Back to School Report 2006

The United States spends 15% of its public monies on education. Yet more of its gross domestic product is spent on providing and consuming private education. It is, in all, a tidy sum.

The overall results, though, are not very consoling. A new report issued this week by the National Center for Public Policy and Higher Education and funded by the Ford Foundation, Pew Trusts, and Atlantic Philanthropies shows that educational progress is stagnating. Here are some of their findings:

  • 14% of people under 25 have no high school degree.
  • 25% of U.S. 15-year-olds score so low on academic skills that they are unlikely to be able to undertake any studies beyond high school.
  • Though 3 in 5 U.S. young adults enter either a junior college or four-year college or university, the number of college graduates in 2003 is equal to only 33% of their generation. Two-thirds of the current young generation, in other words, is not getting a college degree. This proportion grows slightly – to 39% — if one adds in young adults with junior college associate degrees.

The report concludes that the United States no longer leads the world in access to and attainment in higher education. The nation’s overall performance, in a word, is average.

Why? Clearly poor primary and secondary education is a cause. As the report notes, a big chunk of young U.S. adults is effectively eliminated because they drop out of high school or have inadequate skills. Given that many other countries have higher high school and college graduation rates, American youth are not hitting some God-given limits on their educational potential, but are rather under-achieving for reasons of local circumstance.

What are they? Financial need, for one. Another report, this time issued jointly by the Congress and the U.S. Education Department this past Friday, September 22, reports that between 1.4 million and 2.4 million young adults will not earn college degrees in the next decade for lack of funds. These young adults, qualified by the study as academically prepared for college, come almost exclusively from low-income families. Doing a little seat of the pants math, if they went to college, they would increase their generation’s college participation by between 10% and 15%.

Income differences really count. Richard Kahlenberg in the March 10, 2006 issue of Chronicle of Higher Education reports research showing that 1 in 2 students from families making $90,000 a year or more went to college, while only 1 in 17 students from families making $35,000 or less went to school.

As low income in the U.S. is often related to race, many of these potential students are no doubt African-American and Latino. The gap between minority student and white student attendance in four-year colleges suggests this is likely. Consider that 2001 U.S. Education numbers reveal that 37% of eligible white students attend college, in contrast to 26% of African-American and 15% of Latino students. As bad as the figures are for white students, minority students trail much further behind.

Something is going wrong at the colleges too. The proportion of four-year college students who graduate within five years of entry has slid from 55% in 1988 to 51% in 2001. Private schools are holding up this rather dismal percentage, for the graduation rate in public colleges and universities is much worse and has declined noticeably more. In 1988, 48% of public students graduated within 5 years; in 2001, the figure had slipped to 42%. These figures were reported by the American College Testing Service in 2002.

Colleges are expensive, and their costs have risen relentlessly since the seventies, as I reported in “Forget the Pigskin and Follow the Money,” an earlier column here at 3QD. It now costs $11,000 a year for tuition, room, and board at public colleges, and over $25,000 a year at private schools. To be sure, colleges, universities, the federal government, and banks, provide scholarships and loans in apparent abundance. But resources are being out-run by rising costs and student inability to pay the rest of a very large bill. Federal Pell grants that provide actual money instead of loans for students coming from low and moderate income families, cover about 15% of the annual student bill, down from 40% in earlier years.

As colleges have ginned up their little competitiveness race, they have diverted more of their resources into so-called “merit” scholarships. They now put over $7 billion into winning students away from other competitors, up five-fold between 1994 and 2004. Schools still award an enormity of aid based upon financial need – some $39 billion in 2004. Once more, however, Kahlenberg in the Chronicle notes that a Congressional advisory committee estimates that when expenses are balanced against the total financial aid package, a low-income student still faces an annual $3,800 shortfall that must be made up by her efforts or by those of her family. When family income is below $35,000, that can be just enough to discourage college entry.

The final economic clincher is that even as education costs rise, incomes for 2/3 of American workers have not grown since 1973. Here then, in higher education, is another place where the fundamental deficiencies of American economic life are being felt.

There is no gainsaying that the income advantage for the possessors of a college degree continue to grow. The Census Bureau reports that national median earnings for college degree holders was $44,000. College degree holders now make 72% more than persons with high school degrees, up from 68% in 1997. Certainly it pays to go to college, if you can pay for it.

This year’s report card shows that:

  • Dramatic improvements are needed in primary and secondary education to increase college readiness.
  • More resources must be devoted to student aid, and without exception, to those who by virtue of their family income are most in financial need.
  • Colleges need to sort out why their costs run along faster than inflation, and have so for a good quarter century. Could institution-building and “competitiveness” have something to do with it?

Let’s learn from these tough lessons.