The problem of interest

Jan 222007
Authors: Daniel GibsonReinemer

College students ought to be happy the House of Representatives recently passed a bill that would reduce the interest rate on federally subsidized student loans.

I appreciate the action taken by Congress to make it a bit easier for recent graduates to pay off their loans, but I don’t expect the action to have any impact on increasing college attendance, particularly among low-income students.

To make college more accessible for students, we need to change more than interest rates on loans. Even reductions in the overall cost of college education may not have a substantial impact on those students who have the greatest need for financial aid.

The sad truth is low-income students are, on average, less prepared for college than their peers from wealthier homes. Students need to possess a certain threshold of academic and cultural skills for them to even decide to attend college, let alone thrive once enrolled.

An ugly fact in higher education is the manner in which children are raised has a profound impact on their ability to succeed, regardless of intellectual ability.

Income level, of course, does not directly cause a parent to raise a child in a given manner. Generally speaking, though, students from higher income households tend to enjoy better primary and secondary schools, receive better healthcare, have parents who emphasize the value of education, and learn the importance of long-term investment in education.

In their book, “Equity and Excellence in American Higher Education,” William Bowen, Martin Kurzweil and Eugene Tobin examined the impact of income and other factors on student decisions.

In a well-designed analysis, they found bright students from poor families were less likely to take the SAT than their equally bright but wealthier peers.

The authors focused their analysis on only those students who had scored in the top 10 percent in previous standardized tests in order to control for the intellectual ability of students.

Among this group of talented minds, 68 percent of those who grew up in families in the poorest quarter of households took the SAT. Among students from the wealthiest quarter of households, 88 percent took the SAT.

If capable students are unwilling to take the SAT, larger and more deep-seated issues are responsible for inequality in college attendance.

In a 2003 paper for the National Bureau of Economic Research, James Heckman and Pedro Carneiro found less than 10 percent of students were prevented from attending college due to financial limitations. Bowen, Kurzweil and Tobin noted another similar study agreed with this estimate.

So why do bright students from low-income families avoid taking college entrance exams? And why do students decide not to attend college even when they have the financial means to do so?

Those answers lie beyond the reach of House resolutions and adjustments to the way college education is priced.

Heckman and Carneiro put a high premium on developing success skills early in life and downplay the importance of trying to make up for deficiencies in that area with financial aid later in life. In their report, they found “only a limited role for tuition policy or family income supplements in eliminating schooling and college attendance gaps.”

In other words, attending and succeeding in college is not a function of how much money students have at their disposal when they decide whether or not to attend, but of how they have been prepared in the seventeen or so years before they decide.

Of course, not all researchers entirely agree with what sounds like predestination in the preschool years. Bowen, Kurzweil and Tobin see greater opportunity for both positive and negative changes later in life.

Ultimately, I believe in the capability of an individual with determination and ability to triumph over disadvantages. I have faith in the power of hope for a better life to change things for any person at any age.

But I temper my faith with the knowledge that socioeconomic status – as a crude proxy for a number of important cultural factors – plays a large role in shaping who we are before we are old enough to know it has happened.

So enjoy the reduction on student loan interest rates – just don’t expect it to change the level of interest in college.

Daniel Gibson-Reinemer is a fishery and wildlife biology masters student. His column appears every Tuesday in the Collegian. Replies and feedback can be sent to

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