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Student Loans and Socioeconomic Diversity

I was having a conversation earlier today with a fellow classmate about socioeconomic diversity. The central question was, “Is Williams’ student body really diverse?” Doesn’t seem like it, my friend suggested. He pointed out the three (!) Tesla cars on campus that he saw in a couple of the student parking lots earlier this morning. “Mom’s Volvos,” as professors like to say.

Was my friend right? One way I thought of answering this question is by looking at the amount of loans Williams issues to students. Claim: Since Williams ended its no loan policy a decade ago and likes to say it has a more socioeconomically diverse student body, then the amount of loans owed to it by students increased over time (reasonable?).

According to the college’s financial statements (which I irritatingly spent quite a bit of time munging, since it’s only available as PDFs and (gasp) scans of printed paper) and assuming I am looking at the correct figure, it did not. Consider this plot of student loan receivables (the total amount owed to the college by students who take out loans) of every year since 2004:

Rplot

It is decreasing! Does this mean that Williams students have been taking on fewer loans despite the repeal of the no loan policy a decade ago? If so, why would students in an increasingly socioeconomically diverse campus take on fewer loans when tuition increases far faster than the rate of inflation? If the student body is really becoming more socioeconomically diverse, then maybe the terms of the Williams loan are worse than outside loans so my classmates just borrow externally (I have a number of friends who do!). OR, maybe the number is declining because most of the student body don’t need to take on debt. Why would they, if they had the money? But that would imply the college, contrary to some official claims, is not more socioeconomically diverse. What do readers think?

Also, the student loan number comes with this footnote:

Under Statement of Financial Accounting Standards No. 107, Disclosure about Fair Value of Financial Instruments, the College is required to disclose fair value of student loans. Management believes that it is not practicable to determine the fair value of loans receivable because they are primarily federally sponsored student loans with U.S. government mandated interest rates and repayment terms subject to significant restrictions as to their transfer or disposition. College sponsored and donor provided loans are similarly restricted as to interest rate and disposition

I don’t know what this means (informed commentary please!). Perhaps the summers I spent in banking haven’t really prepared me to plow through the college’s financial statements just yet. As with the rest of the filings and my latest problem sets, I find this quite befuddling. On top of this there are also so many accounting changes and new categories year to year that are almost never properly explained/defined and are frequently shuffled around, so much so that a skeptic would think someone somewhere is obfuscating. Maybe only PWC (who audits these for the college) understands them. Any useful pointers/corrections/whatnot welcome, especially from those who are familiar with higher education financing!

Should we spend more time on the college’s financial statements?

Don’t forget to send tips/comments/whatever to concerned.ephs@gmail.com!

UPDATE: I also looked at Bowdoin’s financial statements. Unfortunately it’s only available from 2011, but the trend is the same. Student loan receivables are also decreasing. Perhaps I am missing something? Informed commentary always welcome! Education doesn’t just end in the classroom!

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EOP V

The Equality of Opportunity Project gathers amazing data on the incomes of college graduates and their families. The New York Times provides an overview and this summary (pdf) of Williams data. Day 5 of 5 on this topic.

I love this graphic:

scatter

At the same time, I don’t quite know what to do with it. Comments:

1) I encourage readers to poke around with the original. The big earners are mostly graduates of pharmacy schools. Is being a pharmacist really that lucrative? Is the median income of someone who graduates from the St. Louis College of Pharmacy really over $120,000 at age 32?

2) I have not figured out exactly how they handle complexities in the data. For example, how do they separate out the incomes from married couples filing jointly? How do they calculate the income for someone who is a stay-at-home mom or dad?

3) Another key attribute to control for is occupation. We don’t care much if Duke graduates earn more than Williams graduates if the cause is that more Ephs become teachers. But if Eph teachers and Eph investment bankers both earn less money than Duke teachers/bankers, we should figure out why.

Comments from our readers?

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EOP IV

The Equality of Opportunity Project gathers amazing data on the incomes of college graduates and their families. The New York Times provides an overview and this summary (pdf) of Williams data. Day 4 of 5 on this topic.

married

1) Are you surprised by the variation in marriage rates among NESCAC schools? I am! Why would 61% of Colby students be married but only 48% at Trinity? Should we be pleased or upset that the number at Williams is, at 57%, below average?

2) There is a great senior thesis to be written about changing patterns of marriage among Williams graduates. In the US population, marriages rates over the last 50 years have dropped dramatically. I think that this is true among the graduates of elite colleges, but can’t find the relevant data. Certainly, the percentage of heterosexual male Ephs who were unmarried at age 40 was very low, at least through graduating classes in the 80s. Single digits? My sense (contrary opinions welcome!) is that the marriage rate among female Eph graduates is lower, probably because of hypergamy.

3) Could a determined Williams president affect the marriage rate? I bet he could! Should he? I think so. Few things correlated better with life outcomes than marriage. (Of course, there are huge correlation/causation problems.)

4) Consider this recent comment, from “girls @ williams” on the annual fall in love post.

Contrary to what seems to be the general belief here, women at Williams do not actually exist as a selection pool from which to pick your future wife / future child-bearer. Of course, I’m sure that the group of men who spend their time obsessively posting distorted facts about the College at which they spent their peak years and now continue to pathetically long for are among the most attractive personages to have ever graduated the hallowed halls of Williams *sarcasm*.

That seems uncharitable! I was urging Williams male undergraduates to ask out female undergraduates. Does our commentator want more of that or less of it?

Perhaps more importantly, it seems that this Eph has not been given “the talk” by her family. EphBlog is here to help! Nothing, other than religious belief, is more associated with female happiness in the US than marriage. You will never be prettier than you are now. You will never have such a high quality pool of potential husbands to pick from. Choose one now. And invite EphBlog to the wedding!

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EOP III

The Equality of Opportunity Project gathers amazing data on the incomes of college graduates and their families. The New York Times provides an overview and this summary (pdf) of Williams data. Day 3 of 5 on this topic.

The central point about socio-economic diversity that I have been making for more than a decade is that there is no evidence that Williams is more economically diverse now than it was 30 years ago, and probably even 50 or 100 years ago. It is embarrassing how often the Williams administration (names like Payne, Schapiro, Hill, Falk and Dudley come to mind) claim that we are more economically diverse and how quickly naive reporters like David Leonhardt of The New York Times are to believe them. Recall the question that I have suggested for years:

In 1998, the 426th poorest family at Williams had a family income of $63,791. What is the family income of the 426th poorest family at Williams today? How has that number changed over the last two decades?

If the Record were a competent paper, or David Leonhardt were a competent reporter, than this is the question that would be asked. It/he isn’t, and so we have been left with just my rants. But now we have data!

bottm60

Summary: Williams did not become (meaningfully) more economically diverse between the classes of 2005 and 2013. Eyeballing the chart, it looks like about 19% of the students in the class of 2006 were from families in the bottom 60% of the income distribution. For the class of 2013, it was 20%. Surprised? You shouldn’t be. Recall my analysis from 2008:

We can see that there is no evidence that the socio-economic diversity of Williams has increased in the last decade and some circumstantial evidence that it has stayed the same.

The EOP proves that I was right. There was no good evidence that economic diversity had meaningfully increased at Williams between 1998 and 2008. The EOP data, which goes through the class of 2013, shows the same thing.

More importantly, we know that the same trend has continued up through the class of 2021, as we discussed on Monday. In fact, this sure seems similar to the data we know for the class of 1998.

Quibbles:

1) The above chart is drawn from this collection, which shows the trends for various cuts of the income distribution. There is no perfect single measure of income inequality. Other charts, like that for the percentage of students from the top 20%, might put Williams in a better light. But even these charts, to the extent that they show changes in the direction of more economic diversity, show incredibly small changes, perhaps even within the appropriate confidence intervals.

2) We are being fast and loose with many of the relevant details. The numbers we studied in 2008 were based on all the students at Williams over the years between 1998 and 2008. In other words, each number was provided for all 2,000 students on campus in a given academic year. The EOP data is, I think, based on birth year, which provides, at best, an imperfect mapping to graduation class.

3) We should try to get our hands on the underlying data for Williams and some other peer schools. Any volunteers? Any readers with connections to Chetty et al?

4) Any predictions as to whether or not US News will use this data in its next set of rankings? Should it?

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EOP II

The Equality of Opportunity Project gathers amazing data on the incomes of college graduates and their families. The New York Times provides an overview and this summary (pdf) of Williams data. Day 2 of 5 on this topic.

income2

Click on the image, or check out The Times directly, for more detail. But the basic message is simple: Williams is a rich families school in absolute terms, but less so than its NESCAC peers. Comments:

1) Again, this has little (nothing?) to do with the moral rectitude or policy preferences of the presidents and trustees of these schools. You really think that Joanne Berger-Sweeney, president of Trinity cares less about economic diversity than Adam Falk? Hah! Trinity is a (much?) poorer school than Williams so it can’t afford as much financial aid.

2) These differences are large and meaningful, even among schools with not-dissimilar endowments and student populations. For example, I would not have predicted that the median Middlebury family was 1/3 richer ($244k versus $186k). I also can’t decide if Wesleyan, one of the poorest schools in NESCAC, has such a lower median income and small percentage from the top 1% because of a serious (and expensive!) commitment to socio-economic diversity or because its reputation as a social justice warrior school makes it less appealing to the wealthy. Comments welcome!

3) One of the main mechanisms, I think, by which schools manage the distribution of median income is via the wait list. The rich schools, like Williams, claim that family income plays no part in who gets off the wait list. (I believe that claim, but sleaziness in the use of the term “low-income” makes me more suspicious than I want to be.) Less rich schools take family income into account, which I bet means that the vast majority of students who get off the wait list require no financial aid.

4) The other mechanism for controlling the income distribution is to squeeze out the upper middle class, especially folks making somewhere between $75,000 and $180,000. These folks aren’t “poor,” and so, according to NESCAC presidents/trustees, don’t really add to socio-economic diversity, but they can be very expensive. Indeed, creating a barbell distribution — lots of super-rich and very poor — is the natural strategy for any school which wants to have the resources needed for a first class education (for which you need families that require no aid) with a commitment to social justice (for which you need poor, and not just “low income,” families). However, I could be wrong about this. Perhaps the entire distributions are shifted?

Williams is, even among elite schools, somewhat extreme in pursuing this barbell approach. We have among the highest percentage of students from both the top 0.1% (2.8%) and from the bottom 20% (5.3%). And, as long as these students have very strong credentials — Academic Rating 1 or, maybe, 2 — I think that this is great thing.

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EOP I

The Equality of Opportunity Project gathers amazing data on the incomes of college graduates and their families. The New York Times provides an overview and this summary (pdf) of Williams data. Day 1 of 5 on this topic.

The entire discussion around socio-economic diversity at elite colleges is about to change, all because of this new data set, produced by Stanford Professor Raj Chetty and colleagues. But, if you have been reading EphBlog for the last 10+ years, little of this will be news to you. From The New York Times:

Students at elite colleges are even richer than experts realized, according to a new study based on millions of anonymous tax filings and tuition records.

At 38 colleges in America, including five in the Ivy League – Dartmouth, Princeton, Yale, Penn and Brown – more students came from the top 1 percent of the income scale than from the entire bottom 60 percent.

The Times should consult better experts. We have always pointed out that Williams, like all elite schools, is a bastion of privilege, that the student body is, and always has been, dominated by the very wealthy. Recall this discussion from two years ago. I get into trouble when I argue that this is largely inevitable — very smart people are both likely to be rich and blessed with smart children, because of both nature and nuture — and not necessarily a problem. See this ten (!) part series from three years ago for background.

The key data can be summarized in one table:

ratio

If you find this surprising, then you haven’t been paying attention. Or you have naively believed some of the drivel from Williams! Recall the news release about early decision for the class of 2021 from December:

[N]early 20 percent of Early Decision admits come from low-income families.

Before reading further, ask yourself, “What is a reasonable definition of the term ‘low-income’ when used in a press release?”

If you are an idiot — or merely one of the “experts” that The Times likes to interview — you probably take this at face value. Why would it be surprising that 20% of Williams students are from low income families? (Yes, I realize that this is just the early decision pool and that the Chetty data does not cover the class of 2021, but those factors don’t matter.) The answer, of course, is that Williams is being about as truthful as Trump’s press secretary when he estimates inauguration attendance. Mary Detloff kindly provided this clarification: at Williams, a “low-income” family is one with less than $85,000 in annual income.

I bet that not a single one of our readers picked a number that high as a fair definition of “low-income.” A much more reasonable definition of low income would be the bottom 20% of the distribution.

access

By that measure — which is probably what the vast majority of (naively trusting!) applicants and alumni had in mind when they read the College’s news release — only 5.3% of Williams students are low income, not “nearly 20%.”

I have always known (and shown!) that Williams is a place of privilege, a bastion of the economic elite. And that is OK! The elite have to send their children to college somewhere. My great annoyance has always been the College’s tendency to obfuscate this central reality, to pretend otherwise, to twist the meaning of phrases like “low income” in order to mislead. The EOP data makes those sorts of lies much less tenable. Hooray!

Any commentary on the specific values in that table? Richer colleges like Williams/Amherst/Swarthmore/Pomona have higher percentages from below the 60th percentile, not because the people who run those colleges are any more committed to socio-economic diversity than the people who run other schools, but because their endowments are so large that they can afford the extra-spending on financial aid. You really think that Will Dudley ’89 (new president of Washington and Lee) loves non-rich people less than Adam Falk? Hah! But some of the differences might have interesting explanations. Why would, for example, Swarthmore have less than half as many students from the 1% as Williams?

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