On College Pricing
Some reactions to Kevin Carey in Slate
Kevin Carey has an article at Slate with the headline “The Single Most Important Thing to Know About Financial Aid: It’s a Sham” that hasn’t generated quite as much chatter as I might’ve expected, maybe because it’s high summer and everybody is at the beach. Which, I should note, is an excellent choice. Shut down the computer, and go dig your toes in the sand somewhere— there will still be plenty of stuff to get mad about when you get back.
Anyway, I think there are some bits of this piece that are maybe a little too strongly worded, but it’s not wrong. I also tend to agree with Matthew Zeitlin’s assessment that one of the most notable aspects is that it’s really about a stratum of schools that don’t get talked about that much:
A lot of this is familiar territory for me, since Union is toward the low end of the tier above this one. We’ve got a sizeable endowment, and so aren’t discounting as desperately as the schools Carey talks about— whose sticker price is north of $70k but who charge the average student $25k— but we are cognizant of that as a source of trouble, and so keep a close eye on the aid budget.
On first read, I didn’t find anything all that surprising, but on a second pass there are a few minor points to make:
— One thing I would say is that this isn’t a new problem: One of the few concrete pieces of advice I remember from back when I was applying for colleges by the light of fires ignited by the asteroid that killed the dinosaurs was a cousin of my dad’s who worked in financial planning saying “Don’t even bother applying to SUNY schools.” His point was that the price tag for going to college was ultimately going to be determined by the amount the financial aid system determined my family to be able to pay. That would cover more or less the full tuition at a state school, but was around half of what an elite private school would charge. That meant that the price for the two categories would net out to about the same thing, and why get a SUNY degree when you could get an Ivy degree for the same price?
The system is very opaque, no doubt, and this is definitely a case where information is unevenly distributed— families where the parents went to college are more likely to be aware of (resigned to?) the way that “sticker price” doesn’t mean much, whereas first-generation families are more likely to be unnerved by the way things are done. It’s been confusing in more or less this exact manner for a very long time, though.
— The general confusion is exacerbated by thirty-ish years of faster-than-inflation tuition increases, which is a long-discussed problem. There’s also the looming “demographic cliff,” which Carey alludes to very briefly, namely that the number of traditional-age students likely peaked a while ago, and is due to drop precipitously in the near future, particularly in the Northeast (where if you throw a rock in the air, there’s a good chance it will land on a college campus). Colleges that are strongly tuition-driven are fighting for a shrinking pool of students who can pay tuition, and that really raises the institutional stakes.
— The hook of the piece is an anecdote (or maybe set of anecdotes) about two students, Ethan and Ashley, and their very different experiences with the system: Ethan gets numerous offers of impressive-sounding “scholarships,” while Ashley is just offered loans toward the eye-popping sticker price, despite having a somewhat stronger academic profile and a lower family income.
I’m not especially surprised by this outcome, though, which seems to be a result of applying to different parts of the prestige spectrum. Ethan’s rich offers are from schools in the #80-100 range of the relevant US News categories, while Ashley’s non-offers are from NYU (#25) and Penn State (#63). While those rankings are unquestionably flawed as measures of actual academic quality, they definitely do capture something about perceived prestige. I’d be interested in seeing a more apples-to-apples comparison between offers—what did each of them get offered by schools in more similar ranges? Did Ethan apply to any schools closer to Penn State and NYU? Did Ashley have any safety schools further down the list?
— The gender split here does not work in Ashley’s favor in terms of actual academic merit. It’s an open secret in higher education that the number of women at any particular level of academic qualifications is much higher than then number of men at the same level. As a result, higher education as a whole skews significantly female, though individual schools try to aim for something closer to a 50/50 split. In practice, this amounts to “affirmative action for boys” when it comes to admissions, a problem that gets somewhat more acute as you move down the presitge ladder.
Putting this together with the previous, it’s not that much of a stretch to believe that Ethan might look like a more attractive admit to a lower-prestige school on academic grounds— someone who would help boost their numbers— while Ashley might look more marginal to a higher-prestige one. This could then play into the difference in aid offers.
— Carey makes a lot out of the use of consulting and marketing firms to decide who to target and what to offer, which I think is mostly a rhetorical fillip of a sort that always bugs me a little. That is, pointing out that something is being done by expensive consultants sounds bad because nobody likes expensive consultants, but it’s not clear that it’s any worse than it would be if it were done in-house.
— To the extent that this is genuinely a problem of asymmetric information— parents not really knowing how the game is played— I would recommend Ron Lieber’s The Price You Pay for College as a guide to how this stuff really works. I reviewed it a while back over at my Forbes blog, and would basically stand by that.
So, those are the points that come to mind in response to Carey’s piece. I don’t think any of them negate the overall point, though I might soften some of the language slightly. Still and all, this is a pretty good encapsulation of something real about the landscape of higher education:
Understanding the true nature of the college market should reduce some kinds of student stress. If you’re a high school graduate in reasonable academic standing, there are scores of good colleges ready to admit you. The real market tuition price in the big middle of the higher education sector is probably about $25,000, not the $50,000 or $60,000 you might have heard. Applying to college there isn’t like being vetted to join an exclusive social club. Nobody is really judging your worthiness for financial aid. College is just another service with a price.
There’s probably a larger question here about whether college should be a service with a price, but that’s beyond what I have time or brain for right now.
If you want to find out if I ever get around to that larger question, here’s a button:
If you want to take issue with any of the above, the comments will be open:
Provided you complete and submit the required financial disclosure form, anyway…
I don't think anybody in academia engages Carey's work any more because he just says the same thing over and over again, with little nuance, and because he's been so willing to promote ed-tech "disruptors". The point about the mis-labelling of "financial aid" is something that people in higher ed say all the time, just a bit more gingerly, since it amounts to the single existing example of "soak the rich" in American life.