Where Have All the Low-Income Students Gone?

In the upcoming edition of The Presidency, ACE’s Terry Hartle and Chris Nellum discuss a surprising and deeply troubling trend: A steep decline in the percentage of low-income students enrolling in college immediately after high school. Their article is posted in its entirety below.

Since 2008, an intensive national campaign has sought to boost the number of college graduates. Early in his first term, President Obama laid out an ambitious goal, promising that “by 2020, America will once again have the highest proportion of college graduates in the world.” Foundations have offered significant funding for work in this area. New organizations, such as Complete College America, have also emerged. Federal student aid and college preparation programs have been generously funded as well.

It is against this backdrop that we have discovered a surprising and deeply troubling trend. According to U.S. Census Bureau data, the percentage of students from low-income families enrolling in higher education immediately after graduating from high school has declined by 10 percentage points since 2008, from 56 percent of graduates to just 46 percent.

Put another way, low-income students are actually much less likely to enroll in college immediately after high school than they were seven years ago, despite all of the efforts to increase their post-secondary participation. As a result, the percentage of low-income students attending college today is only about 3 percent higher than it was 20 years ago.

To some extent, it is no surprise that the percentage of high school graduates who immediately enroll in college has declined since 2008. During an economic recession, more people go to college to improve their skills and help their job prospects. As the recession ends and more jobs are available, fewer people enroll. Total higher education enrollment has declined roughly 3 percent since 2008.

However, the 10 percentage point decline in college enrollment among low-income high school graduates is much sharper than the drop for high- and middle-income students. This development looks even bleaker in light of these facts:

The dramatic decline in enrollment among low-income students in two- and four-year colleges and universities occurred despite a massive increase in grant aid. Between the 2008-09 academic year and 2013-14, the total increased by roughly 50 percent, from $82 billion in 2008-09 to $123 billion in 2013-14.

During roughly the same period, the overall high school graduation rate increased from 75 percent to 81 percent, meaning that the pool of potential college students has increased.

Due to increased grant aid, the average net tuition price (as opposed to the published “sticker” price) that students pay has decreased sharply at two-year institutions and increased only modestly at four-year institutions, according to College Board data.

Key Data Points

• Low-income student enrollment rates are clearly more volatile than for the other income groups. But given all of the efforts to increase college completion, the growth in access-oriented programs, and the sharp boost in student aid funding, this is a discouraging finding.
• Since 2008, the percentage of all high school graduates who immediately enroll in college has fallen from 69 percent to 66 percent in 2013. However, the proportion of low-income high school graduates plummeted during that period from 56 percent to 46 percent.
• By contrast, enrollment among high-income students has fallen from 82 percent to 79 percent. This means that the college participation gap between high- and low-income students is growing.

In 2013–14 the federal government provided approximately $49 billion in federal grant aid and institutional grant funding added $48 billion. After adjusting for inflation:

• Funding for Pell Grants in particular grew from $19.4 billion to $33 billion (in 2013 dollars), an increase of 74 percent.
• Institutional aid grew from $33 billion to $48 billion (in 2013 dollars), an increase of 50 percent.

Conclusion

It is unclear why the college enrollment of low-income students immediately after high school has fallen so sharply. There are at least five hypotheses that might explain this trend:

1. The rapid price increases in recent years, especially in the public college sector, may have led many students—particularly low-income students—to think that college is out of reach financially.

2. Students may believe that the economic value of higher education has declined.

3. Due to the economic recovery, low-income students have begun to enter the workforce at a higher overall rate than those from higher-income families.

4. College enrollment tends to decline when the economy improves, and the decline of enrollment at for-profit institutions may have disproportionately impacted low-income students.

5. The data are incorrect.

These data are even more worrisome with this fact in mind: While the percentage of low-income students in elementary and secondary schools is increasing, the percentage of low-income students who go on to college is falling. Said a bit differently, at the same time that low-income individuals are enrolling in college at lower rates, the majority of young adults in the pre-college education pipeline are from those same low-income communities. A recent Southern Education Foundation report showed that for the first time in recent history, low-income students are a majority of the children attending the nation’s public schools.

And as the Pew Research Center noted last year in its report, The Rising Cost of Not Going to College, “On virtually every measure of economic well-being and career attainment—from personal earnings to job satisfaction to the share employed full time—young college graduates are outperforming their peers with less education. And when today’s young adults are compared with previous generations, the disparity in economic outcomes between college graduates and those with a high school diploma or less formal schooling has never been greater in the modern era.”

The long-term implications of a society with a growing number of low-income students attending public primary and secondary schools but a shrinking presence of those low-income students in postsecondary education are ominous.

Regardless of why this is happening, it is a move in the wrong direction. It is a troubling trend that must be carefully analyzed, aggressively addressed, and ultimately reversed.

This is a special preview of the Winter edition of ACE’s flagship magazine The Presidency, which will be in subscribers’ hands by mid-December.