Understanding Gaps in College Outcomes by First-Generation Status

Information frictions significantly shape students' academic trajectories, but their differential impact across student backgrounds remains understudied. Using a novel panel survey capturing incoming students' subjective expectations and anonymized transcript data from Arizona State University, we first show that parental education strongly predicts educational success, even after controlling for demographics and measurable college preparation. First-generation students enter college less informed and with more uncertain beliefs, facing substantial challenges stemming from limited understanding and uncertainty about the higher education setting. A Bayesian expected utility maximization model demonstrates that higher uncertainty alone can sustain persistent achievement gaps. Empirically, students update their beliefs and make academic decisions consistent with the model’s predictions. Finally, leveraging a natural experiment involving a targeted first-year experience program for academically marginal students, we demonstrate that cost-effective interventions can successfully reduce knowledge frictions, improve retention, and encourage beneficial early major switching.