Imagine you’re buying a car and the salesman offers you a choice: you can buy a brand new Lamborghini or Ferrari for a few thousand dollars, or you can pay a lot more and get a non-descript compact car with a history of product recalls. Not much of a choice, right.  Yet when it comes to choosing a college – one of the most important life and financial decision a person can make – the vast majority of High-Achieving, Low-Income Students (HALIS) are choosing the equivalent of the old banger.

That’s the analogy that Stanford Prof. Caroline Hoxby, the nation’s leading authority on HALIS, used in her keynote address to this year’s 2014 Council for Independent College Institute for Chief Academic Officers and Chief Financial Officers in Portland, Oregon to explain “under-matching” one of the core problems in today’s U.S. higher education system. Her work with Prof. Christopher Avery of Harvard, has shown that the large majority (63%) of the most talented low-income students are applying to just one, non-selective college and only 1 in 10 apply to the most selective colleges; in contrast, nearly two-thirds of the brightest high income students are adopting the recommended college application strategy: applying to a few stretch schools, some target institutions that fit their academic profile, and a safety.   

undermatching students in higher education

Who are HALIS?

The population of High Achieving, Low Income Students is far greater than previously understood.

They define HALIS as students who scored in the top 10% on the SAT or ACT and who come from the bottom quarter of the income distribution, i.e. families making under $41,472.  While these standardized tests have been heavily criticized as being unfair to lower income students and minorities, they are still, according to Hoxby: “the best predictor of college success.”  Their analysis of 8 million test takers in 2008 revealed that the population of HALIS was far greater than previously understood:  they discovered another 35,000 students who fell in this category, beyond the 4,000 or so low-income students who were applying to top colleges.

Why under-matching is a major problem

“Under-matching” is such a problem because U.S. undergraduate education is the rare good or service where the true price goes down as quality goes up.  How can this be the case?  Because the top-ranked private colleges also tend to have the largest endowments which they use to deeply discount the costs of attending for talented, low-income students.  Harvard, for example, is free for students from families with incomes below $60,000; 73 of the most selective colleges have similar policies of meeting the full financial need of all students they admit.  

"HALIS who attend top-ranked colleges are far more likely to graduate than their peers."

And this decision has huge life consequences.  HALIS who attend top-ranked colleges are far more likely to graduate than their peers who go to less selective institutions and after graduation they earn $360,000-$550,000 more on average during the course of their careers.

Great students miss out on great education

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Why are so many HALIS missing out on such a great deal?  Hoxby and Avery rule out a number of explanations.   It is not the case that these students are denied admission or do poorly when they get to top colleges; nor is it true that these top colleges don’t actively want and recruit these students; and while HALIS may feel uncomfortable in some cases because of cultural and lifestyle differences they experience relative to much wealthier fellow students, this doesn’t appear to be a major factor in dissuading them from applying.

Instead, the problem appears to be lack of good information: in general, they are poor gauges of college quality and aren’t aware of the differences between list prices, and what they would actually have to pay.  “Students don’t understand the difference between colleges and universities,” said Hoxby.  “They  don’t know what 'flagship' means.  Nor are they clear on the differences between for-profit and non-profit privates, or privates vs. publics.”

Creating college opportunity

Liz Fisher, a star performer in American Honors’ (AH) initial graduating class in Spokane, was a classic case of such a first generation college student.  Liz had a near perfect SAT, but was planning to attend her local public university because that was the only place where people she knew went to college.  But when she discovered American Honors, she realized she could follow a bigger dream.  Working closely with her advisor, Liz applied to and was accepted at a number of top colleges, and is now attending Stanford on a full scholarship.  

"Providing HALIS with low-cost, customized information packets could help them make more informed college choices."

In addition to shedding light on an important national issue, what truly sets Hoxby’s work apart is her efforts to come up with an innovative solution to this problem.  Working with the College Board and other partners she launched the Expanding College Opportunities Project, which sought to demonstrate that providing HALIS with low-cost, customized information packets could help them make more informed college choices.  They mailed special packets to a randomly selected group of 40,000 HALIS; the packets included a computer-generated comparison chart comparing completion rates and net prices for a range of colleges tailored to each high school, along with up to 8 fee waivers that would allow students to apply to top colleges for free.

They were able to increase the number of students applying to selective institutions by 56% and their chances of being admitted by 78%.

The results were impressive.  At a cost of just $6/student, they were able to increase the number of students applying to selective institutions by 56% and their chances of being admitted by 78%.  Students receiving the packets were 46% more likely to enroll in a top college, and perhaps surprisingly, those who attended the most selective institutions earned better grades and were 28% more likely to have persisted through Fall of junior year than the control group.

Based on these promising findings, she is now building a data-driven online tool that will allow all high school students to make better college choices.  This will generate a highly individualized profile for each student to identify best fit colleges and their net prices.  It will also show how students like them have performed when they go to those colleges, and the types of careers and graduate programs they’ve gone on to.  The tool is now under construction, and will likely be released in another year or two after it has been thoroughly tested.

Authored by David Finegold

Dr. David Finegold is a leading expert on skill development systems and their application to economic performance in the global marketplace. He writes about how honors programs can help close the achievement gap.