June 22, 2009

Recession Hits Low Income Students

Posted by Viany Orozco at 10:33AM

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(This post originally appeared at Demos)

The silver lining of a recession could be that it incents people, particularly those who are unemployed, to return to school and upgrade their skills, or to finish degrees they started but never finished. For recent high school graduates, who face the highest unemployment rates of all age groups, going to college should be a no brainer. Our current financial aid system, however, leaves low income students with high levels of unmet need for their education. Therefore, a vast majority of them finance their education through work. Under double digit unemployment rates among young people, then, the flaws inherent in this financing model are glowing.

The differential impacts recessions have on college enrollment for different income groups have been well documented. Michael Christian, from the Wisconsin Center for Education Research, analyzed the relationship between recessions and college enrollment from 1968-2000. He found that while young people from higher income households tend to increase their probabilities of enrolling in college during recessions, low income students are less likely to attend due to income constraints. Other research based on different sources, such as the National Longitudinal Survey of Youth, arrive at similar conclusions.

In addition to facing more income constraints than usual to attend college, young low income students are also paying a disproportionate price for the financial challenges affecting higher education institutions. Against the popular belief that community colleges accept all students, some community colleges already limit admissions due to budget constraints, a policy that is spreading to more campuses under strapped state budgets. The California Community College system, for example, must reduce its enrollment by a minimum of 250,000 students due to recent budget cuts. The most financially accessible institutions of higher education, then, are becoming less accessible to the neediest students.

A recent article in the New York Times about Reed College, moreover, illustrates that access is not only restricted to low income students interested in public colleges and universities. Private schools that under better economic conditions would have accepted more students who need financial aid are substituting well qualified low income students for those who can pay the bill.

In this context of ever increasing financial barriers to promising young people, it is disconcerting to observe opposition from our legislators to President Obama's plan to eliminate wasteful subsidies to student loan companies in order to increase grants to low and middle income students.

For a long time our country has failed to make a dedicated investment in one of our country's most valuable asset, its young people. This proposal will be huge step in correcting this divestment, particularly among those with the least resources, and it can become a reality with our support.