Title: Accounting for Demographics and Risk in Postcollege Earnings
Source: American Enterprise Institute
Author: Jorge Klor de Alva
A new report from the American Enterprise Institute highlights the need for an “equitable accountability system” in higher education that considers students’ demographic and economic background in assessing institutional performance.
The author cites post-college outcomes as an example to show how students’ demographic and family backgrounds matter, analyzing data from 444 public and 688 nonprofit, private, primarily four-year colleges and universities. The institutions were divided into quintiles based on the average median earnings of formal students at 10 years after their first enrollment. The percentages of four student subgroups were presented: Black, Hispanic, and low-income (Pell-eligible) students, who are likely to experience lower earnings; and students from the highest quintile of the income distribution, who are likely to experience higher earnings.
The analyses showed systemic patterns in the relationship between students’ composition by demographic and economic background and their post-college earnings. Institutions with a higher percentage of Black, Hispanic, and low-income students were more likely to have a lower percentage of students from the highest income quintile and lower average earnings after graduation. Conversely, at institutions with a higher percentage of students from the top income quintile, the percentage of students from disadvantaged groups was lower and the average post-graduation income level was higher.
The report concluded that an accountability system that does not take into account the socioeconomic background of students is likely to only confirm the selection effect rather than the added value of the institution, disproportionately rewarding selective colleges. To properly appreciate the value added by institutions willing to serve disadvantaged students, it is necessary to consider the student’s pre-college background and the social mobility achieved through a college education. According to the author, rewards and sanctions based on such an equitable accountability system can contribute to the improvement of the U.S. higher education system.
To read the full report, click here.
—Ji Hye “Jane” Kim