March 29, 2024

Economix Blog: Judith Scott-Clayton: From Kindergarten to College Completion

Judith Scott-Clayton is an assistant professor at Teachers College, Columbia University.

A report released last week has drawn new attention to low degree-completion rates among college entrants, particularly among those who never attend full time. The organization that published the report, Complete College America, seeks to rally policy makers around the goal of substantially increasing completion rates by 2020.

Today’s Economist

Perspectives from expert contributors.

But here’s a question: if we want to increase college completions over the longer term, is it more cost-effective to direct resources to college students or to preschoolers and kindergarteners?

The influential economist and Nobel laureate James Heckman, among others, has asserted that early educational investments have the highest return, because of the cumulative nature of skill development (“skill begets skill”). By the time a high school student is on the verge of college (or an older worker is considering returning to school), this argument goes, it may be too expensive to try to fix skill deficiencies that trace back decades.

Yet the federal government continues to invest far more in higher education than in early childhood programs (see chart). For example, the Pell Grant program received more than $28 billion in 2009, compared with less than $10 billion for Head Start.

College Board, Department of Health and Human Services, Joint Committee on Taxation.

A new study presented last week at a Federal Reserve Bank conference on education and employment adds to the growing body of evidence that early educational experiences can affect outcomes in college and beyond. (Note: Susan Dynarski, one of the study’s co-authors, was my doctoral adviser.) The study found that kindergarteners randomly assigned to smaller classes through the Project Star experiment were 2.7 percentage points more likely to enroll in college and 1.6 percentage points more likely to complete a degree by age 30.

While the magnitude of these effects may sound modest, they are statistically and substantively significant compared with the control group’s attendance rate (38 percent) and degree completion rate (15 percent). And the effects were much larger among minorities and at-risk students.

Previous experimental and quasi-experimental studies have found large effects of both the Abecedarian and Perry Preschool programs and the Head Start program on college enrollments. A consistent and fascinating pattern in all of these studies is that early effects on test scores tend to fade over time, only to re-emerge as effects on college-going and other adult outcomes.

When it comes to cost-effectiveness, however, the new study challenges the theory that early investments are always better. The 33 percent reduction in class size evaluated by the Project Star experiment was not cheap, and the authors estimate that it cost more than $400,000 per additional student induced to attend college as a result of program participation (calculated by dividing the $12,000 per-student cost of the program by the estimated college impact of 0.027).

Using impact estimates from other studies, the researchers calculate that programs aimed at individuals on the brink of college have the biggest bang for the buck — if the goal is college attainment.

For example, a recent experiment that randomly selected people to receive assistance with completing and submitting a federal financial aid application found that this assistance, which cost only $88 per participant, increased college enrollments by seven percentage points.

An enormous caveat to this analysis is that good early childhood programs have been shown to improve a host of outcomes even for those who never attend college, including childhood health and mortality. Moreover, scholarship programs and financial aid application assistance may work only to the extent that there is a pool of people who can benefit from college but aren’t already enrolled — so their current cost-benefit ratios may not be infinitely scalable.

Finally, some interventions at the college level may increase attainment simply by handing out more degrees rather than by fundamentally increasing skills (an extreme example of this is a new effort to locate and award degrees to former students who earned enough credits but never asked for their diplomas).

Based on both theory and evidence, it is hard to argue that we’re not underinvesting in early childhood education. Even policy makers who care only about college completion rates should be looking for promising interventions in the earliest years of life.

But that’s no reason to write off later interventions. There appear to be opportunities for cost-effective investment all along the educational continuum.

Article source: http://feeds.nytimes.com/click.phdo?i=04722eda2f8195470050ea2eda520492

Economix Blog: Judith Scott-Clayton: A Jobs Program in Need of Reform

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Judith Scott-Clayton is an assistant professor at Teachers College, Columbia University.

Readers following recent proposals to stimulate employment may be surprised to learn that one of the largest and longest-running federal programs providing direct employer subsidies to hire disadvantaged workers is run by the Department of Education.

Today’s Economist

Perspectives from expert contributors.

The Federal Work-Study Program, created in 1964, provides more than $1 billion in wage subsidies to institutions and reaches more than 750,000 college students each year. For students who are financially eligible, the program covers up to 75 percent of wages for 10 to 15 weekly hours of on-campus employment or, in some cases, for community service work off campus. The college covers the rest.

The federal government spends only about half as much on the Work Opportunity Tax Credit, which subsidizes 25 to 40 percent of wages when employers hire workers in one of nine target groups.

The longevity of the work-study program program reflects its popularity, and, to some extent, romanticized public conceptions of the student “working his way through college” (see, for example, this 1907 article from The New York Times Magazine). Surveys suggest that students like the program. And it’s obvious why work-study is beloved by institutions: it provides a highly discounted labor pool.

But popularity aside, the equity and efficiency of the program are questionable at best.

Unlike Pell Grants or student loans (and also unlike other wage-subsidy programs like the Work Opportunity Tax Credit), work-study dollars aren’t really distributed on the basis of need. The eligibility criteria are loose enough that far more students qualify for work-study than can receive it, and colleges can choose from among eligible students however they want.

Fewer than half of undergraduate work-study recipients are needy enough to qualify for a Pell Grant, and 20 percent come from families earning more than $100,000 a year (see chart).

National Postsecondary Student Aid Survey, 2008 (figures represent dependent undergraduates only).

Moreover, the way work-study funds are allocated to individual institutions has virtually no connection to the neediness of its student body. The precise formula is incredibly arcane, but the first five words capture the essence: “Allocation based on previous allocation.” The highest per-student allocations go to already advantaged institutions that had access to savvy grant-proposal writers when initial allocations were determined by review boards in the late 1960s (see this report for the program history).

The inequity is extreme: Columbia University receives more than five times as much in work-study allocations as Florida State University, although Florida State has more than five times as many undergraduates, a much higher proportion of whom qualify for Pell Grants.

The chart below shows the ratio of work-study allocations to aggregate Pell Grants awarded (a summary measure of the neediness of the student population) for selected institutions. The ratios for elite schools like Columbia and Harvard have been even higher in previous years.

Author’s calculations using Department of Education data for 2008-9.

More fundamentally, it’s not clear that the program works very well either as a jobs program or a financial aid program. While work-study jobs may help improve students’ work ethic, they are typically low-skill clerical or service positions unrelated to students’ studies or future career plans. In other words, they are the type of jobs most students would be able to find even without a work-study subsidy.

Finally, in comparison with the large body of rigorous research on other types of financial aid, the evidence regarding the academic benefits of work-study assistance is thin. While some correlational studies have found a positive relationship between on-campus employment and academic outcomes, one particularly rigorous quasi-experimental study found large negative effects of student employment on grade point averages.

My own research-in-progress indicates strong negative effects for women, but some positive effects for men – perhaps explained by gender differences in job types or in what students would be doing if they weren’t working.

Now is not the time to reduce federal investments in financial aid and jobs programs. The work-study program could be reformed to better target truly needy students, to provide more substantive job options or even to give students the option of taking the value of their wage subsidy as a grant instead.

But in its current form, federal work-study may better serve the interests of privileged institutions than those of needy students.

Article source: http://feeds.nytimes.com/click.phdo?i=20f835be1cdefdda71b444dd7274a65e

Economix: How Worrisome Is Student Debt?

Today's Economist

Judith Scott-Clayton is an assistant professor at Teachers College, Columbia University.

Student loan debt has risen to its highest level ever, with starting balances averaging $24,000 among the two-thirds of graduates who borrowed for their degree, Tamar Lewin noted in an article in The New York Times on Monday. This increase has heightened longstanding concerns that college students are borrowing too much.

Economists tend to be less troubled by the trend, Ms. Lewin noted, viewing student loan debt as a worthwhile investment that pays off over a lifetime. Many economists even raise the concern that an irrational aversion to debt may lead some capable students to forgo college.

So should we stop worrying about student debt? Or are students and their families right to be alarmed? The key question is this: Are graduates better off, even with all that debt, than if they hadn’t gone to college at all?

The answer seems clear: even with $24,000 in debt — comparable to the cost of a new midsize car — the average four-year college graduate is likely to be substantially better off over the long term than someone with only a high school education, data show.

Median annual earnings for full-time workers with a bachelor’s degree are around $53,000, compared with $33,000 for those with a high school diploma, and unemployment rates among college graduates are just over half of the rates for those without a degree.

Yet there are at least three reasons this level of debt may be troubling.

First, while the returns to a college degree accrue over a lifetime, loan repayments are typically expected within 10 years of graduation. And graduates don’t typically earn $53,000 in their first year of employment; it may take a decade or more to reach this level. The median graduate is likely to start out somewhere closer to $35,000.

Earnings were calculated using October data, 1999-2008, on individuals with only a bachelor's degree who were employed full-time and not enrolled in school.Current Population Survey, Census Bureau Earnings were calculated using October data, 1999-2008, on individuals with only a bachelor’s degree who were employed full time and not enrolled in school.

Second, not every graduate will get the average outcome. For those who do worse, the debt may be particularly burdensome. And it is not easy for students (or even economists) to predict what the economy will be like several years from now, or how any individual will fare in it.

So while it may be an excellent investment on average, there is a real risk that some graduates with $24,000 of debt will face unmanageable monthly payments particularly in the early years of their careers.

On the standard 10-year repayment schedule with a fixed interest rate of 6.8% (the current rate for unsubsidized federal student loans), monthly payments would be about $276. If payments up to 10 percent of gross monthly income are considered affordable, then a graduate would need to earn $33,000 annually to comfortably manage this debt. Most will do so, but many will not.

Third and perhaps most important, not every borrower will graduate. Among 2003-4 college entrants who ultimately borrowed $22,000 or more, 31 percent did not have any postsecondary credential six years later (see chart below). And unemployment rates and earnings for people with “some college, no degree” look much more similar to those with only a high school diploma than they do to bachelor’s degree recipients.

U.S. Department of Education, National Center for Education Statistics, BPS: 2009 Beginning Postsecondary Students

Luckily, federal loans have options beyond the 10-year repayment plan, and many students take advantage of them. Graduated, extended or income-contingent repayment plans may offer substantially lower monthly payments, with repayment periods of up to 25 years (see these loan repayment calculators offered by Mark Kantrowitz of www.finaid.org).

Policy changes tucked into last year’s health care act also strengthened protections for those who face economic hardships.

These additional options and protections — which apply only to federal loans, not private loans — reduce but do not eliminate the risk students take when they borrow for their education. So anxiety is likely to continue because, frankly, this stuff is complicated, and the consequences of defaulting on a student loan are severe.

Plenty of resources are available to help students learn how to borrow responsibly. But some, like this 56-page federal guidebook, may be too much for young adults to digest, given high rates of financial illiteracy. Those who try to navigate these resources on their own may come away feeling frightened rather than informed.

Policies like the one at Tidewater Community College in Virginia, which require students to estimate their loan repayments and plan their budgets before taking a loan, may be the best strategy for promoting wise borrowing decisions.

No one is ever going to love their student loans. But we don’t want students to be afraid of them, either — because forgoing a college degree may be the biggest risk of all.

Article source: http://feeds.nytimes.com/click.phdo?i=5aeb9f75152d35ca127df0cd5702c084