How Elite Colleges Drive Income Inequality

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In the last few months, there’s been a flurry of articles in the mainstream press acknowledging the same problem: a paucity of high-achieving, low-income students at elite colleges. “Better Colleges Failing to Lure Talented Poor,” says the New York Times. ABC tells us “Colleges Struggle to Connect With High-Achieving Poor Students.” Likewise, NPR is concerned that “Elite Colleges Struggle To Recruit Smart, Low-Income Kids.”

Why does it matter that top-performing low-income students aren’t making it into the best schools? After all, many other above-average schools would be happy to accept them and even give them adequate grant or scholarship money. And its likely that a worthy degree from a competitive institution would give these students at least a decent shot at moving up the income ladder.  Harvard grad Ross Douthat has an answer that Ivy-leaguers knew long ago: “…elite universities are about connecting more than learning… the social world matters far more than the classroom to undergraduates.” The absence of low-income students in elite higher education underscores its failure to facilitate social advancement. 

Higher education in general hasn’t done a good job of serving low-income people. As Richard Vedder has noticed: “In 1970, 12 percent of recent college graduates came from the bottom quartile of the income distribution; 40 years later, the percentage was 7.3 percent.” Jeffrey Selingo, a writer for the Chronicle of Higher Education, has pointed out in his terrific new book College Unbound that just 8% of the lowest income group gets a B.A. vs. 82% from the highest income group.

The picture is similar at America’s top colleges. The 200 most selective colleges take only 15% of applicants from in bottom half of income distribution. 7 in 10 students at those colleges come from top income groups. And the Harvard Crimson, summarizing an important NBER paper by Caroline Hoxby and Christopher Avery, reported that “only 34 percent of high-achieving high school seniors from the bottom quartile of the income distribution went on to attend one of the country’s highly-ranked selective schools.”

Of course, lower-income students have fewer resources for accessing top colleges: less money for application and test fees, fewer role models, fewer guidance counselors. These persistent inequalities cannot be mitigated by elite colleges alone. But assuming that the elite colleges feel some obligation to enroll low-income students, their own recruiting efforts are currently subpar. A recent op-ed in the New York Times captured well the pessimism of students from rural, poor backgrounds with high aspirations. The writer, who grew up impoverished in Nevada but is now an English professor, noticed that more selective schools didn’t appear in conversations about college:

By the time they’re ready to apply to colleges, most kids from families like mine — poor, rural, no college grads in sight — know of and apply to only those few universities to which they’ve incidentally been exposed. Your J.V. basketball team goes to a clinic at University of Nevada, Las Vegas; you apply to U.N.L.V. Your Amtrak train rolls through San Luis Obispo, Calif.; you go to Cal Poly. I took a Greyhound bus to visit high school friends at the University of Nevada, Reno, and ended up at U.N.R. a year later, in 2003.

If top colleges are looking for a more comprehensive tutorial in recruiting the talented rural poor, they might take a cue from one institution doing a truly stellar job: the military.

Of course, the U.S. military can recruit on a much larger scale than elite collegess due to their greater personnel demands and budgetary allowances. But their success should still inspire our elite schools.  To that end, perhaps our top schools should create regional cooperatives that establish contacts with and assist top students in the admissions process.

Even if schools did a better job of recruiting these students, it is increasingly not in their financial interest to do so. The current financial model of private colleges is to keep tuition prices high so as to capture a great amount of money from students who can afford to pay top dollar. This money then funds fanciful construction projects and superfluous creature comforts for students, which, as this essay in the Atlantic pointed out, do wonders to attract more of the same students.

Furthermore, when they do accept low-income students, many fairly prestigious colleges are comfortable loading up students with loans and shortchanging them on grants. A remarkable new report from the New America Foundation exposes some well-regarded schools’ practice of enrolling a low percentage of low-income students and sticking them with a high tuition bill. In fact, “nearly two-thirds of private nonprofit institutions charge students from the lowest income families a net price of more than $15,000.” At Boston University, for instance, only 15% of students accept Pell Grants (given to financially needy students), but the net price for those students is still around $24,000 per year. Similar statistics reflect the reality at Carnegie Mellon and American University. At Santa Clara University, 15% of the students take Pell Grants, but still are expected to contribute $46, 347 per year.

In fairness, many of the elite schools, most notably Harvard and Princeton, have a de facto policy of not letting any student whose family makes less than $30,000 per year pay anything. MIT, Stanford, and Rice are among the best schools on the New America Foundation’s chart, with Amherst being the very best (Pell Grant students there have an annual expected contribution of only $448 per year). I have written that an education at the most elite institutions is worth a high amount of debt, but at many schools, like the ones above, that becomes much less of a value proposition. The author of the report noted that colleges could enroll and support low-income students if they wanted to, but that the “relentless pursuit of prestige” deters them. Truly elite schools (with massive endowments and operating budgets) can offer more money than second-tier private schools that are grasping for elite status. They will always have a high demand of people willing to pay their tuition rates. Conversely, second-tier private schools have to compete harder for an ever-shrinking pool of the most moneyed clients. They will never capture the revenues that the Ivies do, and will eventually become forced to offer less money to their needier students. Alas, this is another unfortunate consequence of private schools trying to emulate the economic model of their elite counterparts.

Lastly, there is a fundamental disagreement between collegiate leadership and students on the reason for college. Only 39% of college presidents in a recent survey said that the price of a university or college degree was a “very important” consideration. 65% said it was a “very important” consideration whether the percentage of students from their university are able to get a good job. And these are college presidents.  Conversely, a survey of 192,000 freshmen revealed that students had many motives for going to college, but the answer that got the highest percentage of affirmative answers (88%) was “to get a better job.” In an age when most students care about credentialization over learning, the presidents are tone deaf. The proliferation of novelty and unrenumerative academic programs, combined with the polyannish sales pitches of admissions and financial departments, has produced at least two generations of college students who think they can major in anything, take on debt, and still be secure in their economic future.

Ironically, the abandonment of poor students by so many prestigious schools directly contradicts their core leitmotif: social justice. For all their rhetoric about “fairness,” and “empowerment,” the private university’s business model usually depends on enrolling an abundance of rich students and burdening the poor ones. Higher-ed watchers often scold the university from abrogating its role of in loco parentis, especially on sexual matters. Letting the poor absorb crushing financial weight is just as pernicious.

David Wilezol

David Wilezol is the co-author of "Is College Worth It?" with former U.S. Secretary of Education William J. Bennett.

2 thoughts on “How Elite Colleges Drive Income Inequality

  1. Very thought-provoking article! Two questions:
    First, any idea why the take rate on Pell Grants for low-income students at BU and Santa Clara et al is so astonishingly low?
    Second, you seem to be saying that elite colleges sucking up all the high income students and refusing to pay for talented low-income students creates scarcity at second-tier schools, where talent is welcome but endowments are more modest, and that second-tier schools should abandon the Ivy model of attracting the richest clients with obscene resort-like amenities (and, if an 18-year old can be induced to care, stellar faculties). What model then, would you suggest that second-tier schools adopt in order to do a better job of fulfilling their own missions?

  2. The English professor quoted at the beginning of the piece actually made it, in terms he and many of us would acknowledge.
    The top opined schools are far less relevant to the greater society than often talked about. They choose good students, no doubt. What their value added is, is far from clear.
    Only selection makes it seem that those who attended such schools succeeded on account of networks developed at school and such. Maybe it’s true for the first job. But good, solid, cheap universities are creating fine value added for the long haul.

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