Low SES students in a capped higher education system

A reader of this COVID-19 series of posts asked me about its implications for low socio-economic status (SES) students in higher education.

I doubt the COVID-19 recession will reduce demand for post-school education from potential low SES students. The same economic logic applies for everyone who might consider further study: education is more attractive than unemployment.  Local vocational education policies and opportunities may affect the regional higher education-vocational education divide, but interest in study should increase.

While low SES demand should hold or increase, I nevertheless think that low SES enrolments will probably decline without policy change. Increased total demand for university places in 2021 will intensify academic competition for entry if funding caps remain. And that, in turn, will disadvantage low SES applicants.

The chart below uses NSW Year 12 results from 2017 matched against the student’s home address, which is given a SES level based on the ABS Index of Education and Occupation. Current policy is that the lowest 25 per cent of areas are defined as low SES, and I have defined the top 25 per cent as high SES.

An important point to note is that in NSW high SES students with an ATAR outnumber low SES students two to one. This is because low SES young people have lower rates of finishing Year 12 and, if they do complete, are less likely to receive an ATAR.* Without some mass gap year for high SES students after Year 12, they must be ‘over-represented’ at university.

Even allowing for this population imbalance ATAR results are very skewed. High SES students outnumber low SES students in the 90-plus ATAR group by more than seven to one. Only at ATARs below 50 do low SES outnumber high SES Year 12s.

SES and ATAR share

Universities increase the selection rank of low SES students by various methods including allocating ‘bonus’ ATAR points. But the underlying population of low SES Year 12s with an ATAR is too small and their academic disadvantage is too large for these practices to fundamentally alter the SES distribution.

Although adjusting entry criteria cannot achieve enrolment parity across SES groups, it is not the only thing that can be done at the margins to provide additional opportunities. Growth in student places relative to the applicant pool means that ATARs required for admission are likely to go down, making more low SES students academically competitive for university entry.

We can use the NSW Year 12 data to see what impact this has by SES. The light blue bar in the chart below shows an elite higher education system in which only enough places are offered to let the top 10 per cent of the age cohort go to university. Its minimum ATAR is 90. With this system, 27 per cent of the high SES Year 12 students with an ATAR go to university, compared to only 7 per cent of low SES Year 12 students.

In a mass higher education system with 40 per cent of the age cohort going to university (roughly what we have now) a minimum ATAR of 60 means 80 per cent of the high SES group goes to university and, on the 2017 NSW Year 12 numbers, 43 per cent of the low SES group.

All groups increase participation rates as ATARs go down. At the margins the high SES groups benefit the most in ATARs dropping from 90 to 80, while the low SES group gains the largest margin in moving from an ATAR of 60 to 50.

declining ATAR

Although in practice there are many non-Year 12 and non-ATAR selection methods used for entry to university, reduced academic selectivity helps explain why low SES enrolments grew more quickly than other SES groups as enrolments expanded in the last decade.

The chart below reports on commencing low SES enrolments since 2001, converted to an index to make it easier to see the trend. When commencing student numbers fell early in the century, due to the then minister threatening and then later imposing penalities for so-called over-enrolments (enrolments in excess of a target number), low SES numbers fell more than from other SES groups. Correspondingly, as enrolments grew after funding caps were lifted low SES numbers expanded more quickly.

Because low SES university applicants are concentrated in the lower ATAR groups, academic selection means that they are affected more than other applicants by both expansions and contractions in student places relative to demand.

In 2021 we may not see the absolute number of commencing student places go down, as we did early this century. But I think universities will probably decrease their offer rates, in the expectation of more higher ATAR students accepting their offers and fewer deferring for a gap year. And that will mean fewer offers to low SES Year 12 students, whose school results are clustered in the lower ATAR ranges.

Increases in maximum university grants for 2021, or better yet a return to demand driven funding, would avoid this problem.

*Two-thirds of low SES Year 12 students and 85 per cent of high SES student  received an ATAR in 2017. Students may have chosen a non-ATAR academic track or not met an ATAR requirement in subjects successfully taken.  I have not investigated another issue, which is that areas are classified according to the Index of Education and Occupation of the 15-64 year old population. The most relevant 17-25 age group may disproportionately live in high SES areas.

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