Panel Paper: The Effects of College Sector and Peers on Degree Attainment

Friday, November 8, 2013 : 8:20 AM
Plaza I (Ritz Carlton)

*Names in bold indicate Presenter

Jonathan Smith, The College Board and Kevin Stange, University of Michigan
Previous research has mostly treated all two-year colleges as outside options for bachelor’s degree aspiring students, ignoring any variation in peer quality within the two-year college sector. This omission is largely due to an absence of standardized measures of student ability across campuses, since many two-year college students do not take the SAT or ACT.  Using a new dataset of all PSAT test-takers in 2004, we develop a new measure of student quality at nearly all two-year and four-year colleges in the United States.  The PSAT has strong coverage across the country even for those not attending college.  We find that nationally and within states, there is great variation in the average peer quality at two-year colleges. Furthermore, some two-year colleges actually attract higher-achieving students than some four-year colleges in the same state.  Some states have considerable overlap between the two- and four-year sectors, while the overlap in other states is minimal. We investigate the determinants of this variation in two-year college quality, including proximity, quality, and price of competing four-year colleges. Using data from the National Student Clearinghouse, we also find that students who attend high quality two-year colleges, even relatively low-ability students, have substantially better transfer rates and two- and four-year degree attainment rates than students at low-quality two-year colleges.  There even exist two-year colleges with better bachelor degree attainment rates than some four-year colleges.  The allocation of students between and within sectors, some of which is driven by state policy decisions, thus has important consequences for the educational attainment of the nation’s workforce.