Best Practices

At various times during the past two decades, the issue of increasing access to a college education for both youth and adults has come to the forefront in the debate about the role of higher education in America. Discussion of access often touches upon issues such as racial diversity, gender equity and class equity. Yet ultimately, most of the recent concerns about access to higher education are centered on two key economic developments: the increased economic opportunity and upward mobility provided by a college degree on the one hand, and the perception that college is increasingly unaffordable on the other. Since the mid-1970s, the economic rewards of earning a college degree have increased dramatically. Changes in the industrial and occupational job content of the U.S. economy have resulted in a sharp increase in the earnings advantages of college graduates. During the mid-1970s, men under age 30 with fresh bachelor’s degrees earned just 15 percent to 20 percent more per year than their high school graduate counterparts. Twenty years later, young men who are recent college graduates can expect to earn 50 percent to 60 percent more per year than

their counterparts with only high school diplomas. The gains in annual earnings for women with college degrees are even greater.

Earnings advantages have been especially large for graduates with degrees in high-demand professional fields such as science, engineering, computer technology, business and health. As employers demand that new hires bring more specific knowledge and skills to the workplace, college graduates—particularly those with degrees in professional fields—have found increasing opportunity in the labor market. The same changes in labor demand that have improved the relative job-market position of college graduates have resulted in a commensurate reduction in
real earnings for many of those without college degrees. As a consequence, college education has become the primary pathway to a middle-class lifestyle.

As higher education has become an increasingly important gateway to economic success, college presidents, trustees and elected officials fret over what appears to be a substantial decline in the affordability of college. Between 1978 and 1998, the cost of attending college—including tuition,
fees, room and board—increased by 63 percent in inflation-adjusted terms. Yet, over the same period, real median family income increased by less than 10 percent. With college costs growing more than six times faster than family income, many observers have concluded that college has become less affordable. For example, in 1978, the out-of-pocket costs of one year of college equaled about 13 percent of the average American family’s pre-tax income. By 1998, this proportion had jumped to 20 percent.

For families of modest economic means, the affordability problem is more severe now than it was 20 years ago. In 1998 as in 1978, roughly one quarter of U.S. families had incomes below $25,000 in constant dollar terms. The median income for those families in the bottom quartile of the income distribution was about $15,000 in both years. But in 1978, college costs equaled about 38 percent of
average family income for those in the bottom quartile. By 1998, this burden rose to about 64 percent of family income. Growing inequality in income distribution among families throughout most of the 1990s has made this problem even worse.

Given these developments, it is not surprising that much of the discussion about improving access to
higher education has centered around making college more affordable by improving financial aid and limiting tuition growth. And indeed, most of the response to declining college affordability has come in the form of increased student financial aid. By 1996, 68 percent of all full-time undergraduates received some kind of financial assistance to attend college, up from 57 percent in 1993. Three-quarters of students with aid received direct grants with no repayment obligations. But is financial aid
enough? Can we solve the problems of access to and retention in higher education simply by improving the affordability of college?

Part of the answer to this question depends on what is meant by access. If it is measured in terms of the fraction of young people who go on to college in the fall immediately after graduating high school, then access is at an all-time high. In 1978, just 50 percent of high school seniors went on to a postsecondary program the fall after graduation. By 1997, this proportion had increased to 67 percent,
and about two-thirds of them were attending four-year colleges.

If access is measured in terms of the percentage of high school graduates who obtain four-year college
degrees, however, the evidence is more mixed. Fewer than one-half of those who enroll in four-year colleges or universities graduate from college within six years—and the graduation rates are even lower for students at two-year colleges.

A variety of national databases can be used to examine the post-high school educational experiences of
young adults over time, including: the 1978 National Longitudinal Survey (NLS) of Youth; the High School and Beyond Longitudinal Survey of 1980 high school sophomores and seniors; and the Beginning Postsecondary Student Longitudinal Survey begun by the U.S. Department of Education in
1989. A key element of these surveys is that they contain measures of students’ literacy skills and academic achievement along with the more standard demographic and socioeconomic data included in such studies.

These three databases, as well as the National Adult Literacy Survey of 1993, reveal that the likelihood of young adults earning a bachelor’s degree is strongly related to their basic skills proficiencies.

The basic skills measured by the NLS are based on student scores on the Armed Forces Qualification Test covering knowledge in four areas: reading comprehension, vocabulary, mathematical reasoning and numerical problem-solving.

The NLS findings reveal that 12 years after the initial interview, only about 1 percent of those in the bottom one-fifth of the basic skills distribution had graduated from college. (See Chart 1.) In contrast, 60 percent of those high school students who scored in the top one-fifth of the basic skills distribution had completed four or more years of college. Clearly, basic academic skills play an important role in influencing the likelihood that a high school graduate will enroll in college and persist through graduation.

But what role does family income play in the context of these findings on basic skills? Are low-income and lower middle-income students with strong basic skill proficiencies able to overcome their financial disadvantages and complete college?

The data reveal that once basic skills are taken into account, family income has Molly a modest influence
on whether a high school graduate will complete college. (See Chart 2.)

Students in the bottom quintile of the basic skills distribution have very low probability of completing college regardless of family income. Only 1 percent of low-income, low-skill students earn a college degree, while just 3 percent of the highest-income, lowest- skill students earn a degree. These
data imply that money alone simply does not overcome low levels of academic preparedness. In contrast, low income students have a relatively high likelihood of completing college if they also score in the top one-fifth of the basic skills distribution. In fact, nearly 36 percent of high school students who live in low-income households but have strong basic skills complete college by the time they reach their late 20s.

These results, complemented by other findings from the National Adult Literacy Survey and the High School and Beyond data, clearly indicate that strong basic skills proficiencies are an extraordinarily
powerful—though not the sole determinant—of college success.

Family income level does contribute to the likelihood that a student will enroll in and complete college— especially when complemented by solid basic skills proficiencies. As Chart 2 reveals, high-income students with strong basic skills are nearly twice as likely to complete college as low income
students with similarly strong basic skills. The evidence is equally clear, however, that family income does not act as a substitute for academic preparedness. Higher family income simply cannot overcome large basic skill deficits in determining who will enroll in and graduate from college.

Recent research has begun to debunk the idea that access to higher education is solely an issue of affordability. Economist Yolanda Kodrzycki of the Federal Reserve Bank of Boston, for example, recently found that rising tuition costs have a relatively modest impact on college enrollment and completion.
In their book, Consequences of Growing Up Poor, Greg Duncan of Northwestern University and Jeanne
Brooks-Gunn of Columbia, find only a loose connection between the family income of teens and the likelihood that they will attend college. (Indeed, the family income of children when they are very young is a stronger indicator of later college enrollment, according to Duncan and Brooks-Gunn.)

Meanwhile, college enrollment rates among recent U.S. high school graduates are at an all-time high—
despite sharp increases in college costs and sluggish growth in real family income. Thus, the nation has been successful in more widely opening the gates to a college education. But the evidence also suggests that we have been less successful in preparing students for the intellectual rigors that
colleges demand. As educational leaders ponder strategies for increasing access to higher education, the discussion should not focus primarily upon affordability and financial aid. Instead, we need to redirect our efforts to ensure that more high school students possess the literacy, quantitative and
critical thinking skills required to succeed at the postsecondary level.

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Paul E. Harrington is associate
director of the Center for Labor
Market Studies at Northeastern
University. Andrew N. Sum is
director of the center.