Inequality in higher education: the American Dream is over

Of interest:

Can College Level the Playing Field: Higher education in an unequal society’ by Sandy Baum and Michael McPherson is published by Princeton University Press. ISBN: 978-0691-171-807

No doubt, Sandy Baum and Michael McPherson, authors of Can College Level the Playing Field: Higher education in an unequal society, were pleased by United States President Joe Biden’s recent announcement that the US government was forgiving US$10,000 of student debt held by people earning less than US$125,000 and US$20,000 of debt held by those who received Pell Grants, which are made to the nation’s poorest students – and by the plan to increase Pell Grants from by over US$2,000 to US$8,670. 

Likewise, New Mexico’s recent decision to make the first two years of higher education free to its residents fits well within their recommendations. 

Their scepticism about online education, especially for less prepared students, has become a leitmotif in the news because the impact of online education during the many COVID-19-caused shutdowns of universities, colleges and schools becomes clear.

For readers outside the United States, however, the strength of this book is not so much in its common sense recommendations but, rather, in its devastating portrait of inequality – in education, achievement and incomes – in America today. 

The Gini coefficient, a figure used by political scientists to show inequality, is 0.390 in the United States. The closer a country is to 1.0, the more its economy is inequitable; accordingly South Africa’s number, 0.623, indicates it is 62% more inequitable than is the US. By contrast, Canada’s number is 0.300 while Norway’s is 0.264.

“The correlation between socioeconomic background and educational attainment has more serious implications in the United States than in many other nations because not earning a four-year college degree has more significant implications for lifetime earnings than it does elsewhere,” write Baum and McPherson. 

Baum is a non-resident senior fellow at the Center on Education Data at the Washington DC-based Urban Institute and emeritus professor of economics at Skidmore College (Saratoga Springs, New York), and McPherson is a non-resident fellow at the Urban Institute, former economics professor and former president of Macalester College (St Paul, Minnesota).

Among the other studies Baum and McPherson use to show that the “American Dream”, which holds that the next generation will climb higher on the socio-economic ladder, has become a nightmare, is the aptly named “Gatsby Curve”. 

At its top is the United States (closely followed by Britain and Italy). This visual representation is deceiving, for the higher the country is on the Gatsby Curve the less intergenerational improvement there is. At the top of the league table, so to speak, are Finland, Norway and Denmark, countries not normally associated with dynamic social change.

The higher education premium

Readers of this publication are used to seeing figures showing the premium higher education provides. The median income for a high school graduate in the United States is US$37,000 a year, or US$18 dollars an hour, a dollar over the minimum wage in New York. For someone with a bachelor degree it is US$62,000 and for those with advanced degrees it is US$82,000. 

However, as Baum and McPherson show, the benefits of higher education accrue to a minority of Americans. This fact, incidentally, is one of the reasons the Republicans oppose Biden’s plan to forgive student debt. 

95% of whites and 89% of blacks complete high school. However, only 40% of white people and 26% of black people hold bachelor degrees. Accordingly, the pay received by 60% of white people and 75% of black people are in jobs where they earn around the minimum wage.  

In fact, in reality, the income of black people is even worse than it appears. For the “median earnings of black 35- to 44-year-old bachelor degree recipients are about $14,000 less than the median for whites”. Instead of earning US$62,000, therefore, blacks with bachelor degrees earn US$48,000 a year, or US$23 per hour.

More than half of white students whose parents hold bachelor degrees go on to graduate from a four-year college or university. The figure is even more striking for children of doctorate holders: 70% of them go on to earn a doctorate. Only 5% of those whose parents graduated from a two-year community college go on to earn a doctorate. 

A meritocratic class

While perhaps predictable, what these figures show is that within families education builds on education, creating a meritocratic class quite separate from the majority of Americans.

Like the “sorting hat” that assigns students to their house at Hogwarts (Harry Potter), a number of America’s high school graduates are sifted by family income and race. 53% of students with very high scores on the Scholastic Aptitude Test (SAT) are admitted to highly selective schools like Harvard or University of Chicago. 

These are the same students who, Baum and McPherson show, tend to come from families in which the parents hold degrees. 

They are also the students who come from families with the financial means to have sent them to private school – or to live in wealthy areas where public schools are well-funded – and to provide extras such as travel, a bookish home environment and SAT preparatory courses. Not surprisingly, only 31% of students with middling scores are admitted to highly selective schools. 

When looked at through the prism of race, Baum and McPherson show the figures are even more striking. Of the admissions to highly selective schools, 89% are Asian, 78% are white, 38% are Latinx and 25% are black. The order, it is worth noting, is the same as it is on charts they show indicating the income of each group.

Growing inequality

One of the most interesting parts of Can College Level the Playing Field is the graph Baum and McPherson use in their discussion of growing inequality, a topic which has been much discussed in the media in recent years.

Since 1969 the bottom 20% of American households (by earnings) saw the percent of their income, relative to the national income, drop from 6% to 4%. The next fifth dropped from 12% to 9%. The third fifth also dropped three percentage points to 15%. The fourth fifth remained at 24%. The highest fifth saw the percentage of their income rise from 41% to 48%; the top five percent, who are part of the highest fifth, saw their incomes rise from 16% to 20%.

At first glance, the drop in income for the poorest Americans from 6% to 4% does not seem that much. It is, however, a 33% decline. While large, when set against the fact that between 1969 and 2019 the US economy grew almost five-fold, from US$4.9 trillion to US$19.4 trillion, it might seem as though this lowest quintile is still doing fairly well economically. 

However, the cumulative inflation rate over the six decades beginning in 1969 is eight-fold: what cost US$100 in 1969 would have cost US$800 in 2019. Accordingly, the poorest Americans have absorbed approximately a 50% decrease in their buying power.

Lowering admission requirements

In the chapter titled, “What Can Colleges and Universities do?” Baum and McPherson make several suggestions. The first is for the elite schools to enroll more poor students. They urge elite schools to lower the SAT expectations from 1,600 to 1,250 for poor students. 

To those who would howl that the schools would be selling out to lower expectations, Baum and McPherson point out that elite schools routinely make such arrangements for star athletes – the ones who will fill these schools’ expensive stadia. Further, they note, such arrangements are routinely made for what’s known as “legacy applicants”, many whose parents just so happen to have made large donations to the alma mater their son or daughter is applying to.

Baum and McPherson urge other state universities to adopt a programme similar to the Texas Top Ten Percent rule. In the “Lonestar State”, the top 10% of high school graduates – even from poor areas where the high schools are lower on the league tables – are guaranteed admission to the state’s public universities, including the state’s flagship institution, the University of Texas at Austin. 

“Outcomes were no worse for the students they replaced, who attended less selective institutions but did not have lower enrollment rates, graduation rates, or earnings than they would have otherwise had,” they write.

For several decades, the United States Supreme Court has whittled away at the affirmative action efforts colleges and universities have used to address the racial imbalance on America’s campuses. In simplified terms, the court has said that quotas cannot be used to address historic or present discrimination – because doing so discriminates against the plaintiff. 

Baum and McPherson propose an interesting way around the court’s rulings. Instead of affirmative action based on race, colleges and universities can create affirmative action programmes based on economic class. 

These would “not [be] vulnerable to a legal challenge based on the Fourteenth Amendment” and, since black people and Latinx Americans make up a disproportionate share of poor people, programmes aimed at the economic class would benefit a large number of them.

Academic support

Their recommendation for mid-tier universities, which educate the vast majority of America’s higher education students, includes increasing state grants that will keep tuition as low as possible. 

Larger state grants will also allow these colleges and universities to provide academic support services that are needed by a disproportionate number of poorer students (because the schools they went to were themselves poorly funded).

Absent from Biden’s announcement about changes to Pell Grants was something Baum and McPherson consider important : however necessary for student success, remediation classes use up Pell Grant room and do not count towards graduation. 

In other words, if students need 64 classes to graduate, but have taken four remediation classes, they will have to take a total of 68 classes to graduate because the remediation classes do not count towards graduation. 

The effect of this is that many poor students have to remain an extra semester to graduate, with the attendant economic costs and no further Pell assistance.

Source: Inequality in higher education: the American Dream is over

About Andrew
Andrew blogs and tweets public policy issues, particularly the relationship between the political and bureaucratic levels, citizenship and multiculturalism. His latest book, Policy Arrogance or Innocent Bias, recounts his experience as a senior public servant in this area.

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