By Matthew Cameron
David Leonhardt’s column today about the failure of high-quality colleges to serve low-income students is interesting in light of a 2002 study (pdf) by Giorgio Brunello and Rudolf Winter-Ebmer that analyzed the unusually long durations that many European students spend in college completing their degrees. The report notes that the median graduation age for three-year degrees was 27.6 in Denmark and 25.7 in Sweden and that 31.2 percent of students in Sweden and 30.8 percent of students in Italy expected to take at least one extra year to earn their degrees. One of the primary factors that the study’s authors identify as contributing to long degree completion times in Europe is the substantial amount of financial support many governments provide for higher education. “Excess time to graduation is significantly higher, on average, in countries where the share of public expenditure on total expenditure for tertiary education is higher,” they write. “This is consistent with human capital theory, which suggests that the investment in years of education depends on the comparison of marginal benefits with marginal costs.” Hence, colleges in countries such as Sweden, where higher education is essentially free to those who qualify, have difficulty graduating their students on-time. Leonhardt’s comes to a starkly different conclusion, that there’s not enough public financial support for higher education, particularly with regard to tuition assistance. He cites a Century Foundation report that shows a mere 44 percent of low-income high school seniors with high standardized test scores enroll in four-year colleges upon graduation, as opposed to 50 percent of high-income students with test scores that are just average. This suggests that many low-income students are deterred from pursuing four-year degrees because of cost concerns. Furthermore, among those low-income students who do enroll, many wind up in lower-quality four-year colleges that are nearer to their homes and less expensive. This problem, known as “under-matching,” means that high-achieving, low-income students often are under-stimulated in their college environments and consequently drop out before completing their degrees. The data from Europe creates a conundrum: If additional tuition assistance is provided to students, it might cause an additional problem for the higher education system by lengthening the amount of time that it takes students to graduate. This could strain resource-starved institutions that do not have enough instructors, classroom space or infrastructure to deal with students who linger for extended periods of time. The answer could be to provide tuition assistance that phases out as students approach the expected time of degree completion. Alternatively, gradually increasing tuition over the course of a student’s time in college can lead to faster completion times — as borne out in this 2007 report (pdf). In either case, the moral hazard created by having a third-party payer for a student’s higher education would be mitigated since the financial burden of education gradually would be shifted from the state to the individual. At the same time, low-income students who have demonstrated high-achievement capabilities will be afforded greater opportunities to realize their full intellectual and economic potential.