First, will be okay...eventually...

I know, it all sounds impossible. But more people are going to college than ever. And while many of them are accumulating debt faster than Congress, you can still get through this without an impossible financial burden. Just remember, that there will likely be no single source of money, you will have to be realistic on selecting the right school, and your major means everything. So, relax and start the journey, one step at a time...

Thursday, September 29, 2011

Standardized Tests: Gateway to College or Barrier?

College, ACT, SAT, Barrier, GatewayThe standardized tests administered by third parties that most colleges consider for admission (ACT and SAT, for example) are an important discriminator for college admissions officers in determining preparedness for college study. Their importance has been downplayed over the years, however, as personal characteristics (including socioeconomic background and extenuating circumstances) and high school educational environment are given greater consideration (e.g., see the University of Michigan's evaluation guidelines).

Although they are not a very robust predictor (even ACT, Inc., will say that a better predictor of college success is obtained when combining the ACT scores together with high school GPA), and they are only one piece of the admissions puzzle, the yearly numerical scores are easily analyzed, make for a good news story, and result in many diverse opinions.

In looking at the ACT test scores, you can find many correlations, such as lower average scores for children of single parents versus married or divorced parents, regional differences, and differences by race. This leads to many claims of unfairness in the design of the test, intentional or not. So the question is this: does the ACT provide a gateway to opportunity by identifying the best and the brightest to attend the "best" schools", or are they an artificial barrier to entry that can be used for political (or other) purposes by leaving the disadvantaged behind?

Clearly, the strongest correlation you will find in the ACT scores is increasing scores with increasing family income. Using data for all undergraduates from the 2008 National Postsecondary Student Aid Study (NPSAS), the distribution of ACT composite scores by family-income for dependant students attending four-year schools, as shown below, demonstrates this (note that the data is incomplete for ACT scores less than 10).

ACT Score, Family, Income, public, private
Source: 2008 NPSAS
But what are the causes and what are the effects - why do family income and ACT scores correlate? Do financially successful parents have the same characterstics as more involved and successful parents? Do higher income families have better locally-funded public schools which prepares students better (on average) for college study? Is the test biased against groups or sub-groups due to it's language or "assumed" popular knowledge? This is where the discussion often begins, but I am only interested in the impact of being able to afford college. While there are clearly many exceptions to this correlation (i.e., high-achieving children of low-income parents), the strength of the correlation makes you wonder if such testing presents a real, financial, inter-generational barrier to access to higher education, and the resultant reduced odds of future financial success.

To answer this, I looked at NPSAS data for net tuition and fees (after all grants, veterans benefits, and tax benefits) for dependant students, to see if the advantages of an increased ACT score (possibly a benefit of well-off parents) correlates to a reduced cost of college due to merit-based aid. The result shows that the higher the ACT score, the greater the net cost of college (which must be covered by savings, income, or loans). That is, even though they qualify for greater merit-based aid, these students tend to attend higher-cost schools, resulting in a greater net cost. Also, since they tend to have higher-income families they would receive less need-based aid.

Net tuition, ACT Score, public, private
Source: 2008 NPSAS
To check this, I looked at net cost compared to family income, and you can see the same trend, though there appears to be an impact of higher-income families sending their children to higher-cost schools (because they can), regardless of ACT score (not all higher-income families produce children with high ACT scores, they only tend to).

Net tuition, family income, public, private
Source: 2008 NPSAS
So, in terms of paying for college, if the ACT discriminates in some manner against lower-income families, this is offset by greater need-based aid and attendance at lower-cost schools. While tuition is a larger portion of family income for lower-income families, student loans to cover the $3,204 average annual public four-year school tuition for the lowest income families are paid back after the student graduates (not drawn from the family income), when the value of a college education should apply to all graduates. So while tuition expense is clearly a greater burden for lower-income families (resulting in lower family contributions), it is not an impossible situation.

The net result of this is that there is a tendancy to segregate college choice by family income, where children of high-income families tend to go to higher cost schools (whether better academically or not, though they are typically better in terms of quality of the facilities and surroundings), and children of lower-income families go to lower cost schools (better academically or not). Often, this means that wealthy families send their children to private schools, and lower-income families send their children to public schools (another, "DUH!" conclusion). And in those careers where the school you graduated from matters (business and law, for example, as compared to engineering or nursing), it reinforces the inter-generational advantages for graduates in those fields.

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