The Price of Admission: Rethinking how Americans pay for College (review)

Thomas J. Kane, (1999). The Price of Admission: Rethinking how Americans pay for College. Washington, DC: The Brookings Institution Press. Paperback, $15.95, 130 pages.

Attending college has become a key predictor of a person's economic well-being in the United States (Pascarella & Terenzini, 1991). A core of literature has established the significant financial (if not also the intellectual, social, and democratic) benefits for both students and society of attending college (Gutman, 1987). "Undergraduate education appears to be generally more important than secondary education. . . furthermore, one appears to receive an additional earnings 'bonus' for completing the bachelor's degree over and above the incremental [financial] advantage associated with years of college completed," (Pascarella & Terenzini, 1991, p. 501). With college attendance emerging as a critical step in a person's economic well-being, what are we, as a nation, doing to insure that more people have access to this opportunity? Thomas Kane suggests, in The Price of Admission: Rethinking how Americans pay for College, that we may not be doing the right things. He presents a persuasive argument, one that resonates to many of my intuitive hunches about the relationship between financial aid and college attendance.

While much of the literature assessing the economic advantages of college attendance looks only at benefits, a secondary area of research has been to determine the "return on investment" of attending college by comparing the benefits of attending to the associated costs to the student. These studies (Kiker & Rine, 1987, for example) continue to find a positive net effect of college attendance on future income.

Given this "safe generalization" that college attendance improves one's earning power, the critical questions in higher education today focus on whether students choose to attend college or not, how they choose a particular institution, and why they persist or leave that institution. A common factor emerging in studies of each of these issues is, again, cost: perceptions of cost, opportunity costs, families' ability to navigate the financial aid system, families' awareness that financial aid exists, etc. Kane's analysis stresses how important it is that we understand this complex set of issues when we consider financial aid policy.

While the cost of a college education is not usually the sole barrier to attendance, it is a formidable one (Leslie & Brinkman, 1983; McPherson, 1991). McPherson and Shapiro (1991) note the decision to enroll in college is positively related to increases in aid and price cuts. ¹ Conversely, a perception that aid is not readily available and that college is expensive acts as a deterrent to attendance. Given a national interest in improving access to higher education, "anything that limits access, even indirectly, is cause for concern and attention" (Jones, 2000).

Both our elected officials and our institutions know cost is a barrier. In response, they direct billions of dollars through federal and state aid programs and tuition subsidies. These same groups also know that tuition is rising at a rate that is outpacing financial aid. In this context of rising costs and limited resources, it is appropriate to ask, is our strategy working? Does our financial aid system positively impact access for lower income students— those we most need to target? A simple question, but one that we have yet to answer satisfactorily.

McPherson and Shapiro (1991) have provided a first cut at an answer. Their analysis suggests that federal aid does positively impact access for lower income white students. Limitations in the data restricted their ability to analyze impact by race, or to further explore issues such as opportunity costs. Kane's book pursues these limitations, asserting that we can and have to understand their impact if we are going to have equitable access to higher education.

Kane reaffirms that "the most basic goal of federal and state financial aid policy should be to ensure that lack of money is not the primary obstacle preventing low-income youth from...