The $6 Fix That's Helping Low-Income Kids Go to College

A decade and a half ago, the ACT started giving test-takers four free score reports instead of three--a small change that's increased the number of poor students at selective schools.

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Fewer than 30 percent of students from low-income families enroll in college. There are plenty of theories about what this number is so low, like financial concerns, lack of resources, and misinformation about the college admissions process.

Though this problem is complex, a new study shows that solutions can be relatively simple: One small, inexpensive change in the college application process made enrolling in college--especially a selective college--more attainable for low-income students.

Back in 1997, the ACT--now the most popular college-entrance exam in the United States-- decided to give test-takers four free score reports instead of three. This change has had two major effects, according a National Bureau of Economic Research working paper by Amanda Pallais: It increased the number of schools both high- and low-income students applied to; it also increased the number of low-income students who attended selective colleges.

Pallais examined confidential ACT micro data and data from the American Freshman Survey to determine the impact of the ACT’s policy change on college applications and enrollment. She found that although an extra score report only costs $6, students were strongly influenced by the number of free test scores offered by the ACT. When the ACT provided three free test scores, 82 percent of test takers only sent three test scores and 3 percent paid the extra fee to send four.  When the ACT added a fourth free test score, 74 percent of test takers sent four test scores to colleges. The range of schools students applied to widened: On average, most students used the extra free report to apply to a more selective school, but others used it to apply to a less selective school with higher admissions rates.

Pallais argues this change increased the probability that a low-income student was admitted to any college, but in particular it increased the number of students who enrolled in a selective college. Pallais finds that, after the policy change, the average low-income ACT-taker attended a college that was about a quarter of an ACT point more selective than low-income ACT-takers before the policy change.

Pallais found this change had a long-lasting impact on the students: The free score report policy increased the expected earnings of low-income students. Although Pallais did not study the earnings of the low-income students, back-of-the-envelope calculations suggested that sending in a fourth application increased a student’s future earnings by $10,000.

As for why the new policy encouraged students to apply to more schools, Pallais suggests that students “may use simple heuristics in making application decisions.” In other words, students may interpret the number of free test scores as a recommendation for the number of applications to send. A lesson from this study, then, could be that providing students with better information about the college admissions process helps low-income students attend more-selective colleges.