Variation in cost of education per student (not tuition or net price after FA and scholarships)

Parents Forum
21

@PurpleTitan‌ (re #16): *"Not sure fin aid should count; it’s essentially just a discount and isn’t something that impacts the quality of the education."

With great respect for your many excellent positions, I believe you are terribly wrong. A few generations ago, “elite” LCAs and National Research Universities were essentially bastions of privilege, affluence, and upper/upper-middle class white culture, IDEAS, EXPERIENCES and THINKING. However, financial aid (especially need-based) has been the indispensable catalyst that provided tremendously enhanced diversity – in backgrounds, in wealth, in class, and in race/ethnicity/religion – to campuses.

Most significantly, such diversity is NOT a demographic census or head-count; rather, it enables previously unarticulated ideas, concepts, perspectives, and experiences to become a critical part of students’ learning. While this is crucial in the classroom, in my opinion it is even more critical beyond formal academic settings (for example, discussions in dorm rooms, at dinning tables, and everywhere else). Students become exposed to the viewpoints, experiences, goals, and lives of their peers from radically different backgrounds. THAT’S PRECISELY WHAT EDUCATION IS ALL ABOUT; IF THIS ISN’T A MAJOR, VITAL AND PERVASIVE ENHANCER OF UNDERGRADUATE EDUCATIONS, WHAT IS?

FYI, at a university like Duke, about 50 percent of undergraduates receive no-repayment-required scholarships and grants and the average need-based annual FA is about $43K. I ask you, PurpleTitan, how many really bright and deserving kids has that brought to campus, what ideas, philosophies, and experiences have they imparted to their peers that would otherwise have been absent from the discussion, and how vital is this to “education?”

22

Despite generous financial aid policies, most of the “top” universities have a very skewed distribution of students’ SES backgrounds. For example, about half of Duke’s students are full pay (probably from top 3% or so income and wealth), but only 14% receive Pell grants. (see http://colleges.usnews.rankingsandreviews.com/best-colleges/rankings/national-universities/economic-diversity-among-top-ranked-schools )

Given that most such schools remain essentially upper and upper middle class environments, it is likely that the few students from low SES backgrounds are much more affected by the differences in ideas, experiences, and thinking than the majority from high SES backgrounds. It may be overstating the effect if one assumed that it affected those from high SES backgrounds similarly.

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@ucbalumnus‌ (re post #21): Do you have ANY evidence to support the your last paragraph’s statements? I don’t have data, but I have repeatedly – and for many years – observed that a sea change has occurred – and is occurring – and that your conclusions are (in my opinion) not universally valid.

While I agree that socio/economic/educational class is more significant than race or ethnicity per se, your conclusion assumes that (for example) an upper-middle class African American undergraduate will not bring the experiences, ideas, background, etc. of his parents and/or grandparents to the discussion. I would heartily disagree. Although I was born immediately after World War II ended, I carry with me many derived experiences of the Great Depression and the War. To suggest that kids today do not reflect the circumstances and the thinking of their forebears seems unrealistic to me. One does not always personally have to experience something to be profoundly impacted by it.

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Purple Titan is right. The “cost” of financial aid isn’t a cost at all. Its a “discount” granted to most students. The universities could show the financials differently with the top line revenue showing only what is actually charged, but that would invite a number of problems in presentation.

The current way of doing it begins with showing the fiction of everyone paying full tuition, and then subtracting the “financial aid” as a “cost”. You could also show tuition as average tuition paid per student x the number of total students, and then show an additional revenue line titled something like “tuition surcharge imposed on those with above average incomes”, which would be accurate, but non-constructive for alumni relations.

But the point is that the “cost” of financial aid isn’t money actually spent by the school. Its, in effect, the fictional opportunity cost of not having admitted students able and willing to pay full tuition. And it should not by any stretch be included in figuring out what the university spends to educate its students.

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@dadx‌ (re post #23): Why is the opportunity cost “fictional”? I’ll wager that all of the top (say) twenty-five (probably considerably more) LACs and National Research Universities could (if they wished, although it would be a terrible idea) fill every undergraduate seat with “full payers” (and, frankly, see very little – of any – decrease in GPA, standardized test results, and other assessment “numbers”). That’s the textbook definition of an opportunity cost and it is hardly “fictional,” because the institutions forego substantial additional revenue that could be immediately allocated for many pertinent and beneficial educational/research purposes.

With that said, I agree that the financial data could presented in several other ways; however, no enterprise with which I am familiar constructs its financials in ways that are disadvantageous.

P. S.: I can understand that some people might look at the first-tier undergraduate price model as being somewhat akin to automobile pricing: a high MSRP, readily available discounts, and competitive net costs. However, that would be erroneous; the KEY difference is Ford could not see all the vehicles it annually produces at full MSRP, however, Brown, Vanderbilt, Northwestern, MIT (at al) could fill every freshman seat at “full cost” (and with little – or no – qualitative decrease).

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Based on IPEDS data, 14% of Duke students receive Pell grants while the figure is 22% for UMN-TC. Duke is to be commended for providing financial aid to improve access for lower-income students, but having classmates from diverse SES backgrounds is not a ‘getting what you pay for’ quality as post #18 implies.

Quite possibly Duke could charge $100k+/yr and still fill the class with full-pay students. The differential between the max price point and effective net price shows that Duke’s values are not purely financial, but I still wouldn’t consider this an instructional cost.

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In the monopolistically competitive market that these universities are part of, we expect to see combinations of both significant price discrimination (or the dominant discounting of sticker price that is observed today), and bundling of goods and service (including living and housing amenities) along with the basic instructional good.

So, looking at financial aid/grant packages is probably misleading in terms of actual educational expenditures per FT, if a significant proportion is made up of price discounts from the sticker price.Further, looking at institutional expenditures per student could be misleading if we don’t know the distribution of those expenditures that goes to instruction-related costs.

Once the average instruction-related expenditures per student can be identified, then the interesting question is percent of students pay above this and what percent pay below this. Current economic research appears to indicate this subsidy to be fairly significant nationally, but likely to vary significantly across institutions.

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Agree with the second statement, but not sure about the first. In many cases, aid money is directed for diversity purposes, but not necessarily to get the best students. For the students who got full ride, I might argue that the majority of cases are not merit related. E.g., I bet for schools like Duke, the chance of admission for a 2000 SAT low/no income URM is substantially higher than a willing full pay 2300 Asian, ALL ELSE BEING EQUAL (meaning they have the same EC profile). Some argue that diversity benefits students academically, but i don’t see compelling arguments to that so far. Imagine putting a student who has done multivariable calculus in HS with a student who has only done algebra 2 together in a college math class, how would the former benefit? In this case, one might argue that the former (full pay) student got much less than what he/she paid for, as he/she had to subsidize the later’s education as well as getting less out from the math class.

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^^^

@Amherst5168‌ : Do you have ANY documentation to substantiate your supposition? I follow such things quite closely at Duke, and I have no data or information that would support your statement (nor do I know of any that would invalidate it).

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@TopTier – as a matter of fact, I think I do. Take eg, Duke’s econ prof Peter Arcidiacono’s (http://public.econ.duke.edu/~psarcidi/) argument that under-prepared URMs at Duke were not able to handle the rigorous STEM curriculum at Duke, despite being admitted initially for their interests in various STEM majors. His thesis was that most of these URMs do not belong to a top school like Duke and they are probably better served by state schools where the STEM curriculum are less demanding. The reason Duke offered admissions and substantial FA to these URMs were based on the premises that a school like Duke is better able to help these less qualified students for a career in STEM. Arcidiacono further argues that this admission policy hurts rather than helps aspiring URMs in pursuing their dream of becoming scientists or engineers. Reading between his lines, it’s not hard to conclude that such policy also robs the opportunities for those that actually ARE qualified to handle the rigorous STEM curriculum. If I remembered correctly, some students got word of the working paper and tried to pressure duke administration to block it from publication by protesting outside Arcidiacono’s building. But I think this paper was eventfully published.

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@Amherst5168‌, STEM subjects tend to be pretty demanding at the better state schools as well.

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The argument for expanding opportunities to attend the more selective schools isn’t that their instruction is necessarily more or less demanding, but that the less-prepared (yet talented and motivated) student can get more personal attention than might be available at a very large university. The same student in turn will have greater opportunities to influence students with the highest academic and leadership potential.

It’s rather far-fetched to suggest a student who has done multivariable calculus in HS will be taking the same math classes as a student who has only done algebra 2. They’ll take placement tests soon after they arrive. They’ll wind up in different math classes, but possibly the same English or history seminars.

“Diversity” (when it’s well managed) is not only about the sheer percentage of URM or low-SES students. It’s also about enrolling URM and low-SES students with the talent and drive to participate fully in campus life. It’s about creating a classroom and campus environment that encourages a high level of participation. That means keeping classes small enough to encourage discussion (and employing enough experienced professors who know how to guide good discussions). It means keeping the number of commuter students low, then housing students in dorms that encourage meaningful interaction, not huge impersonal cinder block towers located on the campus outskirts. All that takes money.

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@PurpleTitan (re post #29): I ask two simple and important questions:

  1. To the degree that this may happen to STEM URMs at the most academically challenging undergraduate schools (and I am not convinced it's terribly pervasive), aren't they better off at "the Dukes" anyway? If a URM (who may receive considerable FA) at Duke's Trinity College (the Arts and Sciences undergraduate school) finds Chemistry too difficult/pressure-inducing and he transfers to History or to Political Science -- rather significantly, this happens to a LOT of non-URM students, as well -- he still receives a Duke (you may substitute other institution(s) of your choice) undergraduate education, he still has the full not-strictly-academic advantages -- and they are many and enduring -- of being a Duke student/alumni, and he still enjoys the friends, classmates, faculty, and so forth he first encountered in Durham.
  2. Equally important, don't "the Dukes" -- especially undergraduate peers -- still gain greatly from that URM's presence, from his participation, and from his thoughts, experiences, insights, background, goals, philosophy, and so forth regardless of his area(s) of scholastic focus.? As I indicted in my last post to you, MUCH of this bilateral, not always academically-related -- but absolutely critical -- learning will occur in "beyond the classroom" settings. Here, the university and its several constituencies attain the precisely same advantages, notwithstanding the student's major (STEM or other).

To summarize, as you well know, many undergraduates at highly-competitive schools opt to change their majors, often to less demanding and stressful disciplines. This is anything but unusual and it’s FAR from URM-unique. However, both the URM student and the institution (particularly peer classmates) receive essentially the same benefits, regardless of the URM’s major. This may be primarily true because (in my opinion) the most valuable undergraduate learning – and teaching – is frequently non-academic and occurs beyond the classroom. Obviously, this complements strictly scholastic education; however, decades after that Bachelor’s degree is conferred, the “life lessons” gleaned during four on-campus residential years may be both more useful and far more frequently utilized. For example, remembering the computational details of the several accelerated depreciation methodologies or the general dynamic lift-to-drag ratio of a super-critical wing design (that’s why senior leaders hire entry-level staff) will likely be rarely employed by a fifty-something leader, whereas how to lead teams, how to work with and through people of diverse backgrounds, how to motivate subordinates, and SO mch more are daily and essential skills.

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@TopTier‌, that was @Amherst5168‌ posting the research, so he/she would have to answer.

35

As a practical matter, the super-selective reach-for-everyone schools that can spend $90,000 per student have few slots available, so most students (more or less prepared, high or low SES, URM or not, including highly talented and motivated students) will not be admitted to them. There is just not enough space, and half of that space tends to be taken up by full-pay (top 2-3% family income) students, so the number of admits that talented and motivated middle and lower income students actually get is even smaller.

Placement into English composition courses can vary as well.

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@PurpleTitan (re #33): You are correct; thank you.

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@Amherst5168‌ (re post #29): I ask two simple and important questions:

  1. To the degree that this may happen to STEM URMs at the most academically challenging undergraduate schools (and I am not convinced it's terribly pervasive), aren't they better off at "the Dukes" anyway? If a URM (who may receive considerable FA) at Duke's Trinity College (the Arts and Sciences undergraduate school) finds Chemistry too difficult/pressure-inducing and he transfers to History or to Political Science -- rather significantly, this happens to a LOT of non-URM students, as well -- he still receives a Duke (you may substitute other institution(s) of your choice) undergraduate education, he still has the full not-strictly-academic advantages -- and they are many and enduring -- of being a Duke student/alumni, and he still enjoys the friends, classmates, faculty, and so forth he first encountered in Durham.
  2. Equally important, don't "the Dukes" -- especially undergraduate peers -- still gain greatly from that URM's presence, from his participation, and from his thoughts, experiences, insights, background, goals, philosophy, and so forth regardless of his area(s) of scholastic focus? MUCH of this bilateral, not always academically-related -- but absolutely critical -- learning occurs in "beyond the classroom" settings. Here, the university, and its several constituencies, attain the precisely same advantages, notwithstanding the (URM) student's major (STEM or other).

To summarize, as you well know, many undergraduates at highly-competitive schools opt to change their majors, often to less demanding and stressful disciplines. This is anything but unusual and it’s FAR from URM-unique. However, both the URM student and the institution (particularly peer classmates) receive essentially the same benefits, regardless of the URM’s major. This may be primarily true because (in my opinion) the most valuable undergraduate learning – and teaching – is frequently non-academic and occurs beyond the classroom. Clearly, this strongly complements strictly scholastic education; however, decades after that Bachelor’s degree is conferred, the “life lessons” gleaned during four on-campus residential years may be both more useful and far more frequently utilized. For example, remembering the computational details of the several accelerated depreciation methodologies or the general dynamic lift-to-drag ratio of a super-critical wing design (that’s why senior leaders hire entry-level staff) will likely be rarely employed by a fifty-or sixty-something leader, whereas how to lead teams, how to work with and through people of diverse backgrounds, how to motivate subordinates, how to attain success in complex bureaucratic organizations, and SO much more are daily and essential skills.

38

In Arcidiacono’s paper about Duke’s experience, he showed that URMs that indicated as incoming freshman STEM majors were much more likely to switch to humanities later on than either white or asian students. However in less demanding schools, URMs were more likely to stick with their STEM majors and post respectable grades at graduation and go on to find jobs in STEM fields. His central thesis was that by admitting less qualified URMs, schools like Duke are hurting rather than helping them by pushing them away from STEM fields they initially had aspirations for.

Granted, Arcidiacono’s conclusion was kind of “explosive” in the views of some Duke students ( see, eg, http://www.thecollegefix.com/post/10157/). Yes, perhaps it is true that diversity contributes to other parts of “learning experience” on elite college campus, but I am no economist and I am not sure how would one go about collecting relevant data to support this claim. If elite colleges were not so tightfisted about making their admissions data public, I am sure economists and social scientists would be able to settle the debate once and for all.

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@Amherst5168‌ re post #37): Well, I did not perceive a real answer to my two questions, but I’ll add a third area for consideration: Arcidiacono’s thesis seems to be premised on the “fact” that URMs at elite institutions would be better off if they remained in STEM majors, rather than migrating to other disciplines. Who says so? Why? Is this equally accurate for the MANY non-URMs who transfer from STEM concentrations at the same schools? In fact, it is my understanding that, in aggregate, non-STEM alumni from many “elite” institutions actually enjoy somewhat greater average lifetime earnings.

Therefore, isn’t it quite possible that:

  1. The most-selective universities (and their many, varied constituencies) are not at all disadvantaged when STEM URMs move to other majors (your second sentence in final paragraph of post #37 applies), and
  2. The formerly-STEM URMs aren’t harmed, either.

If this is true:

  1. What’s the point of Arcidiacono’s analysis, other than further arcane, esoteric, and possibly useless information (even if once accepts its validity)?
  2. Why would the most-competitive and -selective universities even consider altering their current paradigms?
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@TopTier‌

I agree with you generally. But this statement, regarding Arcidiacono’s research (which can be said about much other research unconvincing in their applicability to student instruction) suggests that costs associated with attracting and retaining world-class professors / researchers who are not involved in teaching should be thrown out. No one would, of course, admit to being able to separate the chaff from the wheat.

It does suggest that when parents (especially full-pay parents) chase prestige to the exclusion of everything else, they fuel the cycle that causes institutions to make things look a bit shinier than necessary. I’m not surprised that institutions respond the way they do.