Why Colleges Have A Rich Kid Problem, In One Chart

The American Dream revolves around the ability to go from poverty all the way to the top. College, with abundant financial aid and connections to alumni networks, is supposed to be a great equaliser. Instead we have a system that may help concentrate wealth.

Even when there’s financial aid available, many qualified and very bright students never apply to selective schools, because they are discouraged by their environments, under-informed, or geographically isolated, according to a paper from Caroline M. Hoxby and Christopher Avery.

Institutions fail to find these students, because they either want to spend money elsewhere or aren’t aggressive enough about targeting far-flung students.

The tragic result is that poor kids don’t even get a chance.

Low-income students overwhelmingly apply to non-selective schools, even though they make up a significant portion of America’s high achievers:   

BrookingsYou see that in the economic breakdown of where students end up. The Atlantic’s Jordan Weissman highlighted a chart showing that the country’s most competitive colleges are still dominated by America’s richest families, with 70% of students coming from the top 25%.

Making this tragedy even worse is that high-achieving, low-income students often end up paying more to go to bad schools than they would at elite institutions, according to data from Hoxby and Avery.

The average for-profit two year school costs around $18,486 out of pocket for a low-income students and spends only $3,257 on their education A top tier school with financial aid costs $6,754 on average for low-income students and spends $27,001 on instruction, according to the report.

Going to the wrong school depresses wages for the rest of a student’s life. Data from Philip Oreopoulos and Uros Petronijevic shows a huge and growing difference in earnings of those ages 30-50 between those with a four-year degree and those who have either completed just some college or got a two year degree.

Significant change is needed to stop higher education from making US inequality even worse.

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