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The trouble with estimating college costs

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Misleading Prices

We spend a lot of time talking about the cost of college. But what if the numbers we’re using aren’t even right?

That’s the focus of a new report from the Jain Family Institute with the provocative title “How Schools Lie,” which argues that misleading estimates add up to thousands of dollars in unanticipated costs for students.

Laura Beamer, the project lead on higher ed finance at JFI, examined two problems with the numbers we see: Colleges underestimate the non-tuition costs of college and overestimate how much financial-aid students will eventually get.

First, nearly every place that prospective students look for costs uses the number colleges tell the government for their “first-time, full-time students.” And in many cases, that’s the cheapest number anyone is going to be charged.

This front-loading of financial aid isn’t new. The Hechinger Report had a good story back in 2015 about this type of “bait-and-switch” pricing. Ben Miller, now an Education Department official, compared the strategy to cable-TV marketing in The Chronicle that same year.

But the JFI report points out, it’s only gotten worse since then. On average, first-time, full-time students now receive $3,000 more in grant aid than other undergraduates.

“Price is a selling point, so the incentive to front-load is even higher. Put simply, colleges are leading students on about the price of college. When students have grant and scholarship aid removed in the second year of college, their only options are taking out (more) student loans, making up the cost difference with family or personal savings, or altering college plans by taking time off or transferring schools. Our research proves the latter options—which delay college completion—are happening at an alarming rate.”

While those first-year numbers may overestimate the total aid students will get, colleges end up underestimating the other costs associated with going to school, according to Beamer.

Of course, asking colleges to come up with a single number to capture the wide range costs of off-campus housing, food, travel, books, and supplies for thousands of different students is super hard.

The JFI analysis, though, used MIT’s Living Wage Calculator to look at how accurate colleges’ estimates were for living off-campus. It found 41 percent were underestimating the costs of room and board. And the average gap was substantial: about $1,500 for public colleges and $2,000 for private ones.

Digging into the numbers colleges report for all those other costs (room and board, books, other expenses) makes you wonder if we’re even talking about the same thing — and what a prospective student should think about any of it.

Today, for example, I poked around the numbers for colleges in Philadelphia. Drexel estimates $17,200 for room and board off campus. The University of Pennsylvania (in the exact same neighborhood) uses $14,500. LaSalle is only a few miles away but apparently in an entirely different housing and food market: it estimates it costs just $7,500 to live off campus.

Then there’s another category of “other expenses.” Drexel says that totals $1,200, but the Community College of Philadelphia says $7,300.

And how these numbers have shifted over years doesn’t inspire much confidence that they’re connected to reality.

St. Joseph’s reported back in 2010 that books would cost $1,500. Now it says they’ll be $910. In that same time, book expenses are down slightly at Drexel, up double at the Community College of Philadelphia, and almost exactly the same at Holy Family University.

What’s a prospective student to make of any of that?

Some simple solutions do exist, according to Beamer:

  • Require a standard financial-aid offer letter, the same way we do for mortgages, credit cards, and other big financial decisions.
  • Give students the cost for the whole degree, not just one year.
  • Standardize how colleges estimate other costs.

Beamer: “I don’t really blame [colleges] at the end of the day. They’re going to do what they have to to survive. And it really comes down to policy makers and politicians to set the standard.”

—Scott Smallwood

Welcome Back. It’s Nice to Meet You.

Students at the College of Wooster on the first day of class. Photo: Matt Dilyard, The College of Wooster

Giselle Rivera, a sophomore, arrived at the College of Wooster last week. She spent most of her freshman year at home in Georgia, studying remotely because of COVID concerns.

Now in person on the Ohio campus, she’s trying to capitalize on the roots she formed online. Over the past year, she told Amy Morona, our reporter with Crain’s Cleveland Business, she made it a point to attend student organizations’ meetings, to turn her camera on during class, to feel like she was making friends.

“Because if not,” she said she thought, “I’m going to be very sad when I go to campus and I talk to nobody, eat by myself, walk by myself.”

Sophomore year is always a critical time for retention. And this year’s class faces unique challenges: The pandemic, Amy wrote, shaped their milestones. Their senior year of high school was marked by a shift to online learning, followed by an anything-but-typical first year of college.

And the pressure is on for colleges to focus on retention after the pandemic-induced enrollment woes of 2020, Amy added. Many, including Wooster, are designing specific orientation activities for sophomores, hoping to connect them with a campus and its resources they never really got a chance to know in year one.

A Lost Class?

In Next this week, Jeff Selingo also focused on this year’s sophomores and asked whether the class of 2024 might become something of a “lost class,” with smaller numbers going forward until commencement and students who struggle to keep up, or drop out, after a year of remote learning.

One question, Jeff wrote, is how much further into the future these trends will continue. This year’s freshmen—the Class of 2025—also had a year of interrupted learning in high school. And then there’s this year’s high school seniors, going on two-plus years of interrupted learning leading up to college.

At Wooster, Myrna Hernández, dean of students, keeps reminding people that only current seniors have experienced a full, uninterrupted year at the college, Amy reported. Because of that, officials are trying to provide supplemental programming that fits the specific needs of each class.

“Our focus,” Hernández told Amy, “is trying to build individual connections for students, being pretty intentional about paying attention to students that aren’t getting connected.”

Elsewhere on Open Campus

Daniel Kiefer, professor of English at the University of Redlands. The university gives grants to select faculty to incorporate career concepts into their courses. Photo: U. of Redlands

In Work Shift: Bringing career counseling into the classroom. Career services offices are trying a novel way to expand their reach: recruiting faculty onto the team with grants to incorporate career concepts and counseling into their courses.

In The Job: ‘We don’t get paid unless you do.’ A growing number of states are linking support for colleges to labor market results. In Florida, a new law features a money-back guarantee for students who don’t find a job within six months of completing certain programs. 

In El Paso: Former El Paso students create mentorship program for high schoolers transitioning to college. Now in its second year, the network has over 60 members across the nation.

In Pittsburgh: Point Park’s new president aims for progress on diversity, finances and — above all — graduation. Donald Green takes over in the wake of an uproar on campus over an attempt to lay off 17 faculty members. With new leadership, some professors are hopeful for change.

In Mississippi: Mississippi college board votes to not require COVID-19 vaccine for students, faculty. The vote came the same week that the U.S. Food and Drug Administration fully approved Pfizer’s COVID-19 vaccine, which many faculty and staff had hoped would open the door for the board or the universities to require the vaccine. Also see: How are Mississippi’s public universities tracking COVID cases?

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