Literature Review #1

Kristin Blagg is a senior research associate and has performed research  on K–12 and postsecondary education and has studies on student transportation and school choice, student loans, and the role of information in higher education.

This article examines the value of the return on investment on college and what possible solutions policymakers can implement to ease the process of paying for college. 

Quotes:

Problem:

"Even with a financial aid package in hand, students can make errors in estimating potential costs. Financial aid award letters can obscure the amount students will actually have to pay, 1 and students do not always make fiscally optimal choices when selecting among financial aid packages (Avery and Hoxby 2004). Students from high-income families are more protected from the potential risks of college costs. These students are often insulated from the need to take on student debt (Houle 2013) and are more likely to make economically rational decisions when weighing financial aid packages against the resources and opportunities available at a given school (Avery and Hoxby 2004)."  (Blagg 3).

"Even when they enroll in the same institution, degree level, and major, students from different demographic backgrounds may experience different earnings returns. Female students, on average, see lower returns than their male peers (Beblavy, Lehouelleur, and Maselli 2013; Saleh et al. 2017), and students who earn a degree at a later age also tend to earn less than similarly educated younger peers (Hout 2012; Jepsen and Montgomery 2012). Returns also vary by race; even after multiple controls for education, white and Hispanic male graduates tend to earn more than black or Asian male graduates (Weinberger 2002). The demographic differences in earnings returns can reflect a student’s preferences for work in different sectors or on different schedules, but they can also reflect differences in a student’s access to job opportunities (e.g., the strength of connections to employers or the discrimination of employers against members of certain demographic groups)" (Blagg 7). 

Solution: "Policymakers can help students by developing interventions to reduce uncertainty in higher education, focusing on five key decision points: (1) college application, (2) college selection, (3) program selection, (4) continued enrollment, and (5) employment. Many recent policy changes have acted to minimize risk, particularly for potential students selecting among different colleges. Investments in college counselors, information from net price calculators and the College Scorecard, denial of federal aid for poor-performing institutions, and pushes for a simplified financial aid process are designed to help mitigate the risk associated with a poor college application and selection" (Blagg 15). 

Value: This article allows me to detail how different groups often have different returns of investment with a college education and allows me to explore possible solutions to the problem.

Blagg, Kristin, et al. “Evaluating the Return on Investment in Higher Education: An Assessment of Individual- and State-Level Returns.” Urban Institute, Urban Institute, 1 Sept. 2018. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=eric&AN=ED592627&site=ehost-live.