College Admissions Favor the Rich. Let's Turn It Around Before Taxpayer-Funded Tuition Relief Becomes Another Handout for the Wealthy

As we prepare the U.S. for global competition, we find ourselves stuck with a myopic and outmoded approach in college admissions — one in which family income has gradually insinuated itself as the most important criterion.

If richer students continue to dominate our college admissions, then taxpayer supported tuition relief will, by and large, become another handout for the wealthy.

Even our Pell Grant system — designed originally to provide tuition support for the poorest families — has morphed into aid for wealthier families.

The Social Mobility Index published by CollegeNET lists 100 institutions for which over one-third of their Pell Grant recipients are students from the richest half of our population. Although college admissions officials routinely issue news releases citing growth in the number of Pell Grant recipients as evidence of their school’s attention to the disadvantaged, these releases do not reveal the extent to which Pell Grants are, in fact, going to richer students.

If we are going to solve our nation’s access and economic mobility problem while competently preparing for future global competition, we need to create new, real, and powerful incentives for colleges and universities so that they enroll, educate, and graduate more students from disadvantaged economic backgrounds.

One sensible way to do this is to tie the tax exemption of endowment gains to a college’s performance in economic mobility.

There has long been controversy around the tax exempt status of endowments as schools continue to pile up huge, multibillion-dollar troves.

Tied up with concerns around “reputation,” school executives hoard money instead of spending it. And they certainly don’t aim spending towards reversing the U.S.’ position as the least economically mobile among developed nations, even though doing this would impart high prestige to any institution that could drive it.

Instead of waiting for miracles, let’s reconstitute the tax exemption around university endowment growth by tying it as follows to an institution’s contribution towards improving economic mobility.

For any higher education institution that is directly or indirectly a beneficiary of federal taxpayer funds — in other words, practically any college and university — its endowment gains will remain tax exempt so long as over the next 12 years, the following economic demographics characterize the institution.

Over the first six years, 25 percent, 30 percent, 35 percent, 40 percent, 45 percent, and 50 percent of admitted freshmen must be enrolled from families below the median income. In each of the next six years, the institution must sustain a freshman demographic where at least 50 percent of enrolled students are from families below the national median income and the cohort of graduates from families below the median income constitutes progressively by the same measures of  of their graduating class.

Thereafter, the institution can retain its tax exemption on endowment gains if it maintains a freshman class where over 50 percent of students are from families below the national median income AND sustain a graduating class where half of the students are also from this economic demographic.

Bias toward the rich seen in IPEDS data

Information from The Integrated Postsecondary Education Data System shows that over 77 percent of enrolled four-year US college students are from above the median family income and over 90 percent of our college graduates are from a weathier cohort.

This makes no sense from a national human development standpoint. Evolution does not first examine parents’ W-2’s before distributing phenotypes to their children.

But what variable most tightly correlates with higher SAT scores? Family income.Thus, selecting for high SAT scores implicitly favors students from richer families. This bias is made worse by the fact that many schools “superscore” the SAT when considering a student for admission.

If a student takes the SAT ten times, the typical college will consider only the highest of her then scores. This system favors the rich student who can afford to pay for repetitive testing and professional coaching services.

An equivalent dynamic is also at work for application submissions. We are now in the season when colleges are touting their low rates of acceptance. Indeed, acceptance rates go lower every year across all colleges as students, in a kind of arms race, submit more and more applications.

Just as with lottery tickets, the richer student who can afford to pay application fees to 15 colleges has real advantage over an equally qualified student who can afford to apply to only two or three.

Neither of these admissions dynamics favoring the rich would change simply by lowering tuition.

Let’s create a national policy that prepares our country for future global competition while restoring the American Dream for all of our citizens, including the economically disadvantaged.