Q&A with Charles Clotfelter '69

The Z. Reynolds professor of public policy and professor of economics and law is the author of "Unequal Colleges in the Age of Disparity" (Harvard University Press).
February 7, 2018

How would you characterize the trajectory of elite private higher education?

In the fall of 1980, Duke’s chancellor, Ken Pye, wrote a report lamenting the prospects for these elite schools; Duke and its peers would have to scale back and “concentrate our resources on what we do best.” As smart and visionary as Pye was, he, along with just about everybody else, was completely wrong. From about 1980 on, it’s been a field day for the very top private institutions.

A field day in what sense?

The share of the nation’s income received by households in the top 20 percent has been going up, and the incomes of everybody else have stagnated. Those who have seen their wealth grow are able to pay the rising tuition of the most selective colleges. Affluent individuals are able to be more generous in their donations. The stock market has been going to town, and the money managers at these institutions have been seeing fantastic returns for their endowments. So even as you have social scientists, almost with a single voice, decrying a growing income inequality, elite higher education has benefited from that inequality.

And the elites have become ever-more elite?

Right. The number of seats at these selective places hasn’t increased with the number of potential applicants. So every seat is more desirable. And the response to that competition has been, for those with financial means, more test-prep courses; more internships that don’t pay anything but provide the fodder for great college essays; more involvement in sports that can make an applicant stand out, like tennis and golf. College admissions over this period has become less discriminatory, more meritocratic. But there’s a built-in advantage for those with money.

Are there other ways in which the elite have broken away from the non-elite?

Look at the grades that highschool students report having made. The grades gap has grown over time between those headed for the elite schools and the others. Also, it used to be that the non-elite colleges could feel confident about attracting the top students from their region. Now the elite schools draw from every region.

But haven’t we seen, especially in top-tier schools, student bodies that are more representative of national demographics?

The change in the racial and ethnic composition of these student bodies, over time, has been dramatic. Still, comparing the most selective private colleges and the less-selective public colleges, the income gap has been increasing.

Can you break that down?

The Harvards of the world, the Amhersts of the world—50 percent of their students come from families in the top 10 percent of income earners. For the University of South Carolina and its peers, it’s about 15 percent. So you ask, “What share of their students come from the bottom onefifth in earnings?” For the elite private colleges, it’s less than 5 percent. Why don’t the elite schools simply increase that percentage? Well, it’s not necessarily in their interest. If you said, “We’re going to go out and get as many low-income students as we can,” your budget people would say, “Hold on, because that’s going to cost us a whole lot of money.”

You seem to be sketching a higher-education ecosystem that’s distorted.

What we have is a giant matching process, where the brightest students—and at the top, they are as bright as you can believe—are being matched with the colleges that have the most resources, with the professors who are publishing the most, with the classrooms that have the most gadgets. The question is, does that very extreme matching make sense economically? Would it be better to take some of those resources and spread them around a little bit? We don’t have to be quite as unequal as we are.

When you look at the recent tax legislation, it’s clear that some lawmakers don’t see higher education as a pure social good, and now there’s a tax on schools with the highest per-student endowments.

Higher education is one of the strongest, most desirable exports that the United States has, and the rest of the world is trying to figure out why U.S. universities are as good as they are. But in my book, I quote a scholar who says that a college is like a combination of a church and a car dealership. It’s partly charitable and partly business. When you look at a place as big and as successful as this university, it looks pretty corporate.