Social Capital, Financial Knowledge, and Hispanic Student College Choices

Hispanic students are significantly over-represented in community colleges compared to White and Black students. This paper uses a powerful but underutilized statistical technique, the Oaxaca decomposition, to explore the impact of social capital, as manifested through college financial information, on Hispanic student enrollment in 4-year and 2-year programs. Background differences between the groups were found to have only a small effect on the gap in attending 4-year schools, while the effect of differential returns to these background characteristics was strong and significant. The analysis revealed that some variables of college financial information contribute significantly to the gap.