Topic: Miller College of Business

October 23, 2008

A 2006 U.S. Census report on poverty rates in Indiana may not properly reflect underlying poverty in certain communities because it counts thousands of young college students, says a new Ball State University study.
 
The analysis of several Hoosier communities with high poverty rates found that "the inclusion of college students misrepresents the underlying levels of poverty in the community" said Mike Hicks, director of Ball State's Bureau of Business Research. 
 
"It is difficult to estimate exactly the number of students in poverty," Hicks said. "But for students to avoid our definition of poverty, they would have to be living with a family above the poverty level or make a little more than $10,000 per year in income."
 
"We know that the average college student doesn't make much money while enrolled in classes," he said. "Most are living on incomes earned from summer jobs, grants and loans, or from money given to them by their parents." 
 
The influence of the poverty definition on some regions was exacerbated in 2006 by the federal census report that included residents living in '"group quarters." In past estimates, individuals living in prisons, military barracks, long-term care facilities and college residence halls were excluded from the poverty estimates. As of 2008 the Census apparently has decided to reverse this inclusion of group quarters data on poverty estimates.

Including college students in the poverty data makes it very difficult for communities to focus on the real factors contributing to poverty in their communities, Hicks said. 

"Indiana has a larger problem of low wage workers rather than actual poverty, and counting students as part of the truly impoverished doesn't help us understand the challenges of low wage earners," he said. 
 
Hicks found that West Lafayette and Lafayette, which have a combined population of about 148,000 residents — including 40,000 Purdue University students — have a 38.2 percent poverty rate. But when the 27 percent student poverty rate is removed from the equation, the rate drops to 11.2 percent.
 
With a total population of 120,000, Bloomington is the home for the main campus of Indiana University and its 39,000 students. According to the study, city's census poverty rate would actually drop from 29.6 percent to about 6-7 percent after eliminating students.
 
In other communities, census poverty rates also fall when students at residential universities are excluded:

  • Muncie's (including Ball State) drops from 23.1 percent to 7.8.
  • Terre Haute's (including Indiana State University) goes from 19.2 percent to 9.3 percent.
  • Marion County (including Butler and Indiana University Purdue University Indianapolis) falls from 16.9 to 12.9.
  • South Bend (including Indiana University-South Bend and Notre Dame) goes from 16.7 to 12.3 percent. 

Hicks pointed out that the Gary-East Chicago metro area had a population of 490,000 and several universities, including Indiana University-Northeast and Purdue University-Calumet, but the presence of college students did not have a major impact on poverty rates. The area's poverty rate fell from 24.4 to 22.9 percent when factoring in college students.
 
"We know the presence of a significant number of college students in a region could artificially drive up the poverty rate, but it's not exploding like the census reports lead some to believe," he said. "And, this hardly tells a meaningful story about poverty in our communities."
 
Hick's analysis is part of a three-part report, "Understanding Regional Poverty: What is Poverty." It may be found at www.bsu.edu/bbr.

By Marc Ransford, Senior Communications Strategist