Academic journal article The Journal of Consumer Affairs

Financing of College Education by Minority and White Families

Academic journal article The Journal of Consumer Affairs

Financing of College Education by Minority and White Families

Article excerpt

"Higher education can be seen as investment as well as a simple consumer good" (Olson 1982, 2). Financing a college education requires strong consumer skills such as ability to calculate costs, knowledge of necessary budget for the coming years, and ability to obtain information about specific programs. Unique characteristics of the purchase of higher education are that the consumer often makes the decision without the knowledge of price (Willett 1976, quoted in Olson 1982) and that most people spend a substantial fraction of their lives paying for somebody's college education--whether their own, their children's, or (as taxpayers) the public at large (McPherson and Skinner 1986). There are many patterns of decision-making besides student as decisionmaker and family as resource provider (Olson 1982).

Increases in tuition costs have outpaced inflation for ten years (Evangelauf 1990). Because families have borne the brunt of these increases, the wide income and wealth disparities between white families and black and Hispanic families have placed an undue burden on many of these minority families. Education has boosted the wealth of blacks but their enrollment in college has stagnated (Updegrave 1989).

"Perhaps the most pervasive problem of the American education system remains the insufficient educational preparation of minority students, especially those who are economically deprived" (Black 1989, 3). Some minority youth have chosen not to enroll in higher education at all; others have chosen lower quality institutions. A high percentage of federal student aid has been used to support students at proprietary schools (Lee 1985). Students attending these schools were more likely to receive financial aid than were students at colleges (Korb et al. 1988), but these same schools have accounted for most of the defaults in student loans (U.S. General Accounting Office 1988) because many of those graduating have not been able to secure jobs. While highly selective institutions have been enrolling a larger proportion of high income students or have sought out minority "superstars," a higher proportion of low income or minority students have been attending community colleges. Black, Hispanic, and Native American students have been less likely than white or Asian students to transfer in order to complete a full college degree (Rotberg 1990).


The purpose of this research was, first, to describe the family and financial characteristics of college students on the basis of minority/white status and then to examine factors affecting parental financial support. The dependent variable was the dollar amount of financial support provided by parents. The independent variables were race, parents' net worth, parents' income, control of school, type of school, students' residence during the school year, parents' saving behavior, whether the family was single-parent or two-parent, age of student, whether the student was married or single, whether the student received $500 or more in financial aid, and whether students contributed $500 or more to their own expenses. (See Appendix for operational definitions.) Parents' contribution was expected to be positively related to parents' net worth and income and negatively related to age of student.


Demographics by Racial Groups

This section deals primarily with the relative growth of minority groups, their financial status, and the college enrollment statistics as reported in government documents. The Census Bureau has reported that the Hispanic population has grown five times faster than the rest of the United States and was also much more likely to live in poverty, to be employed in low wage occupations, and to lag behind educationally (U.S. Department of Commerce 1990). They were more likely than non-Hispanics to be made up of families, but those families were less likely to own their homes or have telephones. Using 1988 income, nearly 24 percent of Hispanic families were below the poverty line. …

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