IES Predoctoral Program Seminar: Dubravka Ritter

The University of Pennsylvania Predoctoral Training Program in Interdisciplinary Research Methods for Field-based Research in Education, sponsored by the Institute for Education Sciences (IES), welcomes Dubravka Ritter to our weekly seminar series.

The Racial Wealth Gap, Financial Aid, and College Access
Presented by Dubravka Ritter, Advisor and Research Fellow, Consumer Finance Institute, Federal Reserve Bank of Philadelphia 

This paper examines the role played by racial wealth inequality and the potential for disparate impact on minority students resulting from the financial aid system’s treatment of different types of wealth. In theory, financial aid should at least limit the impact of differences in wealth since wealth is incorporated into the formula determining financial need. However, important forms of wealth (retirement savings, home equity, intergenerational wealth) are excluded from consideration in the Expected Family Contribution (EFC) formula used to determine the student’s financial aid package. Since these forms of wealth are more likely to be held by white families, and in larger amounts, they provide white students with greater resources to pay for college compared with minority students. Using the Panel Study of Income Dynamics, the Survey of Consumer Finances, and the National Postsecondary Student Aid Study, we explore the role that wealth inequality may play in contributing to differences in college attendance, degree attainment, and subsequent labor market outcomes. We find that white families mechanically receive an implicit subsidy (in the form of a reduction in EFC) of about $12,000 relative to Black families, and $8,000 relative to Hispanic families, due to the federal financial formula’s treatment of wealth. We also find that Black and Hispanic students attend less selective colleges because of affordability and credit constraints, even conditional on family income, EFC, and other covariates. The EFC reduction also leads to lower rates of degree attainment and college success for minority students. In summary, we document and examine the inherent features of the financial aid system that represent institutional barriers that may stifle the educational advancement of minority (and especially Black) students, limit their education and labor market outcomes, and perpetuate the racial gap in economic standing.

 More information
The IES Predoctoral Program’s weekly seminar series connects program fellows and affiliates to scholars and practitioners who engage in educational research and the development of research methods.

 Seminars are likely of interest to doctoral students and faculty. If you are interested in attending virtually, please email Melanie Bahti for Zoom information.