New Study Shows Which Colleges Help Low-Income Students Get Ahead

When it comes to helping low-income students achieve economic success, it turns out that the most successful colleges are not the nation’s elite universities like Stanford, Duke or those in the Ivy League. Instead, the schools that provide the most economic mobility are all public, Hispanic-Serving Institutions (where Hispanic students account for at least 25% of their enrollment). Historically Black Colleges and Universities (HBCUs) earn good scores too, far better than they fare in traditional college-ranking schemes.

Those are some of the conclusions of a new report – “Out with the Old, In With the New: Rating Higher Ed by Economic Mobility” from Third Way, the national think tank.

Methodology

To assess the degree of economic mobility provided by institutions of higher education, Third Way investigators mathematically combined two variables: 1) the amount of time it takes low-income students from a given college to recoup the costs of paying for their education, and 2) the proportion of students from low- and moderate-income backgrounds who were enrolled at each school.

It’s an index that extends previous research by Harvard economist Raj Chetty that examined inter-generational mobility by comparing students’ post-enrollment incomes to those of their parents. 

Here’s how the Economic Mobility Index (EMI) is derived.

First, Third Way investigators calculated a Price to Earnings Premium (PEP) for each school. The PEP measures the amount of time it takes on average for low-income students who attend a given college to recoup the costs of paying for their education. (Think of it as an alternative to the Obama-era “Gainful Employment” regulation that evaluated programs by how much of their post-completion discretionary income former college students had to pay to meet their educational debt obligations.)

A PEP score is derived by first determining the amount a student pays out-of pocket to attend a given institution (i.e, the net amount after scholarships and grants are factored in). The second step is to calculate the average salaries of attendees (ten years after attendance, in this case) and the average salaries of those with only a high school diploma within the state where the college is located. Dividing the net costs by the difference between the salaries of college attendees vs. high school graduates gives the PEP quotient, which tells you the number of years it would take for students to recoup the net costs of their education.

In this study, Third Way looked at the PEP for low-income students, defined as those whose families made $30,000 or less annually. It analyzed data from 1,320 bachelor’s degree-granting institutions.

To arrive at an EMI, investigators multiplied the percentile rank of schools based on their PEP scores by the percentage of Pell Grant recipients each institution enrolled.

EMI Results

The colleges that produce the most economic mobility are those that accomplish two things for their low-income students: 1) they offer a quick return on investment (a good PEP score), and 2) they enroll a large percentage of low-and moderate-income students (Pell Grant recipients) as part of their overall student body.

Here are the top 10 universities, ranked by their EMI.

1. California State University, Los Angeles, with an EMI of 66.7%
2. California State University, Dominguez Hills, 63.3%
3. Texas A and M International University, 60.7%
4. The University of Texas Rio Grande Valley, 59.2%
5. California State University, Bakersfield, 58.9%
6. California State University, Stanislaus, 56.8%
7. California State University, Fresno, 55.9%
8. California State University San Bernardino, 55.7%
9. CUNY Leman College, 55.2%
10. CUNY John Jay College of Criminal Justice, 54.7%

They are all public, Hispanic-Serving universities that enroll relatively high percentages of Pell grant students. And that – along with their good PEP scores – explains why they rank highly on this index.

Consider these examples for comparison. The three colleges with the best PEP scores for low-income students are all highly selective, elite schools – Duke, Stanford and William and Mary. But because these schools enroll so few Pell students, their EMI scores and (rankings) – 13.8% (722), 16.7% (548), and 11.7% (836), respectively – are dismal. Harvard, another university with an excellent PEP score for low-income students, ranks 847th on the list, with an EMI of 11.5%.

Several HBCUs, on the other hand, scored well on the EMI. Here are the top five:

1. Elizabeth City State University, EMI of 53.3%
2. Xavier University of Louisiana, 42%
3. North Carolina A&T State University, 40.4%
4. Fayetteville State University, 40%
5. Florida Agricultural and Mechanical University, 37%.

Elite schools do a very good job of producing an excellent economic return on the educational investment by low-income students. But their overall impact – their economic “throw-weight” – is minimal mainly because they enroll such paltry numbers of these students compared to other institutions.

Of the schools in the Third Way study, the mostly private, selective schools that offer the best overall return for low-income students enrolled only 15,168 Pell recipients cumulatively, the ten schools that offer the most economic mobility enrolled 95,619—over six times as many per year. Looking at the top 50 colleges for EMI, 42 are public institutions.

These results also help put into context the findings of a new report from the Georgetown University Center on Education and the Workforce released this week. It found that the return on a college investment (ROI)—the amount earned over time minus the full cost of attendance — varies significantly for low-income students depending on the institutions attended.

The Georgetown investigators found that the top ROIs for low-income students were achieved by elite, private, typically very selective universities – Georgetown, Stanford, Harvard, Tufts and MIT were the top five.

But at none of those schools did the enrollment of Pell recipients reach 20% of total enrollment. So while these colleges do a good job boosting the earnings of low-income students, their achievement should come with an asterisk – they do so with a very small number of them. They’re like luxury airplanes carrying only a few passengers.

As Michael Itzkowitz, the lead investigator on the Third Way study, observed, “While news outlets often focus on the most prestigious and selective institutions, these new data show that their impact on increasing mobility is extremely limited.”

He added, “If the primary purpose of postsecondary education is supposed to be to catalyze an increase in socioeconomic mobility, the Economic Mobility Index better highlights institutions that are truly succeeding in that goal. It shows that many other colleges serve exponentially more underserved students students—and serve them quite well.”