CHE:Knowing the cost of college

[Hibush]

CHE published an informative article yesterday.

Admission offers come nearly universally with financial aid, so a parent does not actually know the cost of different colleges.

My approach, which admittedly seems rare, is to have prospects apply to schools that seem a good academic fit, then evaluate the financial offers to see which, if any, come in at an acceptable price.

To do anything like that, you have to know what the price is. The CHE article covers a GAO report in which they looked at offers from 176 colleges to see whether they are providing an interpretable price. The answer is unfortunately "not usually."

They focused on offers to Pell-eligible applicants, where price is of great importance. Providing a low-ball estimate that fails to include something even moderately costly can hive dire consequences for the student and family.

The Education Department had a checklist of ten things they want to see in a financial aid offer. Zero colleges did all ten things. Only a third included five things.

That is terrible performance. This dishonesty must lead to more dissatisfaction with the cost of college than the actual cost itself.

GAO suggested having Congress pass a law to standardize offers, along the lines of standardized IPEDS reporting. The report was requested by Republican Congresswoman Foxx, so there may be some bipartisan support, albeit with different motivations.

The report doesn't mention any schools. What kinds of deceit is common in the various school and student demographics? I could imagine schools desperate for any revenue being evasive. But even they wouldn't get a lot of money out of misleading the Pell-eligible who would have to drop out.

[Ruralguy]

I am not sure what my school actually tells applicants, but I highly doubt its 100% honest. Our discount rate is huge and growing. Our tuition and fees are at the high end of the distribution. We like to sell ourselves as a quality product that deserves the high price tag as much as a fine wine or a BMW, but, hey, your kid is so great, and we really mean it, that we just have to give you a discount and do you the great favor of letting your kid have access to this wonderful high end product. 

[Hibush]

I am not sure what my school actually tells applicants, but I highly doubt its 100% honest. Our discount rate is huge and growing. Our tuition and fees are at the high end of the distribution. We like to sell ourselves as a quality product that deserves the high price tag as much as a fine wine or a BMW, but, hey, your kid is so great, and we really mean it, that we just have to give you a discount and do you the great favor of letting your kid have access to this wonderful high end product.

The pitch is probably effective with that demographic. Making parents feel accomplished in earning access to exclusivity is a sound business model. There are some obvious downsides in terms of mission integrity and so forth. Figuring out the role of education and learning in providing what those parents are paying for is also a challenge. But it can definitely work for a relatively exclusive set of schools.

[marshwiggle]

I am not sure what my school actually tells applicants, but I highly doubt its 100% honest. Our discount rate is huge and growing. Our tuition and fees are at the high end of the distribution. We like to sell ourselves as a quality product that deserves the high price tag as much as a fine wine or a BMW, but, hey, your kid is so great, and we really mean it, that we just have to give you a discount and do you the great favor of letting your kid have access to this wonderful high end product.

The pitch is probably effective with that demographic. Making parents feel accomplished in earning access to exclusivity is a sound business model. There are some obvious downsides in terms of mission integrity and so forth. Figuring out the role of education and learning in providing what those parents are paying for is also a challenge. But it can definitely work for a relatively exclusive set of schools.

I keep being amazed by this, as a non-American, but it just occurred to me that maybe it's tied to the realities of US healthcare. When important service like that have all kinds of out-of-pocket costs, even to people with good insurance, it has created an anchoring effect for any and all services. In other countries with good public healthcare, higher education often also has much more price uniformity, probably in part because people don't expect everything to depend on ability to pay.

[Anselm]

I am not sure what my school actually tells applicants, but I highly doubt its 100% honest. Our discount rate is huge and growing. Our tuition and fees are at the high end of the distribution. We like to sell ourselves as a quality product that deserves the high price tag as much as a fine wine or a BMW, but, hey, your kid is so great, and we really mean it, that we just have to give you a discount and do you the great favor of letting your kid have access to this wonderful high end product.

The pitch is probably effective with that demographic. Making parents feel accomplished in earning access to exclusivity is a sound business model. There are some obvious downsides in terms of mission integrity and so forth. Figuring out the role of education and learning in providing what those parents are paying for is also a challenge. But it can definitely work for a relatively exclusive set of schools.

I keep being amazed by this, as a non-American, but it just occurred to me that maybe it's tied to the realities of US healthcare. When important service like that have all kinds of out-of-pocket costs, even to people with good insurance, it has created an anchoring effect for any and all services. In other countries with good public healthcare, higher education often also has much more price uniformity, probably in part because people don't expect everything to depend on ability to pay.

As a thought experiment I wondered what would be difficult to explain to a foreigner and my list so far includes college financial aid, healthcare finances, income tax rules and American football.

[mythbuster]

You should add the electoral college to that list. I remember trying to explain that to a foreign exchange student back in 2000. American Baseball was also hard to explain, even to a Brit who had seen some cricket!