The Consequences of Public College Tuition Inflation for Low-Income and Disadvantaged Students

1. The Consequences of Public College Tuition Inflation for Low-Income and Disadvantaged Students Melissa L. Freeman Ohio University

2. The Consequences • Tuition has been increasing at an alarming rate • 21 states have increased by at least 10% in 2002-03 • Enrollment has been increasing as well • 15 million students enrolled in 2002-03 • 12 million enrolled in public institutions

3. The Consequences • A paradox • Review of the literature about the effects of public tuition inflation on low-income and disadvantaged students

4. The Consequences • Talented college-ready, low-income students often choose not to go to college • 2 million in first decade of 21st Century • One factor is public college tuition inflation • Rising prices have a chilling effect on low income enrollment

5. The Consequences • This paper reviews the impact that price has on • Participation • Aspirations • Institutional choice • Persistence • Post graduation debt • Financial Nexus Model

6. The Consequences • Price and participation • Leslie and Brinkman (1988), meta-analysis • For every $100 increase there was a drop of .7 percentage points in first time enrollment rate • Heller (1997), follow up • For every $100 increase there was a drop of .5 to 1.0 percentage points in first time enrollment rate

7. The Consequences • Price and Aspirations • If students view college as unaffordable, they will not prepare. • Hossler, Schmidt, & Vesper (1999) • There is a difference between the factors that influence aspirations and those that influence achievement • Somers, Cofer, & VanderPutten (2002) • SES and college costs most influenced aspirations

8. The Consequences • Price and Institutional Choice • Low income more likely to attend a two-year college • Rising prices • Shift from need-based aid to merit-based aid by states and loan aid by the feds • The Problem • Tuition and fees going up everywhere • Many potential four-year graduates stop after completing the two-year degree, dramatically and unnecessarily limiting life chances

9. The Consequences • Racial segregation among types of public institutions • African-American’s attend their first choice less often • Attend institutions closer to home • Chose institution based on lower cost

10. The Consequences • Price and Persistence • Previously, researchers questioned that price impacted persistence. • Upperclassmen less responsive to changes and more committed to completion • St. John, Paulsen, & Starkey (1996) • Link between persistence and tuition, subsidies, financial aid and living costs • Heller (2000) • For most racial groups, there was a strong correlation between continuing students and price

11. The Consequences • Post Graduation Debt • Increasing tuition, reduced need-based aid requires increased reliance on loans. • Direct Student Aid--1991-1992 • 50% Grant Aid • 47% Loan Aid • 2% Work Aid • Direct Student Aid—2002-2003 • 42% Grant Aid • 57% Loan Aid • 1% Work Aid

12. The Consequences • Low income students are more likely to enroll with grant aid than loan aid • Loan debt more likely inhibits low income enrollment • Borrowing is a much greater burden for low income students • Post graduation debt impacts students’ lives long after college, including what career path they may choose

13. The Consequences • Financial Nexus • St. John, Paulsen, & Starkey (1996) • Model explains the complex interactions between finance and academic preparation in influencing college choice • Financial concerns present barriers at every stage of the college selection process—direct and indirect influence on enrollment behavior • Finances shape the expectations and condition the choices of students and families long before they are thinking about college

14. The Consequences • Cumulative Consequences for Low-Income Students • Participation Rates • Economic Segregation by Institutional Type • Degree Attainment

15. The Consequences • Participation Rates • Percentage of those who graduate from high school and go on to college. • Low income students are less likely to go • In 2001, participation by income quartile • 36.8% for bottom quartile • 53.9% for second quartile • 67.9% for third quartile • 78.6% for top quartile

16. The Consequences • Participation by Minorities • In 1999 • Whites = 45.3% • Blacks = 39.2% • Hispanics = 31.6%

17. The Consequences • Economic Segregation by Institutional Type • Low income students pushed toward 2 year schools • Resulted in the sorting and redistribution of higher education according to economic class

18. The Consequences • Degree Attainment • Low income students less likely to receive a bachelor’s degree. • In 2001, bachelor’s degree completion by income quartiles • 12.2% for bottom quartile • 22.9% for second quartile • 36.2% for third quartile • 65.5% for top quartile

19. The Consequences • Conclusion • Despite increased demand for higher education, low income and disadvantaged students still face a myriad of barriers to a higher education • Central to this is the lack of affordability