Growing Less Equal

Although university leaders speak frequently about college as a driver of social mobility, opining on the need to expand access to poor and underserved populations, inequality permeates American higher education.

A new book attempts to quantify just how different top colleges are from their less selective peers -- and how institutions’ fortunes have changed since the 1970s. That book, Unequal Colleges in the Age of Disparity (Harvard University Press), by economist Charles Clotfelter, shows American undergraduate education is less equal today than it was half a century ago. It also explores the many forces contributing to that change.

Clotfelter, a professor of public policy studies at Duke University, examines higher education as an industry, setting aside idealized portraits in lieu of economic terminology in order to demystify the market and scrutinize it in depth. He argues that no one who works at a top institution like Duke sets out to create an increasingly unequal higher education landscape. Yet a competitive market and rising income inequality have contributed to top universities growing even more powerful and elite than they were in the past, even as many of their smaller and lesser-known peers struggle.

“When we examine the market for baccalaureate education in the United States, we behold a scene of spectacular disparities,” Clotfelter writes. “They reveal themselves as differences across colleges in tangible resources, academic qualifications of entering students, and outcomes for graduates.”

Clotfelter answered questions by email about his new book. The following exchange has been lightly edited for length and clarity.

Q: You pick out three themes in the book: diversity, competition and inequality. Were you surprised at what you found?

A: Regarding inequality, the surprise was in the extent, not the existence of it. Comparing the less selective half of public colleges and universities (so classified in 1970) with the most selective private ones, for example, the difference in assets per student by 2013 was astounding: $29,000 for the former group of colleges, compared to $1.2 million for the latter group. Another aspect where inequality showed up was in qualifications of students, and these disparities grew larger over time. In 1972, for example, the percentage of students whose average grades in high school were A or A-plus was 7 percent in the less selective public colleges, compared to 39 percent in the most selective private ones, for a gap of 32 percentage points. By 2010 that large gap had grown even bigger, to 43 points.

The extent of the diversity in colleges’ missions is also striking. Colleges differ from each other, sometimes radically, along a host of dimensions, most noticeably by age, location, architecture and size. Going beneath the easily observed, they differ in elusive but more significant ways -- religious mission, research intensity and emphasis on practical skills, to name a few. But there is a connection back to inequality, since the extent to which a college’s courses teach “useful” skills is often a good predictor of where the college resides along the elusive dimension of prestige. Prestige in turn is correlated with the average SAT scores of students and the difficulty of gaining admission.

Most of these differences have roots in history. For example, many if not most private colleges were founded by religious bodies or for religious reasons. Although for many colleges these religious ties have weakened over time, as the society at large has become more secular, the vestiges of these religious origins remain. Historical roots are evident as well in the most secular of colleges, the country’s public universities, including the great land-grant institutions established by the Morrill Acts of the 19th century. They are evident as well in the historically black colleges and universities, originally designed to serve black students in the states where Jim Crow segregation was the law. Other dimensions of diversity can be seen in universities that began as colleges for women or for Native Americans, or as urban commuter colleges, or two-year colleges. And if you really want to see diversity in mission, just look at the military academies.

One final reason for diversity is that every student’s college experience is different. Unlike many goods and services that require little from the purchaser except money, the service being bought and sold in the college marketplace requires as one indispensable “input” attention and exertion by the student herself. Like any paying customer who visits the supermarket or joins a gym, the college student must also be a partner in the production process. What students get out of college depends on the effort they expend. Owing to the marvelous variety among students and the multitude of classes and activities available at most colleges, the ultimate product -- a baccalaureate education -- is by its nature an idiosyncratic thing.

Q: How do you go about analyzing such a range of institutions?

A: To reflect this diversity, I adopted an approach to the empirical analysis that would accentuate differences across various types of colleges. I divided colleges into 17 categories. I first separated public and private HBCUs from the rest, owing to their unique history. I divided the remaining colleges between public and private and according to the average SATs of their students in 1970. Once a college had been classified, it remained in the same category over time and in each of three waves of data from the Freshman Survey, 1972, 1989-90, and 2008-09. This permanent assignment facilitated the objective of making apples-to-apples comparisons over time. For every one of my calculations of changes over time, the categories I compare contain exactly the same colleges or students from exactly the same colleges.

Q: How much do the choices made by the handful of elite, highly desirable colleges drive all of this?

A: In a very real sense these elite colleges are the “industry leaders.” Historians of higher education have demonstrated the myriad ways in which colleges across the land have attempted to emulate Harvard and the rest of this handful of institutions. For the developments I document, however, the importance of the choices made by the elite colleges lies not in their effect on other colleges, but rather on their own situations.

The most selective private colleges, already seemingly secure, left no stone unturned in their efforts to improve the quality of their programs, to recruit the very best faculty, to admit the brightest possible entering classes and, of course, to raise the maximum amount of donations and grants. The venerable law enunciated by Howard Bowen several decades ago remains true: colleges raise all the money they can and spend all the money they raise. To be sure, it is not spending for spending’s sake, but spending for the aim of being the best, of coming out ahead of one’s rivals.

This meant raising tuition at rates consistently above the rate of inflation. It meant gathering as many dollars of donations into their endowments and seeking out financial expertise that would achieve above-average rates of return. It also meant continuing the age-old practice of giving preferential consideration to the sons and daughters of alumni.

To offset the rather obvious class bias wrapped up in such as policy, the top colleges also maintained or enhanced their financial aid to low-income students. But at the end of the day, very few of these elite colleges enroll all that many students from the bottom one-fifth of the income distribution.

Q: What built-in advantages allowed those elite colleges to expand their resources in a time of increasing competition?

A: This is an industry where history’s hand is very heavy, and the advantages of a great faculty combine with the advantages of fame, reputation and architecture to produce barriers to entry of awesome proportions. But this advantage bestowed by inertia was enhanced by the increasing inequality in incomes throughout the economy, having the ironic effect of enriching the very institutions that needed help the least.

I call this the inequality dividend. In a perfect illustration of the enigmatic Matthew effect (the tendency for the rich to get richer, so named by the sociologist Robert Merton for a New Testament parable), the rising incomes of the most affluent households in the country led to large jumps in donations to higher education. Because donors tended to give to their own alma maters, much of this new giving gravitated to the very institutions that were already well-off.

Q: How has growing inequality affected faculty members?

A: No resource is more important to a college’s teaching and research missions than the faculty. Thanks to annual surveys carried out by the American Association of University Professors, it is not hard to trace the pay of faculty by college. Among the 17 categories of colleges I followed over time, the most selective private colleges increased the pay for their faculty members by the most. Pay differences that were significant in 1970 became bigger over time.

The difference in average faculty compensation between the least selective public colleges and the most selective private ones was some 37 percent in 1972. By 2012, the inflation-corrected difference had reached 44 percent.

These disparities have taken on an ominous public-private dimension, due in part to lagging state appropriations for public higher education. A recent study compared average salaries at public and private research universities. In 1971, it showed, the average salary in the public universities was 5 percent less than the average in the private ones. By 2015, that gap had reached 24 percent. Given the importance of public research universities to the growth and well-being of the American economy, this trend is a troubling one.

Q: What does it mean for students?

A: If you combine these findings with those related to the larger question of resources, what you come up with is a picture of a well-financed, highly efficient set of colleges at one end and a large number of struggling colleges at the other. Combined with other information I present in the book, which shows that students enrolling in the most selective colleges, in comparison to those who enrolled in less selective colleges, spent more time in high school studying and with other research showing a general decline in study time among college students, these indications of a bifurcation in college quality are disquieting.

Q: What choices do colleges face now?

A: The richer the college, the more choices it has. The richest and most exclusive, which have the luxury of choosing among scores of talented applicants, have the power to increase or decrease the share of their students who come from modest backgrounds. If colleges, singly or as a whole, want to reduce the degree of economic stratification that exists across the spectrum of colleges, they must act accordingly.

There is no shortage of possible remedies. As economists Caroline Hoxby and Sarah Turner have demonstrated, there are hundreds of low-income, highly able high school seniors across the country, many of them outside metropolitan areas, who are there to be contacted and informed that colleges want them and that financial aid is available. To identify some of these students, colleges’ admissions offices could redirect a few of their visits each year from affluent suburbs to nontraditional recruitment areas. In evaluating applications, they could do more to neutralize the advantages of affluence, such as by giving less weight to experiences, like unpaid internships, that are more accessible to affluent applicants. And, in making financial aid offers, they could take steps to lessen or eliminate the debt burden on the neediest students.

Lastly, they could reduce the preference they give to legacies. That most of the selective colleges continue to favor legacies reveals that “excellence” must not be the sole institutional objective.

If any college wishes to take steps to increase its share of low-income students, it will require a willingness to sacrifice other objectives. It might mean scrimping on renovations, professors’ salaries or additions to the endowment, or it might mean turning in less impressive statistics to U.S. News.

It is unreasonable, however, to expect colleges to do much redistribution beyond what is in their own private best interest. This would require concerted action by selective colleges as a group, but this approach will inevitably raise antitrust concerns.

Q: Do you have hope that the trajectory of American higher education can change?

A: At the moment, all the trajectories seem locked in place. The incentives of colleges to engage in practices that enhance their financial strength and competitive position do not show signs of changing. Public policies designed to open opportunities to lower-income students, such as an enhancement of Pell Grants, do not appear politically likely. More grandly, policies that might slow the seemingly unstoppable increase in inequality do not appear likely. About the only policy proposal I have seen that would have the effect of reducing the inequality of colleges is the proposal, contained in the current House tax bill, that would tax large university endowments and pay to top employees over $1 million.

In a word, no.