Tag Archives: Education

The Wrong Story About Education

Today the Wall Street Journal wrote an article entitled “Big Gap in College Graduation Rates for Rich and Poor, Study Finds.” The article is about the growing divide between wealthy students completing their degree and low-income students. It states:

In 2013, 77% of adults from families in the top income quartile earned at least bachelor’s degrees by the time they turned 24, up from 40% in 1970, according to a new report from the University of Pennsylvania’s Alliance for Higher Education and Democracy and the Pell Institute for the Study of Opportunity in Higher Education. But 9% of people from the lowest income bracket did the same in 2013, up from 6% in 1970.

The narrative is telling a story about the struggle that low-income students have completing their degree. The author says, “about one in five college students from the lowest income bracket completed a bachelor’s degree by age 24 in 2013, about flat with the 1970 figure.” While that statistic may be true, I believe the author is telling the wrong story about education.

Rather then talking about college completion, how about talk about college enrollment? This year, the number of college applications reached near record highs; “at the top colleges, applications are rising at astronomical rates. Princeton University received just under 27,000 applications for the Class of 2019, the second-largest amount in its history,” according to this article. But who are these applicants? According to the WSJ article, this has been a point of progress – “One small sign of progress is that more poor students are enrolling in college than they did 40 years ago. Forty-five percent of dependent 18- to 24-year-olds from the lowest income quartile—with family income of $34,160 or less—enrolled in college in 2012, up from 28% in 1970.” However, couldn’t that be explained by the fact that the total number of applicants has risen?

In reality, there are actually a lot of factors dissuading low-income students from even applying. The first of which are application fees – the average college application fee is $41, with the top schools charging $75 or more. That means that just applying to college is a costly endeavor, let alone the cost of actually attending. Because of these fees, it makes it difficult for low-income students to send out a ton of applications. In an environment where colleges boast about low acceptance rates, it is important for applicants to apply to many places, which is clearly advantageous for wealthier applicants.

While graduation is certainly an important component, I believe the problem begins much earlier in the process. Low-income students should be incentivized to apply to college, not the other way around.

Inequality in College Education

Feb 4th 2015



As Professor Miles briefly mention in the class today, the relationship between the education and its benefits (in other words, wealth or wages) is one of the most important issues in educational economics field. On February 3rd, Wall Street Journal talks about the gap in college graduation rates for the rich and the poor, generating another big social problem. According to a report from the University of Pennsylvania and the Pell Institute for the Study of Opportunity in Higher education, 77% of adults from the top income quartile earned at least bachelor’s degrees in 2013. It is a huge increase because there were only 40% people who got degrees in 1970. However, only 9% of people were from the lowest income bracket in 2013, being increased by 3% from the 1970.

Many people are worried about the situation because they think that “education” can be a solution for mitigating inequalities in wealth and society. “Education is one of the levers that we have in place to address income inequality. It offers the promise of achieving the American dream,” said Laura Perna, executive director of the Penn program. However, Melissa Korn, the writer of the article in Wall Street Journal, questions the fundamental reason of education. In other words, she wonders that education really improves the income inequality. “While the report focuses on college access and completion, one thing it doesn’t cover is whether there would be jobs for those students if everyone actually got a bachelor’s degree” said Neal McCluskey, associate director of the Center for Educational Freedom at the Cato Institute, a libertarian think tank.

Neal McCluskey’s idea is, at least, true in Korea. Most Koreans agree with the statement that Korea has small territory with scarce resources, which mean we only have “human resources.” Clearly, many Korean parents take care about children’s education and wish their kids get at least bachelor’s degrees. As a result, there are a lot of college graduates who cannot find their jobs, and this becomes a serious social problem in the Korean society nowadays. Increase of unemployment rate in college degree holders is a more severe problem than other unemployment rates because bachelor’s degrees usually take a lot of costs. Many young Koreans waste their time, efforts and money to take bachelor’s degree although some jobs don’t need higher educations.

I believe social pressure in Korea should be eliminated because the society should take costs a lot. Many Koreans argue that we need to change the social structure and recognition which only college graduates can get jobs. In reality, the amount of those high quality jobs is limited and other simpler jobs have hard time to be filled because many graduates avoid applying on them (they want to get “better rewards” as they get through harsh college education). The whole situation is messy and really inefficient. Of course, as Wall Street Journal mentions, no opportunities or less opportunities of education for the poor, young people make the ladder smaller, which goes up to upper class. But, I want to emphasize that too much recognition for college-level education is inefficient as well as unnecessary.

Growing Pile of Student Debt Poses Threat to Future US Economic Growth

The United States prides itself on the value it places on higher education.  The nation was recently ranked the fifth most educated country in the world, according to data collected by the Organization for Economic Co-operation and Development, using percentage of the population that has attained a tertiary education as their metric.  However, the data presents a more troubling story than it would appear at first glance.  When the OECD set its age range for the rankings, it was surveying the US population that fell between the ages of 25 and 64, yielding the 42% tertiary education attainment rate that places the United States so high in global education rankings.  However, if the age range is tightened to individuals between the ages of 25 and 34, which OECD uses to survey the “younger adults” population group, the US yields the same rate, 42%, and falls in the rankings all the way down to 14th.  The message here is clear: the United States may still be a leader in education, but it won’t be for long, as the nation is falling behind in the brains race.

Perhaps one of the biggest barriers to the United States keeping up with other leading nations in education its populace is the rapidly rising cost of higher education.  As shown in this analysis conducted by Bloomberg with data from the Bureau of Labor Statistics, the cost of college tuition in the United States has risen by a jaw-dropping 1,225% in the last 36 years – compared to a 279% increase in the consumer price index.  Higher education has been by far the most rapidly rising expense to American consumers in the past several decades, and it has left a massive burden on the shoulders of our country’s young population.


While European countries are pumping out higher education at little to no cost to their students, thanks to state-subsidized public universities, American students are assuming student loans that will cripple their ability to contribute to the economy for years to come.  Mitchell E. Davis, the President of Purdue University, presents some more worrisome statistics in the Wall Street Journal, such as the fact that educational debt has become the second largest debt category for the American public, after home mortgages, and the fact that 25% to 40% of student borrowers report postponing major purchases such as homes and cars.  The most shocking statistic, for me at least, is this one: 45% of graduates age 24 and below are currently living at home or with some sort of family member.  Not only is this disheartening as a soon-to-be graduate, but it is troubling as a US citizen.  Young Americans are currently dragging down the US economy by avoiding major spending and by starting families later and later, they are dampening potential for economic growth.  The issue will continue to worsen as the pool of Americans with college debt grows, and will not be resolved until measures are taken to reform the higher education system and make learning more available to all citizens.

Blog 6: Income Distribution in an Economy with 4.5 Million Dollar Raises

The type of income distribution a country faces can provide insight on its economic and social environment. Optimally, the distribution will display a strong middle class to disseminate the negative externalities created by concentrated wealth. When wealth is concentrated unequally, issues such as access to education, are amplified and the future economy is likely to suffer. According to the US Census in 2013, we see this breakdown of income:

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In 2012, the Census shows that 50% of Americans were earning an income below $27,000 each year. Using this income calculator, you would need $36,700 to live in a modest single family home, drive a Honda Civic, not travel, rarely buy clothing and have no kids. This is a pretty meager existence and considering half of the US was making roughly $10,000 less than this in 2012, I would say this is a major problem.

The situation is even more problematic as it continues with the rich getting richer. Perpetuating the unequal distribution, the Wall Street Journal notes, “For the second consecutive year, Morgan Stanley’s chief executive got a raise.” The 4.5 million dollar “raise” was accompanied by raises to other executives as well. When our economy is allegedly growing and improving in this post-recession era, are the benefits universal, or merely being reaped by those heading distribution?

During my Freshman year, (Fall of 2011), here at the University of Michigan, the Grad Student Instructor in one of my discussions proposed an income distribution of students at the University of Michigan in comparison to that of the US in general. It was a surprise to me that the distribution on campus was so heavily skewed towards higher income families. This alone began to open my eyes to the real effects of unequal distribution. Enrollment at this notably ranked school was limited to the pockets with enough depth. This study by Stanford, done in 2014, analyzed 2004 graduates from a variety of schools including the University of Michigan.

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We see that for the people with family incomes below $35,000, less than 10% are able to go to college. Granted, this study is relatively dated and since its publication there have been more programs created to aid students with loans. However, it is still a large problem that will take much effort to correct. If the rich keep getting richer, the country as a whole is not advancing. Moving forward together is what helps alleviate social problems such as poverty and economic issues such as debt. A healthy economy lies hand in hand with a healthy income distribution.