Equity and Efficiency Revisited

By Richard Vedder

It has been probably forever true that kids from rich families are more likely to get college degrees than children coming from poor ones. But the gap has actually widened over time, as Tom Mortenson's Postsecondary Education Opportunity points out in the December 2006 issue of their newsletter. In 1970, about 40 percent of high school graduates from the top quartile of the income distribution graduated from college by age 24; by 2005, that had risen to well over 72 percent, over a 32 percentage point gain. By contrast, the attainment rate in the bottom income quartile rose from about 6 to about 12 percent, a 6 percentage point gain. Put differently, in 1970, about 60 percent of the "rich" kids (from the top quartile)with high school diplomas graduated from college in a timely fashion (4 year degree), compared with less than 28 percent today. In 1970, 94 percent of the low income students did not graduate, compared with 88 percent today.

The rising income-related gap with regards to college success has been blamed for some slowdown in the rate of income mobility in the U.S., and this critique may well be justified. What is less clear, however, are the reasons for the rising gap. Mortenson loves to single in on falling real Pell Grants. The problem seems to be far less that poor kids fail to enter college than that they fail to graduate once there. It is a dropout problem. Most rich kids who enter college graduate, while most poor kids do not. Yet the poor completion rate relative to the rich was relatively high in the era before Pell Grants, and also the rate has risen somewhat in the early part of this decade despite a decline in the ratio of Pell awards to college costs.

If Pell Grants do not explain the trend, what does? Several factors may be at work. One that is highly politically incorrect to mention but is real is that kids from poor families, on average, are less capable of doing college level work, having less good course preparation but also less cognitive and other skill sets highly correlated with academic success (this point was made recently very well by Charles Murray). Beyond that, the rising costs of college and the shift in emphasis from need to merit based aid has raised financial pressures, especially on kids from lower income homes.

The side of me that sympathizes with American egalitarian principles of equal opportunity laments these developments, but the side of me that says "too many unqualified kids are going to college" says that the changes occurring are at least partly the consequence of the excessive promotion of college education over alternative ways of augmenting skills, such as vocational schools, on-the-job training programs, etc. I am moving more and more to the point of view that the access problem may be less a real problem than we think in that many kids who do not enter or complete college probably should not have been there in the first place.