Parental Income and Application Decisions in Post-secondary Education

In 2018, the higher education institutions should no longer use entrance examinations that require extensive preparation and, instead, evaluate prospective students by their general upper secondary school (i.e. high school) matriculation examination grades. While the aim of the reform is to speed up the transition of students from secondary to post-secondary education, there are concerns that the reform increases inequalities between girls and boys and between students from different high schools. On the other hand, the current student admission processes may also generate inequalities between high school students from high- and low-income families. Not all students have resources to take preparation courses or cover the costs of spending gap years to prepare for the exam. Consequently, students from low-income families may either choose not to apply to higher education or end up choosing less selective programs. These application decisions may later affect career opportunities and earnings prospects. However, this aspect of student selections processes has gained less attention in the public debate. In this brief, I document differences in the application behaviors between newly graduated high school students from different family income groups. The findings show that students who have performed equally well on the Finnish language test in the national matriculation examination, but come from low-income families are less likely to apply to universities and choose less selective programs than their peers from high-income families.