Study shows widening college completion gap between rich and poor

The gap between high-income and low-income youths who earn a bachelor’s degree by age 24 has doubled in the last four decades, according to a report released Tuesday (PDF) by two research institutes.

Individuals from the highest-income families (defined in the report as those making $108,650 or more a year) were 8.5 times as likely in 2013 to earn the degree by their 24th birthday as those from the lowest-income families (making $34,160 or less), the report said.

The percentage gap between the two groups has grown even wider than it was in 1970, when 40 percent from the highest-income group earned the degrees by 24, compared with 6 percent from the lowest-income group. In 2013, it was 77 percent and 9 percent respectively. 

"It's really quite amazing how big the differences have become between those from the highest and lowest family incomes," said Laura Perna, a University of Pennsylvania professor and executive director of the Alliance for Higher Education and Democracy, one of the institutions that produced the study. The other was the Pell Institute for the Study of Opportunity in Higher Education.

The report’s release comes amid renewed debate on college affordability, spurred by President Barack Obama's proposal on Jan. 9 to make two years of community college free "for anyone who's willing to work for it." If every state adopts the proposal it would affect a projected 9 million students each year, and cost taxpayers an estimated $60 billion over 10 years — a price the Republican-controlled Congress will likely be hesitant to embrace.

Some of the report's other findings were more encouraging. The percentage of students from all income levels enrolling in college has increased, shrinking the gap in enrollment between rich and poor somewhat during the last four decades. The 46-point gap between the two groups in 1970 narrowed to 36 points in 2012.

But completion gaps are growing: While 99 percent of students entering college from the highest-income families graduate by 24, just 21 percent of students from the lowest-income families finish by that age. 

The report blamed the widening divide on several factors, including access to the information and support needed to enter college and graduate, as well as the availability of higher education that meets people's needs — particularly for students who might have children, limited access to transportation or full-time jobs.

The report also said the likelihood of finishing a degree varies dramatically by the type of school. More students from the lowest-income families are in public two-year institutions, which tend to have lower completion rates, while those from wealthier families are more abundant in schools that grant doctoral degrees.

The Obama administration has expanded the availability of need-based federal Pell grants and supported a tax credit for tuition costs, but the study said the maximum Pell award has not kept up with rising college costs. Those costs were more than twice as high in 2012 than in 1975 at the start of the Pell program, the report said. 

Pell grants covered 67 percent of college costs in 1975 but only 27 percent in 2012, the report said. 

"We sometimes think that low-income students are taken care of because of the federal program. But you can see it covers so much less than [when] it was first established," said Margaret Cahalan, director of the Pell Institute for the Study of Opportunity in Higher Education.

The study indicates that the burden of paying for college has increasingly shifted from state and local governments to students and families. That, Perna said, should prompt an important question: Who should pay for college given the individual and societal benefits?

"Students only have so many resources they can use to pay the costs," Perna said.

The authors of the report also laid out several possible solutions, one of which was trying to incentivize completion by converting college loans to grants when an individual finishes his or her course or program of study.

As an example they cited a South African program in which qualifying public university students received a loan for the full cost of their final year of study. That loan would become a grant if the student passed all courses and graduated on time. If not, the loan would have to be repaid to the government. 

Al Jazeera and The Associated Press