Race, financial aid awards and college attendance: parents and geography matter

I Introduction BETWEEN 1979 AND 1989, the proportion of the black college-age population spending four or more years in college increased from 9% to 13%, while the proportion of college-age whites attending college rose from 19% to 24% (Meisenheimer, 1990). The gap between white and black students did not narrow, despite an increase in the proportion attending college in both groups. However, both the absolute number and percentage of black males attending college have declined in the 1980s.(1) One possible reason for this is that the mix of financial aid has shifted from grants to loans and work study awards during this period (Savoca, 1991). Karen (1991) argues that since blacks have mobilized politically, they have achieved a special status and thus have gained access to higher education. He argues that if blacks had not attained their special status as an "official group" there would have been a disproportionate decline in the number of blacks attending college, especially at the top-tier schools. Part of the political rewards of black mobilization has been the use of race-based scholarships.(2) Karabel and Astin (1974) argue that this type of ascriptive criteria is used as a counterweight to a meritocratic criteria as a method of gaining access to higher education. They suggest that a rigorously enforced meritocratic system will favor the affluent. Wolfle (1985) investigated the effect of family background and ability on educational attainment using LISREL analysis. His study indicated that the process of educational attainment does not differ significantly between white and black populations. Wolfle concluded that differences in educational attainment are primarily the result of differences in social class origins. A weakness of this study, however, is that it did not take the ordinal nature of educational outcomes into account. In measuring the level of education attainment, individuals (and employers) are primarily concerned with the degree attained, and not with the number of years of education. If an individual spends 7 years trying to complete a Bachelor's degree, it seems unreasonable to view this person's level of educational attainment as being higher than that of an individual who completes a bachelor's and PhD. degree within 6 years. The current study is designed to: 1. examine the contribution of race and other characteristics in explaining differences in financial assistance; and 2. investigate the effect of a student's race on the probability of attending college, holding other factors constant. While earlier studies(3) have investigated the effect of race on financial-aid awards, this study is unique in that it takes into account the potential bias that may be present as a result of the fact that financial aid awards are always greater than or equal to zero (and many individuals receive no awards). Because of this, the conditional expectation of the error term in financial aid award equations is nonzero in the observed sample. In the current study, Tobit analysis has been used to address this issue. Most previous studies(4) of the effect of race on educational attainment have generally relied on probit, logit, or multinomial logit analyses. Since alternative levels of educational attainment, however, provide an ordered ranking of alternatives, an ordered probit specification appears to be most appropriate. In this study an ordered probit model is used to examine the effect of race on educational attainment. The models presented below are estimated using data from the National Longitudinal Study of the High School Class of 1972. II The Model EDUCATIONAL ATTAINMENT has been shown to be important in explaining earnings.(5) In this paper it is assumed that an individual chooses a level of education by seeking to maximize the expected value of his or her lifetime earnings stream. It is assumed that alternative educational choices can be represented by a vector of family background variables (X). …