The Widening Gap of Higher Education Inequality

The gap in higher education between income groups is wide and it’s continuing to grow, according to a February report from Pell Institute and the Alliance for Higher Education and Democracy (AHEAD) at the University of Pennsylvania.

The report, Indicators of Higher Education Equity in the United States — 45 Year Trend Report, reviews over four decades of higher education outcomes across family income groups, and reveals substantial inequities in terms of postsecondary enrollment, degree attainment, and the burden of college costs.

Authored by Margaret Calahan, Vice President of Research for the Pell Institute, and Laura Perna, Executive Director of AHEAD, the study draws from national census and education data, and illustrates some striking statistics and trends. For example, bachelor degree attainment for families in the top income group increased from 40 percent to 77 percent from 1970 to 2013, while for the bottom income group, degree attainment barely moved, from 6 percent to 9 percent during the same time period.

Additionally, 81 percent of 18 to 24-year-olds from the top quartile of family income were enrolled in postsecondary education in 2012, compared with just 45 percent of those in the bottom quartile, according to the report.

The study also found that family income was a strong predictor of the type of degree students earned. Seventy-five percent of students who did not receive Pell Grants attended four-year institutions instead of two-year colleges, as opposed to only 55 percent of students who did receive Pell Grants.

The Price of Inequality in Higher Education
With higher education inequality so high, what implications does this have for low-income families – and U.S. participation in a global economy? With most jobs projected to require a postsecondary degree by 2018, the United States is confronted with a significant challenge in terms of being truly prepared for global economic competition.

“Increasingly, the jobs that are available and are being created require some level of education beyond high school. We see that in terms of earnings and benefits, those who have higher education are much better off,” said Perna. “The widening gap in educational attainment leads to important gaps in terms of economic and social well-being.”

“I think we should be worried about this,” said Perna. “We can’t get to the levels of educational attainment that are required for international competiveness without closing the attainment gap.”

Bearing the Cost
Students and their families are also increasingly bearing the cost of paying for college themselves, while at the same time, state and local funds for college have been declining. According to the report, in 1977, state and local sources accounted for 57 percent of higher education revenues, while families paid just 33 percent of the cost. In 2012, families and students paid nearly half the cost, 49 percent, while state and local revenues dropped to 38 percent. Federal funding accounted for an additional 12 percent.

At a time when average salaries are flat or even falling, the costs of college are rising, and with state and local college funding less available, successfully earning a postsecondary degree is becoming more of a challenge for lower-income families.

What accounts for this dynamic? With more students entering college, state and local funds are being more widely distributed, and the economic downturn of recent years has also contributed to the trend, said Perna. However, there is also a philosophical aspect to the decrease in public funding.

“For some reason, we have defined postsecondary education as a private good, rather than as a public good,” said Calahan. “We have a situation where state and local funding structures have a lot of priorities, and individual decisions are being made as to where you invest in terms of tax dollars.”

Drop in Global Rank
The Pell report also illustrates another trend, a slowing of the rate of graduating students with a bachelor’s degree in comparison to other countries. In 2002, the United States was ranked second in degree attainment, but by 2012, the United States had dropped to twelfth.

A variety of factors account for this slow down. Students entering college find themselves unprepared for college, while others find it difficult to balance paying for school and staying academically engaged, said Calahan. “The countries that have passed us up have all made conscious choices that they’re going to try to make specific goals for bachelor degree attainment for their students,” said Calahan, explaining that once in college, many students have to then balance school and work to support themselves. “If we can create a situation where students have the financial support, then I think this will help with retention. “

Narrowing the Gap
Addressing the higher education gap is complex. To do so will require significant attention to our postsecondary finance, achievement, and information policies, according to Perna. Making sure students are provided with sufficient academic counseling is crucial, along with ensuring that students receive the necessary supports around financial aid, such as understanding the difference between a loan and a grant.

Calahan pointed to other approaches and supports, such as project-based work-study programs that directly connect to students’ future careers, incentivizing college completion by turning student loans into student grants upon degree completion, and more investment by states and local communities. However, addressing the gap is a multilayered problem. “It has to be a multifaceted approach – there’s no magic bullet,” said Calahan.

George Knowles is the Web Communications Associate at the American Youth Policy Forum (AYPF).

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