For many families, paying for college is one of the biggest financial decisions they will make. Tuition fees are higher than ever – and the financial support process is far from clear. American journalist Ron Lieber’s new book, The Price You Pay for College, aims to take over the black box of college financial data and “keep making it brighter and brighter”.
Of course, Lieber admits, it’s a messed up system. But he’s not out to fix the problem – he’s only here to help you and your family navigate. “What I’d really like to do is blow it to pieces. But this is not a book to be torn to pieces,” he says. “I take the system as it is and try to help people beat it.”
The interview has been edited for length and clarity.
What Are Parents Wrong About College Price – The Price Listed On College Websites?
Around 90 percent of people don’t pay full price. You get some kind of discount. The number of families that actually pay depends heavily on how desperate a particular institution is to put heads in beds and whether it is particularly desperate for some types of people than others.
You’re not paying this list price because most families get help – or what you call a discount. What are the two types of help?
There is the needs-based help system that runs on a train track, and right next to it there is the performance help system – it runs on its own set of tracks.
Okay, as a student or family member, how do you deal with this first type of on-demand assistance?
Every school must publish a net price calculator. It’s often hidden – it’s not in an obvious place. So you only have google, you know [insert college here] and net price calculator. You can enter your financial details there. The net price calculator is supposed to give you an estimate of what your family would have to pay if you got on board. So you get the final price and then hopefully a breakdown of how that financial support could be split.
So the hard part once you get that net price. make sure you understand what the components of that net price might be. For example, how much debt did this school take from you?
The other money you get from colleges is earnings support. I view earnings aid as money to be smart. But it sounds like this goes beyond academics?
It’s much more about who you are, your profile, grades and test scores, and other kinds of tangible and intangible assets. This can vary by year or month, and also how well the school tries to attract the right number of students paying the right amount per student.
Here’s another way to think of it: Imagine a really long list of all the colleges and universities in the United States, roughly ranked by selectivity. From slots 30 or 40 onwards there are a lot of elite institutions that give away some money because of their academic skills. And then in the next 25 to 50 slots on the list you will find many selected schools that have a market problem and a marketing problem. At $ 70,000 or $ 80,000 a year, people’s ability to pay no longer increasingly matches their willingness to do so. So you’re trying to maintain some pricing power at full price for a certain number of students while giving discounts to others.
Then you go further down the food chain where very few people are paying full price, but most people are unaware that everyone is getting an earnings support pony. And in these institutions, schools keep this information to themselves – the fact that everyone gets the discount – because they want every parent whose child receives an unsolicited credit offer from the school in town to brag about how their child is academic Money was offered by this or that college. Further down the food chain, it’s evident that pretty much everyone is getting something.
Earning aid – the discount that is not related to financial needs – is basically a way for colleges to manipulate or convince often wealthy families to go to their university?
Check out what Tulane, Northeastern, and even the University of Southern California have done with Earnings Aid. They just went out and bought smart kids. People are often surprised because we are not used to looking at higher education for the competitive industry that it is. We have a couple of thousand undergraduate institutions, and they try to commit and enroll every single student.
So it shouldn’t really surprise us that money is also used as a lever with children, as children have a role to play in this process. I’m in enough teenage inboxes looking at this stuff to know that the money talk is more common than it used to be and totally resonant, but also confuses people because they don’t really know how it all works.
Where do parents even start when determining how much money is appropriate for college?
First and foremost, I encourage people to take a look at the shared dataset that most schools provide. [To find, search Google for “Common data set” and the college name. Here’s an example result from the University of Richmond.] This is the document schools send to US News and World Report and other ranking organizations. Look for line H2A. It tells you the number of students who did not qualify for needs-based assistance but still received earnings. This gives you an idea of how desperate the school is and how much income package it can even offer people who don’t need the money because of their wealth or income. You get a feel for where you are.
And then there is something else you can do. Just go to school and ask. All of this hocus-pocus and data table searching are not fair. It makes perfect sense to call a school in September and say, could you please read a credit card that read my application. It goes on. The College of Wooster in Ohio does it for anyone who asks. Whitman College in Washington state does it for anyone who asks. It is obscene that we have to make decisions about where and how to apply without having a good sense of how it will work out. It is not right.
What should students applying to college this year do if their financial situation has changed due to the coronavirus?
The ways of calling [for need-based aid and merit aid] are different. If the assistance is tailored to your needs, contact the Grant Office and try to prove to the Grant Officer that circumstances have changed since you submitted your grant forms. And you go Ask this grant officer to use professional judgment to reconsider your offer.
On the Earnings Aid side, you’ll be reaching the admissions office, and the best way to do it is with a whole lot of humility, but also a competitive offer.
If you have a quote from another school that competes enough with the institution to make a reasonable comparison, go to the school you want to contact and say, “I would really like to go here. The final price at this other school is lower than yours. We may have made a mistake here in our application that we didn’t make with the other school. Would it be possible to just do a review here so we can understand what happened? ‘
And here’s the secret that most people don’t know: It’s not the people who generated these offers in the first place. Most of them are robots that have been programmed using software algorithms. And so people have the ability to intervene in the end within a reason. It can’t hurt to try.