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A frequent theme in the discussion on poverty is the degree to which poverty persists across generations. While the United States is touted as the land of opportunity where everyone can attain their American dream, poverty is still the most likely outcome for a child born into a poor family. A large body of research demonstrates that education is the best way out of poverty, especially when dealing with inter-generational transmission of poverty. The problem is, however, that children from economically disadvantaged families are much less likely to obtain college education than their wealthier peers. In this article, I review innovative recent studies demonstrating cost-effective ways to increase educational attainment among poor children.
Caroline Hoxby and Sarah Turner show that high-achieving students from poor families typically apply to selective colleges much less frequently than students from wealthier families, despite the fact that those selective colleges would have generous financial aid available. In their experimental study, Hoxby and Turner offer customized information on the application process and financial aid to students, and find that the college application, admission and enrollment rates of high-achieving low-income students increase dramatically. As their intervention only cost $6 per student, the authors argue that providing information in this manner would be a highly cost effective way to improve the educational attainment of low-income students. Their experiment was adopted by the College Board in an effort to attract poor, high-scoring students to elite colleges. Indeed, Wellesley College has just launched their own effort to advertise financial aid available to low-income families.
Eric Bettinger and his colleagues tackle the low take-up rate of college financial aid among low-income individuals by providing assistance for filling out the Free Application for Federal Student Aid (FAFSA) forms and handing out information on the expected student aid levels relative to college costs. High school seniors whose parents received the assistance were much more likely to enroll in college and complete at least 2 years of education during the 2-year follow-up period. The experiment cost a total of $88 per participant (including a $20 participation incentive and $20 incentive to the H&R Block tax professionals proving the assistance). Even so, the large positive effects of the experiment would far outweigh the modest cost per participant.
Several recent studies have provided information on the benefits of higher education to high school students, concentrating especially to students from economically disadvantaged backgrounds. These studies cover students in a variety of countries such as Canada, Dominican Republic and Finland. In each case, these low-cost interventions find that students exposed to the information provided change their application behavior and/or post-secondary educational attendance. In most cases the effects are particularly large for students stemming from poorer or less educated families.
The studies reviewed here demonstrate that children from poorer families are lacking in their educational attainment at least in part due to insufficient information on the economic benefits of education and available financial aid. In addition, their college attendance may further be hampered due to the application procedures required to obtain financial aid. These disadvantages could be easily, and cheaply, overcome by providing targeted information and assistance to students and their families. As the research shows, the modest investment would be far outweighed by the positive benefits stemming from greater college attendance and higher future earnings of the participating students. And most importantly, these types of policies could begin to bring children out of chronic poverty by cutting down the inter-generational transmission of economic status.
Sari Pekkala Kerr, Ph.D. is a Senior Research Scientist and Economist at the Wellesley Centers for Women at Wellesley College. Her research and teaching focus on the economics of labor markets, education, and families.