants" can be delivered to students. Aside from traditional "up-front" grants, there are loan remissions, tax credits, and increased tuition subsidies. Some of these types of subsidies are targeted in more or less the way that the research says is best: towards low-income students. Others are not targeted at all and result in substantial wastage resulting in windfall gains for higher-income students who do not need the higher subsidy in order to attend post-secondary education.