Featured Research

from universities, journals, and other organizations

Limited access to higher education may harm society

Date:
December 15, 2011
Source:
Penn State
Summary:
The rising cost of a college education and limited access to financial aid may create a less productive workforce and steeper wealth inequity, according to a study by North American economists.

The rising cost of a college education and limited access to financial aid may create a less productive workforce and steeper wealth inequity, according to a study by two North American economists.

Students with low-income parents are discovering that it is more difficult to find funds to pay for a college education now compared to students of similar economic backgrounds in the 1980s, said Alexander Monge-Naranjo, assistant professor of economics, Penn State.

"The consensus was that in the 1980s, credit constraints didn't seem to matter for those who went to college," said Monge-Naranjo. "But according to the latest data, we see family income and parental wealth are making a big difference in who is attending college."

Monge-Naranjo said there were several reasons for the move away from affordability. Over the last two decades, more higher-paying jobs required a college degree. The higher demand for a college education led universities to increase tuition, according to Monge-Narajo.

At the same time, money available through government loan programs remained flat or, when adjusting for in inflation, declined. During the 1990s, the percentage of undergraduates who borrowed from government lending programs increased significantly. Of those students, the ones at the top limit of their borrowing capacity tripled to 52 percent. Many more students are relying on private lenders for loans, Monge-Narajo said.

In the 1980s, credit constraints -- factors that limit financial access to college funding, such as caps on financial assistance and family income -- did not significantly stop students from attending college, once the researchers controlled for other factors, such as SAT score, age and race. Even poor students who had little financial resources to pay for college, but who were smart, could access credit to pursue an education, Monge-Naranjo said.

The researchers, who reported their findings in the current issue of the American Economic Review, said a shift occurred in the 1990s as more low-income students began to struggle to access credit to pay for a college. During the 1990s, youths from high-income families were 16 percent more likely to attend college than youths from low-income families.

Monge-Naranjo, who worked with Lance Lochner, associate professor, Western economics and director, CIBC Centre for Human Capital and Productivity, University of Western Ontario, used the most recent data from the National Longitudinal Surveys of Youth and the Armed Forces Qualifying Test to examine the relationships between intelligence, family income and college attendance.

According to Monge-Naranjo, constraints on financial aid could have far-reaching economic impacts. When poor but intelligent workers are unable to earn a college degree, their career choices are restricted, Monge-Naranjo said. That could mean less qualified and less productive workers will attain those positions.

"It's a matter of economic efficiency," said Monge-Naranjo. "Are we choosing the best individuals for the job, or just the individual whose parents are wealthy? In the long-term that may have an effect on the economy, although it may take a couple of generations to find out and, even then, perhaps be hard to quantify."

The National Science Foundation supported this work.


Story Source:

The above story is based on materials provided by Penn State. Note: Materials may be edited for content and length.


Journal Reference:

  1. Lance J Lochner, Alexander Monge-Naranjo. The Nature of Credit Constraints and Human Capital. American Economic Review, 2011; 101 (6): 2487 DOI: 10.1257/aer.101.6.2487

Cite This Page:

Penn State. "Limited access to higher education may harm society." ScienceDaily. ScienceDaily, 15 December 2011. <www.sciencedaily.com/releases/2011/12/111214102926.htm>.
Penn State. (2011, December 15). Limited access to higher education may harm society. ScienceDaily. Retrieved July 23, 2014 from www.sciencedaily.com/releases/2011/12/111214102926.htm
Penn State. "Limited access to higher education may harm society." ScienceDaily. www.sciencedaily.com/releases/2011/12/111214102926.htm (accessed July 23, 2014).

Share This




More Science & Society News

Wednesday, July 23, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Courts Conflicted Over Healthcare Law

Courts Conflicted Over Healthcare Law

AP (July 22, 2014) Two federal appeals courts issued conflicting rulings Tuesday on the legality of the federally-run healthcare exchange that operates in 36 states. (July 22) Video provided by AP
Powered by NewsLook.com
What Self-Made Women Need to Know Financially Before Getting Hitched

What Self-Made Women Need to Know Financially Before Getting Hitched

TheStreet (July 21, 2014) Halle Berry was recently ordered to pay her ex-boyfriend Gabriel Aubry $16,000 a month in child support by a California judge for their daughter Nahla. As women make strides in the workforce, they are increasingly left holding the bag when relationships end regardless of marital status. 'What Monied Women Need to Know Before Getting Married or Cohabitating' discusses information such as debt incurred during the marriage is both spouse's responsibility at divorce, whether after ten years of marriage spouses are entitled to half of everything and why property acquired within the marriage is fair game without a pre-nup. Video provided by TheStreet
Powered by NewsLook.com
$23.6 Billion Awarded To Widow In Smoking Lawsuit

$23.6 Billion Awarded To Widow In Smoking Lawsuit

Newsy (July 20, 2014) Cynthia Robinson claims R.J. Reynolds Tobacco Company hid the health and addiction risks of its products, leading to the death of her husband in 1996. Video provided by Newsy
Powered by NewsLook.com
Clock Ticks Down on Internet Speed Debate

Clock Ticks Down on Internet Speed Debate

Reuters - US Online Video (July 18, 2014) The FCC received more than 800,000 comments on whether and how internet speeds should be regulated, even crashing its system. Lily Jamali reports. Video provided by Reuters
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins