College Is Not the Great Equalizer

That’s one takeaway from a recent post by Brookings fellow Beth Akers:

Essentially, does higher education succeed in lowering intergenerational “stickiness” of socioeconomic status?

Unfortunately, the evidence doesn’t paint as rosy of a picture as we’d like to see. New evidence shows that a college degree might be worth less if you’re raised poor. We can’t say for sure why this is the case, but it’s easy to imagine a number of reasonable explanations. For instance, it’s likely that students who grown up in poorer families attend lower quality institutions. The disparity in returns is so large that individuals who are born into poor families (the lowest quintile of the income distribution) and manage to graduate from college have the same chance of staying in the bottom income quintile as people who are born into rich families (higher income quintile) and don’t complete high school.

Another one is to ignore (or at least temper) the increasingly popular notion that a college education is about knowledge, not a path to higher income:

For a long time we’ve hesitated to talk about education as a financial investment, but that has a done a disservice to the students who can’t really afford the luxury of turning a blind eye to the economic consequences of their decisions. We need to empower students to make good decisions by publishing data on the labor market returns of each program of study covered by the federal student aid program. A large step on this front was taken last year when earnings data for each college was published on a government website. But program level information is also necessary so that students can choose courses of study that are likely to lead them to jobs that will make their college costs worth it.

She adds that we should seek ways to “reduce the risk of investing in higher education including a more robust income driven repayment system in the federal loan program, private market financial products that offer insurance to student borrowers and new business models that offer guarantees to students.”

Check it out.