Will Limited Access to College Restrain Future Economic Growth?

by Brian K. Fitzgerald

The creation of a highly educated workforce has fueled American economic growth and social mobility over the past half century. The GI Bill, which enabled the "Greatest Generation" to attend college, contributed to post-War prosperity. The most highly educated generation in our nation's history, the Baby Boom generation, powered our economy to unprecedented heights. However, as the Baby Boom generation nears retirement, powerful fiscal and demographic forces already in place raise serious doubts as to whether the next generation--the largest and most diverse in the nation's history--will have the same opportunities and whether we will produce enough college-educated workers, so essential to our knowledge-based economy, to replace retiring workers.

Over thirty years ago, recognizing the linkage between an educated workforce and economic growth, Presidents Johnson and Nixon urged Congress to create federal and state student aid programs to ensure that qualified students would not be denied a college degree because they were poor. As a result, student aid made college possible for tens of millions of Americans. The nation has reaped the returns on this investment many times over.

Nevertheless, even as the nation made an historic commitment to "leave no child behind" through comprehensive elementary and secondary school reform, large numbers of low-and moderate-income high school graduates already academically prepared to attend four-year colleges cannot do so because of high financial barriers resulting from rising college cost and inadequate student aid.

Today, grant aid will cover only a third of college cost for low-income students (with family income of less than $25,000), leaving a gap of over $8,000 to be made up by work and student borrowing each year. Although that gap is cut in half after as a result of work-study and loans, total aid fails to cover nearly $4,000 of college cost each year. Similar barriers exist for moderate-income students (with incomes below $50,000).

These barriers have a powerful effect on college-qualified low, end moderate-income high school students. Eight-in-ten low-income parents and seven-in-ten low-income high school seniors report being very concerned that they will not be able to finance college; many fail even to apply to four-year colleges as a result. Ultimately, almost half of these college-qualified high school graduates fail to enroll at four-year colleges and nearly a quarter fail to attend college at all. Financial barriers also limit the ability of these students to stay in college through graduation: less than one quarter will earn a bachelor's degree. This pattern is similar for moderate-income students as well.

Last year alone, over 400,000 of these college-qualified students did not enroll in four-year colleges and 170,000 did not attend college due to these barriers. Over this decade, as the largest and most racially and ethnically diverse generation in our history reaches college-age, these barriers will keep 4.4 million college-qualified students out of four-year colleges and 2 million out of college entirely.

These losses of college-ready students suggest that the long-term stakes are very high. Failure to produce replacement workers for those retiring will create a significant drag on future economic growth. Projections by the Employment Policy Foundation indicate that labor demand for college-educated workers will create a shortage of six million college-educated workers early in the next decade. Raising the college attendance rate of low-income students to a level comparable to other students could generate $280 billion in GDP and $80 billion in new tax revenue. With the financial returns to workers with a college degree at an all-time high, failure to stem these losses will consign increasing numbers of Americans to low-paying jobs and bleak futures.

Simply by providing those students who are already qualified the opportunity to attend college though adequate student aid will go a long way to eliminating this shortage of educated workers, and expand economic growth and social mobility. The price for failing to do so will be very high indeed.

Brian K. Fitzgerald is the Director of the Advisory Committee on Student Financial Assistance in Washington D.C. He can be reached by phone at 202.219.2099 or for more information log on to www.ed.gov/ACSFA/