UW-Madison’s Average Family Income is $90,000?

April 30, 2011 | Blog

Based on the tweets from today’s student conversation with Chancellor Martin, there’s a big myth running around campus:

No, the average family income of UW-Madison students isn’t $90,000.

That number came from reports like these that were discontinued back in 2008. Why were they discontinued? Because the data they are based on is a train wreck. The information comes from students’ self-reporting of their parents’ income when they were in high school (reporting is done on the ACT questionnaire) and according to UW-Madison’s office of academic planning and analysis 30% of UW-Madison students left the question blank (and that percent has been rising over time).

Is it a high estimate? A low one? Well, what we know is that a study done by two La Follette professors using Census blocks to estimate income (better than student self-report most likely) finds that family income at UW-Madison for Wisconsin residents isn’t very out-of-whack with Wisconsin family incomes as a whole. For example, families of Wisconsin applicants to Madison have incomes that are 1.2 to 1.3% higher than the state average.

Why don’t we have a really accurate measure of family income? Because UW-Madison doesn’t ask students to report their family income on their application (for obvious reasons) nor does it require them to complete a financial aid application (otherwise known as a FAFSA). So we only know family income–according to parents–for those who apply for aid. And less than 50% of UW-Madison students apply. That doesn’t mean less than 50% are needy; many needy kids don’t apply every year because the application is insanely onerous and difficult to complete correctly. In fact, upper-income folks are more likely to complete it, and to do it correctly, because they’re hoping to get a loan.

If we really want to promote affordability at UW-Madison we should make FAFSA completion an “opt out” rather than “opt in.” This is the kind of nudge behavioral economists love, since it makes the default option less painful (people tend to resort to inaction over action).

Why aren’t we doing it now? This did, after all, come up during debates over the Madison Initiative for Undergraduates and I made the proposal directly to Chancellor Martin over lunch in spring 2009.

I can think of a few possible reasons, see which one you think fits:

(1) We are worried about privacy. But remember, you can opt out.

(2) We are worried about deterring students who don’t want to complete the form. But remember, we’d only require it after you applied and were accepted, and were able to enroll. Even then, you could opt out.

(3) We are worried about undocumented students. But remember, you can opt out.

(4) We are worried about the increased paperwork and staff time. But think about all of the financial aid $ our students would get at no cost to us (e.g. federal $)

(5) We are worried about our institutional aid costs. The more you identify as needy, the more you have to “hold harmless.”

I’m willing to bet that requiring all entrants to complete the FAFSA or opt out would increase the percent receiving Pell by a fair bit, and increase retention rates by getting more students the financial aid they deserve. And once we have more accurate family income information for more than 90% of our population, we’ll likely find out that right now our average Wisconsin family income is much lower than $90,000. Under NBP, I’m willing to bet that will change drastically because of (a) an increased perception of elitism, (b) disjuncture from the System, (c) sticker shock, and (d) insufficient discounting over time.

But of course, who am I to make such judgments? We are told, after all, we have nothing to worry about.

3 Comments

  1. Reply

    Jason Pickart

    June 4, 2011

    "many needy kids don't apply every year because the application is insanely onerous and difficult to complete correctly"

    I hear this a lot and it's something that confuses me. Is the application a bit messy? Could it be improved? Most definitely yes. But it's really not that bad to fill out. You get a few tidbits of tax information from your parents (or really parent, since you only need to pick one) and fill out some information about yourself that you should know (like your earnings) and then you hit submit. You don't even have to mail it in since you can electronically sign it.

    You could say I'm suffering from a lack of perspective, but I'm someone that is definitely "needy", neither of my parents have a college degree, and I grew up on a farm, so it's not like I'm from an upper class household with tons of experience in the matter.

    With that in mind, I don't think the solution is to make FAFSA a requirement that can be opted out of. That would require more bureaucracy and probably other problems. What do you do if someone doesn't let you know they are going to opt out? Put a hold on their account so they can't take classes until they resolve it? It would just be one more mess for the already inadequate advising system at Madison. And if you don't provide a stiff enough penalty, people will just ignore the 'requirement' and you'll be back at square one.

    I think providing more education in the form of e-mails, maybe even hard letters on applying for FAFSA would help. Telling adivsors to mention it if they can, or check to make sure a student they are helping has applied for FAFSA, would probably also be beneficial. This would give the few people who are in the dark about the matter the knowledge they need to get the ball rolling. At the end of the day the ultimate responsibility lies with the student however. If someone can't spare a few hours to fill out an application that will give them thousands of dollars (some of which will be free in the form of grants) then, to be blunt, that's their own fault.

  2. Reply

    Dr. Sara Goldrick-Rab

    June 6, 2011

    Jason,

    Thanks for writing.

    First, my contentions are supported by solid, empirical work, not anecdotal perceptions. In particular, there is rigorous experimental evidence that simplifying the application process increases college attendance among low-income families. http://ies.ed.gov/ncee/wwc/pdf/quickreviews/fafsa_121410.pdf

    You should also review the plethora of evidence compiled by Rethinking Student Aid.
    http://www.gao.gov/new.items/d1029.pdf

    Second, there is solid evidence that "opting out" is far more effective policy than "opting in" and no, the bureaucratic challenges aren't excessive--especially when compared with the enormously ineffective efforts already undertaken to get people to opt-in.

    http://www.amazon.com/Nudge-Improving-Decisions-Health-Happiness/dp/0300122233

    Finally, your last paragraph is a classic "blame the victim" framework. Essentially, you are making an argument that the failure to possess requisite "college knowledge" is attributable to individuals rather than to structure. In fact, this designates a "deserving" and "undeserving" poor. You're an historian, right? Please read Michael Katz. We've moved from a warn on poverty to a war on welfare, and now, to a war on higher education.

    http://www.amazon.com/Undeserving-Poor-War-Poverty-Welfare/dp/067972561X

  3. Reply

    Jason Pickart

    June 6, 2011

    Thanks for the in depth response, and the book recommendations! I'll add to my ever growing list of things to read. And yes, I am a history major=)

    If the bureaucracy involved is actually less, then I'd have to agree. It just seems counter-intuitive, hence my original statements, but of course intuition isn't the most reliable of things.

    I didn't really convey my argument or views very well in my last paragraph. What I'm really saying is that the "college knowledge" is something that should be presented to individuals better, but that the ultimate choice should lie with the individuals themselves. This is why I mentioned sending out e-mails, letters, or encouraging advisors to talk about financial aid with students. All of those things increase knowledge, or at least present the opportunity to gain that knowledge. If the individual has the knowledge of what to do and fails to use it then the blame would ultimately rest on their shoulders, just as an individual in your proposed system would have to take the blame if they chose to "opt out" out of poor decision making.


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