When Effort and Ability Are Not Enough to Reduce the College Enrollment Gap, Does College Savings Help?

Background and Purpose: With limited opportunities for accumulating savings for college, many high-achieving low-income students do not believe that a four-year college is within reach.  They learn from a very young age that while college may be desired, it is not affordable – 43% report that college costs are very important for the type of school they will choose. This study examines whether college-bound (i.e., students who expect to graduate from a four-year college and who are high achieving) low-income 10^th graders enroll in a four-year college shortly after graduating from high school – i.e., the amount of “wilt” that occurs. In this study 46% of college-bound low-income student experience wilt. Asset accumulation, especially in the form of college savings, may help reduce wilt.

We ask, what amount of wilt occurs among college-bound low-to moderate-income (LMI) students and middle- to high-income (MHI) students and whether LMI college-bound students experience more wilt than MHI college-bound students?

Are LMI and MHI students who have parents with college savings less likely to experience wilt?             

Methods: Use data from the Educational Longitudinal Study (ELS:2002/2006). It is sponsored by the National Center for Education Statistics (NCES). The sample is split into two subgroups, LMI and MHI sample. LMI sample (N = 3,289; weighted 737,068); MHI (N = 4,744; weighted 976,792). 

Sample is restricted to students who report in 2002 they expect to graduate from a four-year college. Sample is also restricted to high-achieving students. High achieving are students who have taken Algebra II, Trigonometry, pre-calculus, and/or calculus. If effort and ability are deciding factors for why students succeed in school, than LMI students who are certain they will graduate from a four-year college and are high-achieving should enroll in four-year colleges at similar rates as their MHI counterparts.

Simple logistic regression is used. Variables are added in a block fashion.

 

Results: 46% of college-bound LMI students fail to enroll in a four-year college after graduating high school compared to 26% of middle- to high-income (MHI) college-bound students. This is a gap of 20%.

In regards to parents’ college savings, findings indicate that college investment funds (such as mutual funds) are a significant positive predictor of LMI and MHI student’s enrollment in a four-year college – i.e., they reduce wilt.

Conclusions and Implications: LMI Americans continue to believe in the idea of education as a means to economic mobility. With limited opportunities for accumulating savings for college, however, many college-bound LMI students do not believe that college is within reach. In this paper, it is suggested that educational disadvantage, rooted in asset disadvantage, may be a significant factor in explaining why LMI students do not believe that college is within reach. Policies that encourage and facilitate college savings may help LMI students think about college as within reach.