The Immense Benefit of Applying to One More College – A Natural Experiment

UnknownA college degree is more than a wall ornament – it represents immense financial benefits for graduates. These rewards have become even more apparent during the long financial downturn, which have seen widening wage and employment gaps between college graduates and those with only a high school degree. Studies also illustrate that getting students to attend more selective colleges puts them on a trajectory to perform better in the labor market after graduation.

In spite of the benefits of college, low-income and minority high school graduates are much less likely to attend any college – and selective colleges specifically – than are higher-income, white counterparts that have similar test scores and grades. Encouraging more disadvantaged youth to increase their application pool turns out to be a very inexpensive way to increase their college attendance rates and attendance of selective colleges in particular.

In a recent paper, Amanda Pallais studies the effect of a change to the ACT, a popular college entrance exam, that increased the number of free score reports sent to colleges from three to four starting in the fall of 1997. Score reports are one required component of a college application at most schools (during the study period once a student used up her maximum number of free score reports each extra report cost $6).

This change induced a massive increase in the number of students that increased the number of sent scores – in 1996 about 80 percent of students sent scores to exactly three schools, but by 2000 about 75 percent of students sent scores to exactly four schools (see below).

Figure 1

Pallais estimates the effect of the policy change on the number of score reports sent by students, selectivity of the school applied to, and selectivity of the schools attended by students as the dependent variables. As a comparison population, she looks at students who took the SAT, an analogous test that is more popular in other regions of the country.

The change to the ACT policy encouraged students to send score reports to more schools, and also encouraged them to send them to a wider array of schools. On average, students tended to use their extra application to send score to more selective schools (perhaps gauging that they had little to lose by trying to see whether they might get accepted to more of a perceived “long-shot” school). Although not all these sent score reports led to more applications, Pallais estimates that the policy induced low-income students to send in 0.14 more college applications in 1999 compared to the baseline years.

She also finds that the policy increased the selectivity of colleges low-income students ultimately attended, but not those of higher-income students. On average, the increase in selectivity is relatively modest – schools where the average ACT scores were about 0.32 points higher on average (relative to a sample mean of about 22 points). However, a simple back-of-the-envelope calculation applying previous estimates of earnings premiums for attending selective colleges reveals that this average increase in selectivity would be associated with an additional $10,000 of lifetime earnings in 1999 dollars.

It would be misleading to state that this policy is all benefit and no costs. Increasing the number of applications colleges review increases their administrative burden. Inducing students to apply to long-shot colleges also takes student time and effort. Finally, increasing the pool of disadvantaged students applying to selective colleges partially crowds out spots for other more-advantaged students, although the author points to studies suggesting that the number of slots colleges offer is not necessarily fixed (a broader pool of applicants can cause colleges to increase their capacity in the long-run). Moreover, increasing access to disadvantaged students with more competitive test scores is a step toward a more equitable admission policy.

What is most astonishing is how much future benefit students had been leaving on the table by not trying their luck applying to an additional college for the $6 fee. One explanation is that for very low-income students even $6 was too much of a financial pinch in the short-term, whatever the long-term benefits. More likely, students are operating with very little good information about how to apply for college. They use the number of free score reports as a kind of heuristic about how many schools they “should” be applying for. Hence, the policy change was much more important than the $6, because it had a strong signaling value to test-takers about the value of increasing the number of colleges applied to.

This study adds to a recent literature that highlights the importance of removing small obstacles in the paths of disadvantaged students. For youth in families with little knowledge or experience of college, even minor hiccups can result in major discouragement, increasing the likelihood that students with reasonably good preparation for college will veer off the track of college completion and sacrifice their chances for better financial futures.

About Brendan Saloner

I am a postdoctoral fellow at the University of Pennsylvania in the Robert Wood Johnson Health and Society Scholars Program. I completed a PhD in health policy at Harvard in 2012. My current research focuses on children's health, public programs, racial/ethnic disparities, and mental health. I am also interested in justice and health care.
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