Equal Opportunities and Meritocracy in Higher Education

An often-heard narrative about the American system is that though no one is guaranteed success in life, everybody is offered an equal opportunity to succeed.  Nothing can better prepare a person to fight for success in life than a good education.   Education is perhaps the greatest social equalizer.  Quite early in its history, the US recognized the value of education for the democratic and economic health of the nation.  By 1870 all states had free elementary schools.  However, even after ignoring the recent bribe scandal regarding college admissions, opportunities in education are increasingly tied to the income bracket of the students’ families.

As a result, educational opportunities are uneven and this shows in the social mobility of Americans.  For example, the likelihood that children will grow to move to a higher income class (intergenerational mobility) has declined in the US and is below that of other industrialized countries.  College education is what primarily makes upward mobility possible.  International data show that across countries lower intergenerational earnings mobility correlates with higher income inequality.   Given the high cost of college education, it is not a surprise, therefore, to see that the US, which is very high in income inequality, is also very low in intergenerational mobility relative to other industrialized democracies.

At the same time, access to a good education is far from open to all.  In 1985, 54% of the students admitted to 250 selective colleges came from the bottom 3 quartiles of income distribution; but in 2010, only 33% belonged to these income brackets.  In 2017, 38 elite colleges had more students from the top 1% of earners than the bottom 60%!  Tuition and fees in top colleges tripled relative to the national median salary between 1963 and 2013.  (The Atlantic, June 2018).  The average annual cost of tuition, room and board of all public universities was $19,189 in the 2015-16 academic year, hardly what a typical family would consider affordable.  Averages mask, though, individual university costs. In quite a few top national public universities tuition alone approaches or exceeds $20,000 a year.  The main reason is declining state support for higher education.

To make matters worse, state support most often ignores non-tuition costs for books, room and board, and thus fails to help poor students who cannot afford these costs.  As a result, benefits designed to help the needy end up helping disproportionately more those who can afford to pay (NYT, “When ‘Free’ College Isn’t Free” 3/19/2019).  And, of course, earning a higher education degree often comes with the life-long burden of student loans whose national aggregate has topped $1.5 trillion, spread across 45 million Americans.

The need to hold part-time jobs while studying is another source of unequal opportunities to quality education.  When I was still teaching, one of the most frequent excuses students gave for incomplete homework and assignments was their work schedule.  Inability to dedicate adequate time to studying due to work is also one of the reasons students drop out of college.

Affordability is intrinsically related to meritocracy.  The affordability-related question is: Can every student who wishes and qualifies for college education have one?   The meritocracy-related question is:  Does likelihood of admission correlate with candidate qualifications?  The above data suggest that because of low affordability, not all those who wish and can receive a college education.  And not all those who enter prestigious colleges deserve this over other better academically but worse-off financially candidates.  As Ross Douthat (NYT, 3/17/2019) writes, the interest of elites for intergenerational continuity coupled with the need of private universities for loyal alumni and streams of donations has led to the present uncomfortable balance of opportunities and meritocracy.   Private and top national universities engage in legacy and donations-based admissions to secure the resources that enable them to extend scholarships to needy students.  Thus, we simply recognize that we are willing to sacrifice meritocracy for wider societal goals.  Besides, there is another reason why universities, especially those that attract elites, should also enroll less advantaged students.  Without the latter group, elite colleges and universities would not offer their more privileged students a full social awareness of the other side of the tracks.  The problem remains though, how colleges that are much less populated by elite student groups would provide social awareness to their underprivileged students about the life and attitudes of the elites.

This being the state of higher education in the US, what should we do?  Making public college education free is one of the proposed solutions on the Democratic Party side.  But we need to consider some side effects.  First, a free good invites too much demand even by those that assign it very low value.  Thus, we might have too many students pursuing college education even if this is not in their best interest.  Also, unless there is a cap in free tuition, public colleges will lose the incentive to be cost-efficient thus risking unchecked growth of costs.  Another unintended casualty might be vocational education that could generate better income results than college education for many young people who are less inclined to do academic work or are more gifted in other types of jobs.  Free public college education could very well crowd out vocational education unless it also gets a cost relief.  Private colleges will also face stiff competition.  On the other hand, reducing the ranks of marginal private colleges will allow those that provide a value-added educational experience over and above that found in public universities to strengthen their position.   Like the need for affordable care, affordable higher education is sorely needed but it will require long and careful thinking and design if it’s going to work as intended.

Even if we make progress in leveling the playing field for college education, the challenge we still face is how we prepare more students for a college education.  That requires our prime and secondary education become less unequal in the quality of education they provide across the many school districts.  Unless we also reduce inequalities in pre-college education, the candidates that enter the halls of higher education each year will misrepresent the demographic profile of the country.  This is a story for the next post.

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Author: George Papaioannou

Distinguished Professor Emeritus (Finance), Hofstra University, USA. Author of Underwriting and the New Issues Market. Former Vice Dean, Zarb School of Business, Hofstra University. Board Director, Jovia Financial Federal Credit Union.

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