Colleges Face Challenge of the Class Divide

calmom · February 14, 2007, 9:38pm

LOL. My Profile EFC was $33K. NO college expected us to pay that much! Even NYU did better than that.

It also turned out that I overstated my home equity for my daughter’s college. According to zillow.com, I’m sitting on a gold mine. I figured that all the colleges would have access to similar data, so that it would be risky to understate home value- and in any case, I had a recent appraisal from the last time I refinanced, so no excuse for hedging on the numbers. Well, it turns out that my daughter’s college relies on the Federal Housing Index, here:
<a href=“http://finaid.org/calculators/federalhousing.phtml[/url]”>http://finaid.org/calculators/federalhousing.phtml</a>
(When we went over my award, they gave me the exact number that came up with that online calculation). So at least this year I’ll be better able to predict my award – and since I know the numbers the college wants, I’ll fill out the Profile consistent with that.

Once my daughter was accepted, I felt it very important to understand exactly how the numbers were calculated, because I was concerned about future years – so it is important for me to know how changed circumstances will impact our finances. I simply wrote out a list of specific questions – including the home equity question – and emailed it to the financial aid department, along with a request to arrange a telephone appointment. The head of financial aid called me the following morning – she was incredibly helpful, and I got off the phone with all my worst fears laid to rest.

There is no reason why you couldn’t do something like that before applying. I didn’t feel like it was worth my time to do so, because the top privates seemed like such reaches for my kid. I mean, who cares how a college is going to calculate aid if they are going to reject my kid anyway? At the elite level, the “getting in” part is still the biggest barrier.

ricegal · February 14, 2007, 11:24pm

I think one point being overlooked by most posters is that the lower class is not being represented at schools like Amherst because they aren’t able to qualify for admission. It’s very difficult to attain 2100 SAT scores and 4.3 weighted GPA when your parents are uneducated. Ergo, most students from the lower class who even attend college at all, attend community college and often have to start with high school remedial classes.

One can argue that the middle class is being squeezed as several posters have done, but I also believe that the middle class often chooses to attend state U’s because those schools have the highest visibility among the students. I have had to fight very hard against the prevailing opinion at our public high school in order to get my son to consider private schools. There is a mass flocking to public universities from your average public high school because the students often only go to places they have heard about. And, as one poster stated, parents have the perception that private schools cost more so why would they try to persuade their children to look elsewhere?

calmom · February 15, 2007, 4:50am

Ricegal, I agree with you that it is much harder for the lower class to qualify for admission — but Amherst and other elite colleges do evaluate applications in the context of the schools where they are coming from. The colleges are very aware of the impact that income had on SAT scores – they know that a score of 1850 from a kid coming from an inner city school is every bit as impressive as 2300 from a prep-school kid – and they aren’t going to expect to see weighted GPA’s from schools that don’t even offer APs.

They are going to be looking at kids who stand out from the crowd at their schools and who are at the head of the pack. That is, the kids with the top grades who have done something to merit special attention. This is not the set of kids who need “remedial” work – even at the very worst schools, the very best and smartest students may have educated themselves beyond their school’s offerings and be very well prepared for Amherst or any other elite schools. There are a LOT of people who have come up out of poverty who spent their formative years soaking up whatever they could from the shelves of their local public library.

To the extent that you meant to say that it is harder for the poor to qualify for Amherst because of the inequities of educational opportunities in our country, I agree with you.

But if you meant to try to justify the income disparities at elite colleges by saying that students from poor families just aren’t good enough … then I disagree – and that is why I am posting. There are plenty who would flourish at Amherst if given the opportunity.

On another note entirely… I would have been very happy if my two kids had limited their college options to our in state publics. It sure would have meant a lot less anxiety over finances, and I wouldn’t be making payments today on a loan from a college my son dropped out of, or stressed out worrying about what I am going to have to pay for my daughter’s college next year. Of course I am proud of my kids … but I also believe that they could have gotten excellent educations at any of the UC campuses. I do recognize a qualitative difference with the private colleges they have attended – its just that I don’t the difference in quality is nearly as great as the difference in tuitions. It’s not that an elite college isn’t worth $33,000 … it’s that a top public college is probably worth a lot more than the $8K that I would pay as a resident. In other words, even without financial aid, the best publics are a tremendous bargain for the middle class. So I understand why it is that most families aim toward the public universities of their state – it just makes more sense financially. Good education + no need for the kids or parents to take on debt to get it – as opposed to a marginally better education at an exceptionally higher cost.

standrews · February 15, 2007, 6:51am

“I think one point being overlooked by most posters is that the lower class is not being represented at schools like Amherst because they aren’t able to qualify for admission. It’s very difficult to attain 2100 SAT scores and 4.3 weighted GPA when your parents are uneducated.”

I’m not quite sure what lower class mean in terms of representation at schools like Amherst in terms of it being 1) a persistent family condition, (low income uneducated parents, tough environment growing up), or 2) a determination made upon family income and assests at the time one applies to college. In the latter sense, one can be from a lower income family, yet still have educated parents and good academic scores. What data do you look at to make this determination? It can’t be EFC. When EFC is 0, how can one distinguish between a kid who comes from a family that’s always been poor and a kid whose family has fallen upon tough times in the recent past? With need-blind admissions EFC would not be a factor. The adcoms have other information that reflects on family situations, (address, high school attended, essay that talks about growing up, first generation status), but do they make this information known in a meaningful way?

cameliasinensis · February 15, 2007, 7:07am

The application does ask where both parents went to college, if at all, which shows whether the applicant is a first-generation college student. I know that certain elite schools are [or at least claim to be] actively seeking out that category of students; Princeton is one example, and I’m sure there are others.

On a similar note – and I’m speaking from experience here – a family can be college-educated and comfortably middle-class (not enough to pay for college, but enough to get by) and still be scarily dysfunctional. That doesn’t show up anywhere on the application despite being a significant challenge for the kid. Can’t be “fair” to everyone, I guess. :rolleyes:

Having said that, in my limited experience, I still think it seems to work more often than not.

unregistered · February 15, 2007, 9:09am

“And why shouldn’t they? Should Family A be charged $4 and Family B be charged $40 for the same gallon of milk? Of course not.”

Well, if it costs $70 to produce this gallon of milk, and the guy at the farmer’s stand sees that one family is in desperate need of milk and can only afford to pay $4, well, sure. The family who can afford to pay $40 is still getting a discount.

StickerShock · February 15, 2007, 9:42am

unregistered, I would go back to dstark’s important point, which nobody has addressed:

We really don’t KNOW that the education each student receives at Ritzy U costs $70,000. Because so much of a college’s expenditures are for the benefit of the surrounding community or the benefit of professors’ careers or any number of non-student beneficiaries.

My family & I, for example, have benefitted enormously as citizens of the surrounding community of several colleges. Theatre & entertainment options are offered to us at a tiny fraction of what we’d pay for the very same acts in NYC or the JerseyPac. Local high schools are offered playing time on the college fields & ice rink, access to college classrooms & a variety of encrichment/academic programs. Their libraries are open to us. The list goes on, and these benefits are highly subsidized by the kids paying that college tuition.

How can a clear accounting of the actual education cost be made? I don’t know; I’m not a CPA. But I do know that the subsidizing goes both ways & those $70k figures thrown around are basically picked out of the air.

unregistered · February 15, 2007, 2:32pm

I certainly hope that all schools spend money to benefit the surrounding community, and it’s silly to assume that that won’t benefit the students. I can’t think of many Yale students who oppose Yale putting money into developing and helping New Haven.

higherlead · February 15, 2007, 6:43pm

Did you all know that Kaplan subsidizes each of their SAR prep course students to the tune of $12,000 and that the students are only dfraying 8% of their educational costs?

All you have to do to come to that conclusion is use the mini methodolgy. You take the total expenditures of the corporation that owns Kaplan and divide it by the the number of students taking Kaplan prep classes and then subtract the tuition the student pays for his SAT prep course from that number. At least that is the way mini and the Williams College folks figure their subsidy per student.

Now in the case of Kaplan they are owned by the Washington Post which of course also does a few other things in support of Kaplan’s educational mission like run newspapers, magazines, TV, and radio stations. The Upshot is they spend $3.5 billion dollars a year on their 280,000 students who pay around 900 for a course. It is a staggeringly generous thing they do isn’t it?

mini · February 15, 2007, 6:59pm

“I think one point being overlooked by most posters is that the lower class is not being represented at schools like Amherst because they aren’t able to qualify for admission.”

They don’t qualify because Amherst (and the like) don’t want 'em. The Gordon Winston study posted upteen times on this forum demonstrates quite conclusively that prestige colleges could almost triple the number of low- and lower-middle income students using the standardized measures of “qualification” they use now (i.e. SAT scores). But they don’t.

“Did you all know that Kaplan subsidizes each of their SAR prep course students to the tune of $12,000 and that the students are only dfraying 8% of their educational costs?”

Actually, that isn’t my method. That’s Williams, Swarthmore, and Amhersts’ method. If you don’t like it, you can take it up with them. (And to be more precise, if it costs $75k, the list price is $45k, and there is an average $13k discount, the median student pays 42.7% of the total cost; and the list price student 60% of the total cost, with the rest coming from endowment and outside income.

If you are going to do the numbers, at least get them right.)

(As to whether the numbers are “real”, I’ll let you take that up with Interesteddad - I personally am agnostic on the issue.)

“The adcoms have other information that reflects on family situations, (address, high school attended, essay that talks about growing up, first generation status), but do they make this information known in a meaningful way?”

Why is it so hard to believe that adcoms, with decades of experience, and years of training behind them in their jobs, operate effectively as professionals? NOTHING is left to chance.

higherlead · February 15, 2007, 9:05pm

mini - you can be agnostic on global warming but not evolution, too much evidence there. Williams, Amherst, and Swarthmore are just proving the old adage that figure don’t lie but liars can figure.

Whatever the real cost of an education at these schools we can all agree it is expensive and they cut no corners. Getting a few more low income or middle income kids in would be nice for the kids but not a major impact on social mobility.

What would help that is more money spent on community colleges and vocational education including post-secondary vocational education. To that end I propose levying a tax on university endowments over a certain size. It makes absolutely no sense that they keep growing these even what they haven’t an educationally useful thing to spend the money on. At the rate Harvard is going they’ll own the country by the end of the century. Lets take some of that money they can’t spend usefully and spend it for them on education.

dstark · February 15, 2007, 9:15pm

"“Did you all know that Kaplan subsidizes each of their SAR prep course students to the tune of $12,000 and that the students are only dfraying 8% of their educational costs?”

Actually, that isn’t my method. That’s Williams, Swarthmore, and Amhersts’ method. If you don’t like it, you can take it up with them. (And to be more precise, if it costs $75k, the list price is $45k, and there is an average $13k discount, the median student pays 42.7% of the total cost; and the list price student 60% of the total cost, with the rest coming from endowment and outside income."

Mini, whether it is your method or the school’s method doesn’t matter.
You use their method to argue that rich kids are getting large subsidies and are getting such a deal.

I think Smith should spend an additional $20,000 per student by hiking professor salaries, pensions, administration costs, advertising, fancy buildings, parties, fancy housing for administrators, additional travel expenses for administrators and professors, starting a football team, food allowances, sabbaticals, health care for everybody, long term care, spousal services, clothing allowances, and meet the opposite sex functions.

Then they should charge you only an additional $15,000 a year. A wonderful $5,000 subsidy just for you and all the other people who choose schools based on subsidies.

I’m sure you would have no problem paying that extra $15,000 a year and would enjoy paying it. That extra $5,000 subsidy is money in the bank. I’m sure you will be on the phone very soon calling Smith and suggesting they do this.

Love those subsidies. ;)

mini · February 15, 2007, 9:19pm

Well, good education costs money. And the schools that have it, flaunt it.

(Aren’t you making the case that they DO spend the funds, use them to attract and keep better faculty, provide better facilities, and pass these benefits along to their students? I mean certainly we could all do without - University of Phoenix does just fine, thank you -but if you admit that they spend it, you can’t then turn around and argue that they don’t subsidize the students to receive the benefits of it. As to whether the benefits of the subsidies are worth it, well, I think you need to go ask some “prestige people”. ;))

dstark · February 15, 2007, 9:43pm

I’m making the case that to use the total expenditures of a place and the total revenues from tuition of a place,and then say the kids are getting subsidies and isn’t that a great thing, and look what value everybody is getting, is absurd.

Higherlead is correct.

When inflation rises less than 3% a year for 25 years, personal income rises around 4.2% a year for 25 years and college costs rise 6% a year for 25 years, we have a huge disconnect. To argue that it is OK because of subsidies when the subsidies are calculated incorrectly (maybe on purpose), and may not exist or students may not benefit from them, makes no sense to me.

If we are using money to calculate whether the school costs are worth it, and that is what we are doing with the subsidy argument, that is the wrong measure.

Return on what you spend is a much better measure. It’s funny. Colleges don’t talk about this too much.

They like the subsidy argument.

I wonder why.

Actually, I don’t.

PS If you like the subsidy argument, than I am sure you would have no problem if Smith’s expenses went up $20,000 a year and they only charged you $15,000.

mini · February 15, 2007, 10:18pm

“When inflation rises less than 3% a year for 25 years, personal income rises around 4.2% a year for 25 years and college costs rise 6% a year for 25 years, we have a huge disconnect.”

Not in the least. College costs have risen significantly less than the income/assets of those in the top 3%. Those are the prime customers, and always have been, and, with or without subsidy, they continue to get a better and better bargain.

Do I think they actually spend all that money? Yeah, at least at these three colleges, I think they probably do. (and at about a dozen others, my d’s school being among them.) But I wouldn’t sell my children on it (I’d sell Interesteddad’s d. instead. ;)) Again, as to the “value added” of the extra subsidy, you should ask those who pride themselves on it! (I wouldn’t have it to pay, so for me it would be non-issue.) Clearly (Veblen again), as prices rise, so do the number of applicants, so it is clear that prices would have to be MUCH higher before the laws of supply and demand would kick in. (and maybe, they being prestige products, they never would.) (However, for the non-prestige products, the state universities, supply and demand are already kicking in, resulting in fewer low-income students - they simply can’t afford it. This I worry about, not what a few tiny little colleges with obscene endowments do with their money.) But if you don’t like it, as said, there is the University of Phoenix.

“PS If you like the subsidy argument, than I am sure you would have no problem if Smith’s expenses went up $20,000 a year and they only charged you $15,000.”

I am in the happy position that the expenses keep on going up, and I don’t pay a dime extra for them. Neat trick, huh? :)

interesteddad · February 15, 2007, 10:35pm

But, that’s the crazy thing about private college pricing. The colleges that spend the extra don’t charge more.

For example, in 2004, Swarthmore spent $11,000 more per student than Smith spent. But, they charged, on average, $1000 less per student in net tuition, room/board, and fees (after financial aid).

They did charge their full-fare sticker price customers $700 more in tution, room, and board, so they were somewhat more progressive in their pricing…sticking it to their wealthiest customers, but offering more per student discounts to need-based aid customers.

mini · February 15, 2007, 10:39pm

Big difference is that Swat spread it over fewer students. Whether that is a good thing or not is a matter of opinion.

In any case, I think it is crazy. I wouldn’t call requiring that full-freight families pay something closer to the cost of the product, or even something closer to the increase in their assets/income “progresssive”; I’d call it just common sense. They can always fill the plane with discounters.

dstark · February 16, 2007, 12:21am

Mini, I like your trick. ;)

Michigan has raised their prices 6% a year for 25 years. I believe the average college has raised their prices 6% for the last 25 years.

I don’t believe the average college kid is made up of the top 3% of the population.

You have to look at college costs separately from stock market gains when deciding if college is worth the cost.

If you are right and college costs are rising because of stock market gains, that might answer the rising cost of tuition. That doesn’t have anything to do with whether college is worth the cost.

<a href=“http://www.swarthmore.edu/bulletin/index.php?id=92[/url]”>http://www.swarthmore.edu/bulletin/index.php?id=92</a>

Why Does College Cost So Much?

Anything of value—and I trust that I have made the case that liberal education is of great value—will be even more valuable if it can be provided at lower cost. So why is liberal education so costly, and what can we do about it?

There is no doubt that college is expensive. The stated tuition at America’s best private colleges and universities generally exceeds $25,000 per academic year. At Swarthmore, tuition this year is $28,500—and with room, board, books, supplies, and other expenses, the College estimates the total “cost of attendance” at $39,616. That’s approaching the national median household income, which was $42,409 per year in 2002, according to the U.S. Census Bureau.

But does this mean that every student wishing to attend college must pay this price? According to U.S. News & World Report, only 6 percent of U.S. undergraduates pay more than $24,000 in tuition and fees, four out of five college students attend public institutions, and about 40 percent of undergraduates pay less than $4,000 in tuition annually.

At many high-priced institutions, merit scholarships and need-based financial aid close the affordability gap. Swarthmore, which continues to admit talented students regardless of their need for aid, provides about half of its students with a “discount” on the published price based entirely on family circumstances and ability to pay. The average aid package last year, including scholarships, loans, and work-study income, was $26,013. Yet even full-paying students received another sort of discount because the real cost of educating a Swarthmore student (excluding financial aid) was $67,028. This hidden subsidy exists at all of the best schools—in fact, it is what makes them the best because their endowments and other sources of income (largely resulting from philanthropy) provide more courses, smaller classes, better faculty, superior facilities and technology, and enough financial aid to admit the best possible student body.

On the surface, however, critics of higher education have a point. Tuition at Swarthmore is six times what it was in 1979-1980. During the same period, consumer prices rose by a factor of almost 2.5, and disposable personal income today is about 4.2 times what it was 24 years ago. Disposable personal income is a better norm than consumer prices for evaluating the cost of higher education (or anything else), in that the ability of households to pay for goods and services is largely determined by the available income. Even so, had Swarthmore tuition risen at the same rate as disposable income since 1979, it would be approximately $19,740—30 percent lower than it is today.

Swarthmore is not alone. Its rate of growth of tuition over the period is about average for four-year institutions. At the University of Michigan, tuition is lower but has risen somewhat faster; it is now 6.6 times what it was in 1979-1980. In summary, college is expensive and becoming ever more so. And remember, tuition does not fully cover costs.

Tell me where the article mentions stock market gains.

I’m sure Interestedad will fixate on the “hidden subsidy”.

We’re supposed to fixate on that number.

That’s the wrong number to fixate on. ;)

interesteddad · February 16, 2007, 12:43am

Actually, the number I recommend fixating on is the perceived value to a specific student versus the cost that specific student and his or her family would be asked to pay. Perceived value can be, and usually is, determined by many factors, one of which may be per student spending. For example, Havard could house their students in pup tents and feed them dog food straight from the can and there would still be a high perceived value to many customers. Likewise, as long as USC wins national football champions, they will have customers who perceive high value. I don’t perceive value in classes taught by grad students instead of professors, but that may not enter into the perceived value equation for somebody else. It’s an individual determination with no right or wrong answers.

BTW, thanks for the link to the Swarthmore Alumni Bulletin article on college costs by the U Michigan Provost. It’s an interesting read, especially the final section where he details the two primary reasons for increased costs: the cost of faculty and the ever expanding smorgasboard of offerings.

dstark · February 16, 2007, 12:47am

Interestedad, we see what we want to see.

You kind of twisted my subsidy example.

I didn’t ask you because I know you would be happy if Swat increased costs $50,000, as long as you paid a penny less. :)

Colleges Face Challenge of the Class Divide

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