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Refinancing the College Dream: Access, Equal Opportunity, and Justice for Taxpayers
Reviewed by Michael Mumper
Edward St. John with Eric H. Asker. Baltimore: Johns Hopkins University Press, 2003
For more than a decade, Edward St. John has been conducting innovative research on the complex linkages between higher education finance and participation. Indeed, much of what we now know about how and why students choose to enroll in college is the result of his work. In his long-awaited new book, Refinancing the College Dream, St. John provides a comprehensive analysis of the barriers that keep people out of college and the policies that institutions and governments should implement to break down those barriers. This is no small task. The problem of college access for students from low-income families has received substantial attention from academics and policy analysts. Since the 1980s, rapidly rising college prices have reduced the purchasing power of need-based financial aid. As a consequence, low-income students are left with little choice but to take out loans, attend less expensive colleges, or not attend college at all. St. John shows that they are doing all three in record numbers. The gap between the college participation rates of lower- and upper-income students is higher today than it has been at any time since the 1970s. Moreover, the gap has continued to widen each year even as federal and state governments appropriate ever larger amounts to higher education.
St. John helps to make sense of these bewildering developments. He reviews previous studies, builds a comprehensive model of college participation, and makes recommendations about what policy actions must be taken to solve these problems. While the scope of the study is large, it makes a detailed and sophisticated argument. In addition, while the model St. John presents emerges from a rigorous quantitative analysis, the text is accessibly written.
The book begins by recounting the evolution of the student financial aid system and explaining the problems now facing low-income students as they consider entering college. In particular, St. John shows how and why the intergovernmental finance system that functioned quite well in the 1970s broke down under the new demands of the 1980s and 1990s. State governments, faced with pressure for increased spending on corrections and Medicaid, diverted funds away from public colleges to address other needs. This drove tuition up at public colleges. As the federal government dealt with growing budget deficits, it allowed the purchasing power of the Pell Grant to erode. This reduced the value of need-based financial aid. The result was that students were faced with higher tuition at public colleges and reduced grant support to cover those higher prices.
Refinancing the College Dream makes at least two important contributions to our understanding of low-income students' participation in higher education. Perhaps most important, it lays out an integrative model that explains the complex interactions between finance and academic preparation in influencing college choice. Currently, there are two conflicting models for understanding how public policy influences college participation among low-income families. One focuses on how financial barriers limit access for students from such families, and proposes increases in federal and state financial aid as the best way to achieve more equal educational opportunity. The second model, often referred to as the "academic pipeline," focuses on the role of academic preparation among students from low-income families and suggests that additional funding should be directed toward improving primary and secondary schools.
St. John moves the debate beyond this tired dichotomy. He uses the academic pipeline model to show how financial concerns present barriers at every stage of the college selection process, and goes on to develop a balanced analysis that considers the roles of both preparation and finances. Viewed in this way, finances can be seen to have both direct and indirect influence on enrollment behavior. Some potential students simply cannot afford the high cost of college. But finances also shape the expectations and condition the choices of students and families well before they are thinking about college.
The book's second important contribution is that its analysis moves beyond the standard analytic tools employed by most higher education researchers. St. John uses a dynamic blend of economic and social theory that he describes as a "contingency theory." Contingency theory recognizes that differently situated students will respond to changes in tuition or financial aid in different, but still predictable, ways, and it provides a sophisticated way of understanding student responses to subsidies and prices. In particular, St. John shows how students respond differently to changes in subsidies (grants, loans, and work) than they do to changes in prices (tuition, fees, and living expenses). The effect of changes in prices and subsidies on student persistence are different than their effect on whether or not students enroll in college in the first place. Students' responses change over time as a result of changes in government financing strategies and the labor market.
The book concludes with recommendations for campus, state, and federal policy makers. St. John seeks to balance the competing interests of taxpayers, middle-income students, and low-income families. While his are largely process recommendations, and few are developed beyond outline form, they all call for increased coordination among those responsible for setting college prices or awarding subsidies. St. John's most detailed suggestion is for a restructuring of the Pell Grant program that would require states and campuses to provide a match for all federal contributions to the program beyond a basic level.
The book has a few limitations. The analysis is based almost entirely on data from the high school class of 1992. While these might be the most comprehensive data available, their applicability to the current situation is questionable. Additionally, the fiscal situations of governments and public institutions of higher education have deteriorated significantly since the book was finished. The federal government now faces unprecedented budget deficits and nearly all the states are in serious financial trouble. This has caused tuition to rise even more rapidly than before and exacerbated the problem of access. But it has also left policy makers with fewer resources available to address the problem and facing stiffer pressure to divert additional resources to improve college affordability for middle-income families.
Refinancing the College Dream is essential reading for anyone who wants to understand the barriers that keep academically qualified students out of college. Indeed, it will become one of the most widely read and discussed books dealing with college finance. St. John establishes that finances present substantial barriers that keep low-income students out of college, and he fundamentally changes the debate over how those barriers should be overcome.
Michael Mumper is professor of political science and associate provost for graduate studies at Ohio University.
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