Family income and participation in postsecondary education

Postsecondary education is no more the domain of students from well-to-do families than it was two decades ago, according to a new study.

The study confirmed that individuals from higher-income families are much more likely to attend university. However, this has been a long-standing tendency. In fact, the participation gap between students from the higher- and lower-income families attending university narrowed through the 1990s.

This in part reflects increases in the participation rates among students from the lower-income families. It also reflects declines in the rates of those from higher-income families.

The study assessed the relationship between postsecondary schooling and family income using data from the Survey of Consumer Finances and the General Social Survey.

Overall, postsecondary participation at college and university levels was at historic highs, and there was no strong evidence that drop-out rates have increased.

Participation rates at university among students from lower-income households increased slightly during the 1990s. There were no significant differences in participation rates in colleges or vocational schools across income classes.

The correlation between parental income and university participation did in fact become stronger, but only to about the mid-1990s, just after tuition fees first experienced substantial increases. The strength of the relationship has weakened since then. This reflects the fact that students, in an era of rising tuition fees, borrowed more once changes increasing the maximum loan limits were introduced to student loan programs. The average amount of student loans rose significantly during the 1990s.

The study found that the option to choose lower-cost community colleges and, in particular, to borrow more, were important factors influencing the relationship between family income and university education. College participation was not related in any significant way to family income.

Steady gains in university participation rates among youth from lower income families

The only group to make steady gains in university participation rates through the 1990s consisted of young people aged 18 to 24 from families with the lowest incomes.

By the late 1990s, young people from families with incomes of $25,000 or less were almost as likely to be attending university as those whose parents had $25,000 to $50,000 in income. In addition, their level of university participation was much closer to that of people whose parents had up to $100,000 than was the case earlier in the 1990s.

At the high end of the scale, about 40% of young people from families with incomes of $100,000 or more had a university degree or were enrolled in university. This rate has ebbed and flowed a bit, but for the most part it has not changed since the early to mid-1980s. It has been substantially and perennially higher than those for lower income groups.

The participation rate for young people from families with more than $75,000 to $100,000 was also notably higher than for lower income groups. It ranged from 20% to 30%.

However, the pattern of change has not varied greatly once family income exceeded $25,000. Participation rates trended up throughout the 1980s, then stopped growing and even declined during the 1990s.

The peak in participation rates seems to have occurred in 1991 or 1992. Only in the case of individuals from the lowest income families - $25,000 or less - has there been a steady progress in participation rates throughout the 1990s. Rates among this group started at less than 10% during the early 1980s and rose to 19% by 1997.

College participation not as closely tied to family income

In college, the patterns have been very different. Participation rates are much more similar across family income groupings, differing only by about one to three percentage points. Further, there has been steady growth in participation, starting at about 15% to 20% in the early 1980s, rising steadily to about 20% to 25%.

Although college participation was not as closely tied to family income as university participation, the lowest income group has again experienced the most consistent growth. In addition, for middle income groups, there has been steady if slight increases through the 1990s.

For men, participation in the postsecondary system as a whole - university and colleges together - has become more loosely tied to family background. This occurred in part because a larger proportion pursue studies in community colleges rather than universities.

Young women also displayed a tendency to choose community college over university, but only for two or three years when tuition fees first started rising. By the mid-1990s, college participation rates among women fell, and remained flat for the rest of the decade. However, their participation rates in university increased and returned to earlier rates of growth.

Link between university participation and parental income eases, but student borrowing soars

The correlation between parental income and university participation increased during the early 1990s and declined during the remainder of the decade. This is consistent with the fact that changes in the Canada Student Loan Program (CSLP) raising the maximum amount of a loan occurred only after tuition fees had already begun to rise.

Costs of higher education rose during the 1990s and, in part, these costs were shifted onto students. This was coincident with much higher levels of borrowing, and the decline in university participation rates of young people from middle-income families (those with incomes ranging from $25,000 to $100,000).

Nationally, from 1990/91 to 1999/2000, arts tuition fees almost doubled, on average, rising from $1,866 to $3,456. Students in Nova Scotia have consistently paid the highest fees, and faced the biggest increases.

The most notable change in the decisions of those attending post-secondary schools was with respect to borrowing. Data from the Canadian Millennium Scholarship Foundation show that between the academic years 1986/87 and 1988/89, the number of borrowers fell by about 15%, but during the 1990s this trend was reversed. The total number of borrowers rose from just over 300,000 at the beginning of the decade to more than 500,000 by the end.

Furthermore, during the 1990s, the average student loan increased considerably. In a single year, form 1992/93 to 1993/94, the average amount borrowed through the CSLP and provincial programs other than Quebec went from about $5,000 - where it had been since the early 1980s - to more than $7,500. It edged up a bit thereafter, ending the 1990s at $7,680.

This sharp jump early in the 1990s in part reflects CSLP changes that increased the limit on the maximum loan amount from $105 a week to $165 in 1994. Provinces that participated in the CSLP matched this increase according to a 60/40 ratio.

This shift in policy also led to an increase in the number of students receiving provincial student loans, since participating provinces previously only provided loans and grants to those whose need exceeded $105 a week. The policy change prompted many provinces to end their grant programs and convert them to loan-granting programs.

The maximum allowable loan went from $105 per week to $275 per week in many provinces within one year.

Definitions, data sources and methods: survey numbers, including related surveys, 3502 and 4501.

The research paper Family income and participation in postsecondary education (11F0019MIE2003210) is now available free of charge on Statistics Canada's website. From the home page, choose Studies. Under Browse periodical and series, choose Free and for sale, then, under Series, select Analytical studies.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Miles Corak (613-951-9047; miles.corak@statcan.gc.ca) or John Zhao (613-951-1508; john.zhao@statcan.gc.ca), Family and Labour Studies Division.