The income gap on college graduation is shocking — but not as bad as I thought

When it comes to who goes to college, and who graduates, there's a big gulf between rich students and poorer ones. But it's not as shocking as a recent report made it seem.

That report, from the Pell Institute for Higher Education Opportunity, said 77 percent of students from the top income quartile had a bachelor's degree at age 24, compared with 9 percent from the bottom quintile. I was particularly stunned by one chart showing that 99 percent of students from the top income quartile who attend college eventually graduate, compared with just 21 percent of college-going students from the bottom quartile.

This chart from the Pell Institute just gobsmacked me. http://t.co/qewXmCWAmY pic.twitter.com/s18UgqlnMD

— Libby Nelson (@libbyanelson) February 4, 2015

That's a dramatic statistic. As it turns out, it's also wrong. The report's methodology was seriously flawed, according to Susan Dynarski, a professor of economics at the University of Michigan, and Matthew Chingos, the research director for the Brown Center on Education Policy at the Brookings Institution.

How the charts got it wrong

The income data the Pell Institute used, from the Current Population Survey, only links young adults to their parents' income if they're still considered part of their parents' household — living with their parents, or away from home only temporarily. They could be living at home and working, or in the military, but particularly among wealthier Americans, 24-year-olds who are part of their parents' household are probably in college.

In other words, a study of college attendance and graduation by income looked at college graduation rates for 24-year-olds who were still part of their parents' households. But the reason most of those 24-year-olds were part of their parents' households was that they were attending college.

"If we limit our analysis of the educational attainment of young adults to those who are linked to their parents' CPS records, we have committed the mortal sin of selection bias: selecting the sample on the variable of interest," Dynarski and Chingos write.

Looking only at young adults who were part of their parents' household could skew the data in other ways, depending on why students from different income quartiles leave home. The Pell Institute tried to correct for this selection bias, using adjustments based on a longitudinal survey conducted in the 1980s. But in some cases, those adjustments created a statistically impossible completion rate of 110 percent, according to Dynarski and Chingos — a sign that although the authors' intentions were good, the study's results were not.

What college attendance and graduation rates actually look like by income

The charts were so striking — and jumped out at me so much — because they illustrate something that's actually true: college, seen as the last, best ladder to the middle class, has become a potent replicator of socioeconomic privilege. Students from wealthier families are much more likely to go to college, and to graduate, than students from poorer ones.

But while the gap is wide, it's not 68 percentage points wide. Longitudinal studies of young adults that take family income into account are infrequent. The most recent one looked at the high school class of 2004, and found that by 2012, 54 percent of students from families in the top income quartile had a college degree, compared with 17 percent of students from families in the bottom quintile.

The Urban Institute's Sandy Baum also picked apart the Pell Institute data, using information from the Education Department, and found a similar graduation rate for the top quartile. The richer students' families were, the more likely they were to finish college: among students from families making $150,000 or more per year (the top 6 percent, by income), the graduation rate for college-going students was a very healthy 80 percent. And for all students, not just those who go to college, it's over 60 percent. That's much, much higher than the 25-percent completion rate for students from the lowest income quartile.

(Urban Institute)

Those are huge, concerning gaps. They only seem smaller because the Pell Institute's estimates were so wildly off.

WATCH: 'President Obama on income inequality'

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