Co-authors: Esteban Aucejo, Jacob French, Paola Ugalde A.
Abstract: This paper attempts to understand socioeconomic differences in the trajectory of students once they are in college. For this purpose, we combine evidence from a novel panel survey of incoming students’ subjective expectations and anonymized transcript data at Arizona State University. We first show that parental education remains a strong predictor of post-enrollment educational success, even after flexibly conditioning on demographic factors and measurable dimensions of college preparation. We find that students’ early university experiences play an important role in generating this educational attainment gap. First-generation students (i.e., those without a college-educated parent) are much more likely to drop out and less likely to switch majors after receiving poor grades in their introductory courses, as compared to their continuing-generation peers with identical observable academic and demographic characteristics. Survey evidence demonstrates systematic differences by parental education in students’ knowledge about both their own ability and the greater institutional setting. First-generation students enter college with much more biased subjective expectations. In addition, we find evidence of the differential reactions to academic setbacks (by first-generation status) only among ex-ante less informed students and those students who have smaller social networks – this suggests that information frictions are likely instrumental in explaining students’ differential reaction to poor initial grades. Finally, we show that it is possible to overcome such information frictions. Specifically, leveraging a natural experiment that nudged some students to enroll in a curated first-year experience targeted at easing the transition to college for academically marginal students, we find evidence that relatively cheap tweaks to the first-year experience can improve retention and encourage early major switching, thus narrowing post-enrollment achievement gaps.