Paying the Cost to Be the Boss: Tuition Rates, Pell Policy, and Postsecondary Access

We’ve all seen data that show education pays:

  • Median earnings for bachelor’s degree recipients working full time is $56,000–$21,000 more than the median earnings for high school graduates
  • Over 10 percent of high school graduates age 25 and older live in a household that relies on SNAP (Supplemental Nutritional Assistance Program) benefits, compared to 2 percent for those with at least a bachelor’s degree
  • Employers provided health insurance to 55 percent of full-time workers with high school diplomas, 69 percent of those with bachelor’s degrees, and 73 percent of those with advanced degrees.
  • Educational attainment increases a person’s chances at economic mobility. According to the Pew Charitable Trusts, only 10 percent of children born in the lowest quintile of the income distribution who get a four-year college degree remain in that quintile as adults, compared to 47 percent of those without a four-year degree.

But we also know that education costs—and these costs keep going up. On average, national tuition and fees for four-year institutions have gone up 40 percent over the last ten years. Tuition increases are also the norm for community colleges, with a near 30 percent average increase over the same time period. Southern institutions are no different than the rest of the nation: Louisiana’s two-year and four-year institutions had the highest average increases over the last five years, at 64 percent and 52 percent, respectively.

Five-Year Change in Inflation-Adjusted Tuition and Fees (2011-12 to 2015-16)

2-year Institutions 4-year Institutions
Alabama 15% 21%
Arkansas 23% 14%
Florida 6% 15%
Georgia 19% 31%
Kentucky 9% 16%
Louisiana 64% 52%
Mississippi 11% 23%
North Carolina 19% 20%
South Carolina 20% 7%
Tennessee 17% 30%
Texas 16% 8%
Virginia 22% 23%
West Virginia 38% 25%

Source: The College Board, Trends in College Pricing 2015

Our Southern flagship institutions are a part of this trend, too, making our most well-known state public universities less affordable for many students and their families.

2015-16 Tuition and Fees and Five-Year Change for Flagship Universities

2015-16 Tuition and Fees 5-Year Change (2011-12 to 2015-16)
University of Alabama $10,170 18%
University of Arkansas $8,522 15%
University of Florida $6,381 16%
University of Georgia $11,622 45%
University of Kentucky $10,936 16%
Louisiana State University $8,827 40%
University of Mississippi $7,444 25%
University of North Carolina $8,591 18%
University of South Carolina $11,482 7%
University of Tennessee $12,436 54%
University of Texas $9,830 -5%
University of Virginia $14,468 24%
University of West Virginia $7,632 29%

Source: The College Board, Trends in College Pricing 2015

Colleges are quick to point out that students do not actually pay the sticker price; most students receive some type of financial aid (scholarships, grants, or loans). For low-income students, that financial aid may come in the form of Pell grants. The Federal Pell Grant program provides need-based grants to low-income undergraduate students. For the 2015-16 academic year, the maximum Pell grant award is $5,730 and the average Pell grant award is $3,693. Except for the University of Florida, the average Pell award wouldn’t cover even half the costs for our Southern flagship institutions, making the possibility of attending these colleges unrealistic for some students. And while tuition costs are increasing, the Pell grant award isn’t. The maximum Pell grant award has decreased by $335 over the past five years.

For the 2013-14 academic year, there were nearly 8.7 million Pell recipients. Over 7 million of those Pell recipients came from families with incomes of $40,000 or less. Across the South, there were over 2.8 million Pell recipients, accounting for over $10 million in expenditures for Southern public, private, and proprietary institutions.

Pell has been considered the great equalizer in college affordability for low-income students. And the Obama administration is trying to make sure more students have access to an affordable education while also attempting to increase college completion rates. Last week, the Administration introduced two new proposals:

  1. Pell for Accelerated Completion would allow students to use Pell grants in the summer, making the program year-round. With the cost of tuition and fees, most students exhaust their Pell eligibility within the fall and spring semesters. This change would help students complete degrees faster by covering some of the costs of summer coursework. This program would add $1,915 to the Pell award for nearly 700,000 students.
  2. On-Track Pell Bonus would raise the maximum Pell grant award by $300 for students who take 15 credits per semester for the academic year. This initiative would help over 2.3 million students.

The US Department of Education press release states:

Today the Administration is calling for significant new investments in the federal Pell Grant program—the cornerstone of college affordability. The two new Pell proposals will help students to accelerate progress towards their degrees by attending school year-round and encourage students to take more credits per term, increasing their likelihood of on-time completion. In fiscal year 2017, these changes would mean an additional $2 billion in Pell Grants for students working toward their degrees.

The Obama administration faces an uphill battle in getting these proposals through Congress. But it is these types of innovative policy changes that could make a difference in postsecondary access and success for low-income students. As we move through this election cycle, pay attention to how presidential, gubernatorial, and congressional candidates talk about postsecondary costs and accessibility. It could make a difference for millions of Americans.

Your Daughter’s Teacher Needs a Raise

The beginning of the year always makes me revisit my annual budget, evaluate my savings plan, and start to think about taxes. As I think about the additional amount of money I still need to save for my family to be comfortable in the future, I am reminded that there are many people I encounter on a daily basis that are not as fortunate. When it comes to having enough income to cover my basic expenses, I’m lucky. I can pay my bills and still save for my family’s future—assuming we don’t have any unexpected medical expenses that deplete our savings. My job pays me a family-sustaining wage, but what about the people I depend on to take care of my family and me on a daily basis?

Last year, Fortune reported that more than 42 percent of U.S. workers hold jobs that pay a low wage. The article assumes any job with wages below $15 an hour is a low-wage job. The $15 an hour rate is based on national studies which have calculated an equilibrium where wages are high enough to lift families out of poverty, but still low enough to not result in massive job losses. In North Carolina, the percent of jobs paying a low wage is 48.7 percent.

We often associate jobs that pay low wages in our economy with low skilled or unskilled labor. Many of us think of fast food jobs and teenagers. However, many of the jobs that pay a less than what is needed to maintain a normal standard of living are the very jobs our society depends on to take care of our family members and teach our children. As the Fortune article points out, low-wage jobs are held disproportionately by women, people of color, and persons 20 years of age or older.

Is $15 an hour enough?

Another definition of low-wage job is one that pays less than a living wage, which is defined as the amount of money a person must earn to cover their family’s basic living expenses. In 2014, MIT and the Living Wage Project calculated the living wage for North Carolina to be $10.53 for one person, living alone. The addition of children obviously increases a family’s expenses. Hence, one adult with a one child will need to make $44,990 a year ($21.63 an hour) to break even every month. This amount does not include emergency savings or funds to splurge on birthday and holiday gifts. Overall, 72 percent of our state’s workforce makes less than $44,990 a year. Here are the living wage calculations for other family configurations:

NC Living Wage

Many of the jobs that pay less than a living wage typically require postsecondary credentials and are occupations that are growing in our economy:

NC Occupations Wages

Half of the preschool teaching jobs in the state earn less than $11.35 an hour. At this wage rate, someone working as a preschool teacher, with a child at home, would not be able be able to cover his basic living expenses. He would not be able to save for his family’s future, and he is probably asking himself a different set of questions at the beginning of the year. All of the jobs listed in the table above require some kind of investment in postsecondary training; the very investment that is touted for getting ahead and securing employment that leads to economic security. But the investment can’t just be on the worker’s side of the equation. We have to invest in making those jobs that require skill and training—and there aren’t many jobs that don’t—quality jobs that provide wages commensurate with the training and value they bring to individuals and communities. Our society is dependent on a host of skilled labor to take care of our families, so we need policies and wage rates that help them take care of theirs.

Poor Indicators: Testing Our Achievement Assumptions

On this blog and around the office at MDC we talk a lot about economic mobility and the lack of opportunity for upward mobility for many low-income young people. In one of our recent meetings on this topic, I mentioned that it is easy to falsely conflate the low-income student population with the low-achieving student population. Just as there are high-achieving wealthy students, there are also high-achieving, low-income students. A recent longitudinal study from the National Center for Educational Statistics found that high-achieving low-income students are as likely as affluent students with below average test scores to complete a college degree.

This conversation reminded me a study I read years ago about gifted students living in poverty. The authors of the study followed a young, gifted student named Jermaine who lived in a poor county in Alabama. In the study community, “Pine Grove,” all students are African-American and 98 percent of them are eligible for the federal free- or reduced-price lunch program. Jermaine’s school had a leaky roof, no gym, and no art or music rooms. The school district was consistently on the list of schools to be taken over by the state’s department of education. The names of the people and places studied were changed to protect the participants’ identities, but this study could be talking about any number of communities across Alabama. Alabama is the sixth poorest state in the nation; one in four children there lives in poverty.

The authors followed Jermaine for the span of three years, his 3rd– to 5th grade years. They reviewed a portfolio of Jermaine’s work, observed Jermaine in and out of school, and corresponded with Jermaine and his teacher, Teresa Beardsley. When the study first began, Jermaine lived with his mother, older brother and sister, and an aunt. His family lived in a house, but in his community, homes were inferior to trailers that came with central heat and air conditioning, furnishings, and appliances. Jermaine knew his family was considered to be in the lowest rung of the social circle in Pine Grove: other students had expensive sneakers, while Jermaine’ mom gets his sneakers from Bargaintown. Jermaine got teased a lot.

Jermaine’s performance in school was considered “remarkable”; he was creative, had an advanced vocabulary, and very high achievement scores. However, his intelligence was not cultivated at school; he was bored and became a discipline problem. Administrators and teachers alike described him as “bad”; someone to “keep an eye on.” His teacher, Ms. Beardsley, found that she often had to serve as an advocate for Jermaine.

His mother did not play an active role in his schooling, but he had two uncles from Detroit who brought him toys and paid for his uniforms when he needed them. Jermaine was supported by friends’ families and the football coach who, recognizing the young boy’s intelligence, made Jermaine his starting quarterback. Jermaine gained friends by sharing the books he received from his uncles and, of course, the acclaim that comes with being the school’s quarterback. He dreamt of becoming a lawyer, but explained that he wanted to be a Hollywood film producer first. We never find out if he achieves this dream.

Even though Jermaine’s school offered opportunities for athletics, they did not offer access to gifted and talented programs or other programs that could have nurtured Jermaine’s creativity. Study authors detailed that rural, gifted students face without access to these types of activities:

…within rural school districts acceptance of the status quo and resistance to change made it difficult to initiate new programs for gifted students. Along with limited financial resources for programs perceived as benefiting a few students, rural schools were unable to provide adequate specialized teachers, counselors, school psychologists, and curriculum specialists to assist in providing appropriate services for high-ability youngsters. (p. 202)

Inadequate funding for poor, rural school districts perpetuates the acceptance of the status quo. In July 2015, EdBuild released a map of student poverty rates for 13,000 school districts. They found in many cases, “school districts of dramatically different income levels are next-door neighbors, or even sit, island-like, within one another.” And in many Southern school districts, there is significant variation in student poverty rates between schools. A recent Urban Institute study examined concentration of poverty in schools and found that a student from a low-income family is six times as likely as one from a high-income family to attend a high-poverty school. The study also found that students of color are far more likely to attend high-poverty schools—in the case of black students, six times more likely than white students to attend high-poverty schools.

I’m glad that Jermaine’s story has remained with me all these years. It puts a face to all those data points. Jermaine is a creative, caring young man who wants to thrive despite his circumstances. As we try to figure out solutions to improve educational opportunity for low-income students, it’s important that we don’t forget there are thousands of other students like Jermaine. Poor students can be smart, too, but our educational system is still failing too many of them.

Across the Great Divide

If you’ve ever been a working student trying to make a living to support your family and your education, you’ve probably had moments where one unexpected challenge after another makes you feel that success is impossible. You don’t know how you’ll make it through the next crisis—your car breaking down or your doctor calling with troubling test results. You just can’t handle making one more choice between two bad options: like missing work or missing class when your boss knows your schedule but says they need you to come in, or waiting a few more days to buy your kid a backpack for school or risking your rent check bouncing. The reason all of this feels so impossible, like the deck is stacked against you, is because it’s not just about you and your choices: it’s about the policies, institutional practices, and systems that make it harder for low-wealth people to get ahead. There are so many things out of your control that affect your path to success, like the scheduling system your employer uses, whether or not you are eligible for paid time off, the timing of courses offered by your college, the reliability of public transit, and the availability of financial aid. And those of us who want to improve economic mobility, or to move people from economic stress to stability, need to understand that context when we design programs and policies.

From my window today, I’m looking out at what could be considered a forest (a hedge, really, at the edge of a small woodland), but recent wind and rain have diminished the forest and left me with mostly trees. And since I’m looking for a metaphor for the importance of understanding the context of a system before adopting a programmatic solution, “missing the forest for the trees” came readily to mind, looking at these bare branches and chill blue sky. When it comes to how we shape responses to economic mobility issues—income inequality, school segregation, college completion—we often get so tied up in our focus on individual success (trees) that we lose sight of the impact of community systems of opportunity (forest).

The philosophy behind why you do the work and the current (and, often, the historical) context it’s happening in, matter. Here’s a great example of a philosophy that changes service delivery: LISC Financial Opportunity Centers. The FOCs—in communities across the country—employ an Integrated Services Model—that’s jargon for offering financial coaching and products (like IDAs to make saving more feasible), education and training, and income supports (like public benefits and tax credits) all in one place, in a sequenced flow that helps individuals move from financial stress to survival to stability:

Taken together, these three core services help move low- and moderate-income families along a continuum of improvements aimed at ultimately increasing their net income (monthly cash flow), credit score, long term job retention and net worth.

FOCs want interim milestones, but they are driven by a big end goal: net worth. And more of it for low-wealth families. At an FOC, they don’t stop at helping someone get emergency funds for utility payments to avoid eviction [TREE]. They don’t stop at providing training and support for a new better-paying job [STILL TREE]. They form a long-term relationship that helps their clients build wealth, like home ownership and retirement plans—because financial stability is the forest made up of all those really important trees.

This long-range relationship and a programmatic orientation that moves from stress to survival to stability is key, especially when you consider the extreme disparities in financial stability and wealth creation in the United States. Recent data from the Pew Research Center reveal that the median net worth of for white households ($141,900) is 13 times that of African-American households and 10 times that of Hispanic households. (This staggering gap inspired CFED’s creation of the Racial Wealth Divide Project.) In Umbrellas Don’t Make it Rain: Why Studying and Working Hard Isn’t Enough for Black Americans , scholars from The New School, Duke Center for Social Equity, and Insight Center for Community Economic Development discuss how “an analysis of who holds America’s wealth makes clear how life outcomes can diverge radically, in particular for those subject to systemic historically rooted discrimination [FOREST], which is not related to the amount of personal effort exerted [TREE].” The analysis shows that neither income nor education is an equalizer when it comes to this wealth gap:

  • The wealth gap persists at every income level, and “white families at the lowest end of the income distribution have a higher median wealth than middle-income blacks”

    Umbrellas 2

    Source: Umbrellas Don’t Make It Rain

  • The wealth gap also persists at every level of education, and “for families with household heads that have a college degree, the typical white household has $180,500 in wealth while the typical Black household has $23,400”
Umbrellas 1

Source: Umbrellas Don’t Make It Rain

Less wealth mean less stability and more stress and struggle for black families, especially when it comes to investing in education, entrepreneurship, or retirement. The authors recommend a possible intervention—Child Trust Accounts—that would be based on the wealth (not income) of their parents. It’s an example of an intervention that takes into account the history and context of the issue being addressed—a short-term action with a long-term view, like the philosophy at the Financial Opportunity Centers. If we want to see real movement toward more equitable economic outcomes, that’s the kind of growth we need to cultivate.

Quality STEM Jobs: Who Is Getting Them?

We’ve got some STEMpathy if you’re kind of over stories about science, technology, engineering, and math (STEM) jobs, and the education and training required to get them. But there’s a good reason for all (or at least most) of those stories: employment in STEM occupations tends to be higher-wage and higher-growth than other occupations. With startlingly low economic mobility for young people in the South, STEM jobs could provide new pathways into stable careers.

In many Southern metros, STEM employment makes up a significant portion of the workforce. According to Bloomberg Business, in Austin, Huntsville, Raleigh, Durham, the figure is at least 10 percent:

STEM jobs

Source: Bloomberg Business

These jobs typically pay better than many occupations, and they are more likely to have the characteristics that allow for economic security and wealth building, like paid sick and family leave, health insurance, and retirement accounts. The gap between median pay in STEM occupations and non-STEM occupations is substantial in many Southern metros:

STEM pay

Source: Bloomberg Business

The prevalence of these jobs in certain areas is not based just on luck; they are areas that have seen sustained investment in innovation and education over time. From Bloomberg Business descriptions of Huntsville and Durham:

Like many high-tech locales, Huntsville owes its 21st century economy to an initial burst of funding for government research. It was a town of 16,000 residents working in cotton mills and on watercress farms when, in 1950, the U.S. Army relocated a team of rocket scientists to Redstone Arsenal, a local installation that produced chemical munitions during World War II. In the decades that followed, NASA designed, assembled, and tested the rockets that put the first men on the moon. Boeing, Lockheed Martin, and dozens of lesser-known aerospace and defense companies have swarmed to Huntsville.

….

Durham, N.C., has a STEM labor force that’s 13.9 percent of all workers. Its biotech economy started with a sprawling research park that began to grow around the same time that Huntsville’s high-tech transformation was getting started.

The Bloomberg author notes that these jobs pay good salaries and those salaries support other draws—like good public schools, restaurants, and arts and entertainment that make the communities appealing to potential employers and potential workers.

Job growth doesn’t happen automatically, and it’s happening less and less through traditional industrial recruitment. STEM jobs are growing in the places where there’s been investment in the services, amenities, and institutions that support those sectors, and particularly in places with a highly educated workforce or the ability to attract one.

These occupations are typically high-skill and require targeted training and education, but the majority are going to populations that are the most likely to connect with high-wage work anyway: white men. Women and people of color are underrepresented in STEM fields. Women make up less than a third of all STEM employment in every Southern state:

STEM women

Source: IWPR’s Status of Women in the States

Southern cities that are seeking to take advantage of STEM job growth must make sure that the pathways into those jobs are strong and equitable. We have to consider what barriers, both real and perceived, are preventing women and people of color from pursuing those careers in greater numbers.

As the Institute for Women’s Policy and Research found, women are significantly less likely than men to get degrees in STEM fields, and the proportion of women receiving associate’s degrees in STEM fields decreased between 2001 and 2009:

STEM gender

Source: IWPR

Though these data show a significant gender gap, community colleges are an important part of the pathway to STEM careers for both women and men, as detailed in an article this week by Lane Florsheim in Marie Claire magazine. More than half of people who receive bachelor’s degrees or higher in a STEM field completed some of their coursework at a community college, including 55 percent of women (63 percent of women with young children) and 44 percent of men.

Florsheim cites research that suggests community colleges are often more accessible and inviting to women interested in these fields:

… a recent study by two Iowa State University researchers found that women at community colleges reported a friendlier atmosphere in STEM-related classes than at four-year colleges. “It is just such a global community,” one student said of her community college experience. The researchers found that similarity in backgrounds and lifestyles made women feel more comfortable stepping into leadership roles in activities and assignments. Strong advising and support from faculty also marked a major difference. Since so many students transfer out, they often work closely with guidance counselors to develop transfer plans. “The two-year plan keeps me focused, and saved me with financial aid,” another woman said.

That welcoming atmosphere, where women and people of color are encouraged and expected to thrive instead of being seen as unusual, must be sustained at community colleges and created at other educational institutions. It hasn’t always been so unusual: computer programming was once thought of as women’s work, but it became overwhelmingly male starting in the mid-1980s as stereotypes about gender and computer science shifted:

Comp sci grads

Source: NPR

Stereotyped messages about who “belongs” in a field matter to young people who are trying to envision themselves in careers.

Holding that vision is difficult to do while women in corporate leadership, especially tech corporate leadership, are few and far between. Only 5 percent of Fortune 500 companies have female CEOs (women make up 15 percent of C-level executives and 17 percent of board members, even though research shows that boards with women tend to outperform board without women). A TechCrunch analysis of 84 “unicorn” companies, or U.S. software or internet-oriented companies that are backed by venture capital and valued at more than $1 billion, found that only two CEOs are women, 30 percent have no women in senior leadership, and approximately 70 percent do not have women on their boards.  And a Fortune analysis of 191 major U.S. venture capital firms—the crucial backers of tech innovation—found that only 5.6 percent of decision-makers and 10 percent of all investment professionals were women.

The power of these stereotypes is seen in a study of academia that found fields that prioritize brilliance and raw talent tend to have lots of white men in them, while fields that emphasize the importance of hard work tend to have larger percentages of women and people of color. Unconscious bias influences who we think of as brilliant and talented—if you don’t look like the typical applicant, then the employer may not be as able to see your unique talent. Women make up 20 percent or less of PhDs in physics, engineering, and computer science; it’s understandable that young women may not see STEM fields as welcoming for either education or employment.

For the Southern economy to thrive, our workforce needs the skills to compete in the global economy and emerging fields—and we need those skills be to accessible to a broad range of workers, including women and people of color. STEM skills will often be highly technical and specialized, requiring both postsecondary training and job-based experience. Developing equitable education and hiring systems can help us shift patterns of economic mobility and ensure that more Southerners can connect to living-wage careers.