Tag Archives: College Cost

More colleges offering tuition guarantees or fixed tuition

24 Dec

About 25 years ago, Secretary of Education Bennett introduced a hypothesis about the rising cost of college. Andrew Gillen describes the “Bennett Hypothesis” in The Center for College Affordability & Productivity report, Introducing Bennett Hypothesis 2.0:

A quarter of a century ago, then Secretary of Education William J. Bennett made waves by declaring:
“If anything, increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase.”1
From that point forward, the notion that increases in financial aid cause increases in tuition has gone by the moniker of the Bennett Hypothesis, and its validity has been hotly debated ever since. http://centerforcollegeaffordability.org/uploads/Introducing_Bennett_Hypothesis_2.pdf

The debate about what causes increases in college costs continues.

Josh Mitchell has an intriguing article in the Wall Street Journal (WSJ) article about a study documenting increased tuition in for-profit colleges where there is increased federal student aid. In New Course in College Costs, Mitchell reports.

The new study found that tuition at for-profit schools where students receive federal aid was 75% higher than at comparable for-profit schools whose students don’t receive any aid. Aid-eligible institutions need to be accredited by the Education Department, licensed by the state and meet other standards such as a maximum rate of default by students on federal loans.
The tuition difference was roughly equal to the average $3,390 a year in federal grants that students in the first group received, according to the National Bureau of Economic Research working paper by Claudia Goldin of Harvard University and Stephanie Riegg Cellini of George Washington University.
The authors only examined programs that award associate’s degrees and nondegree certificates in fields including business, computer sciences and cosmetology. They didn’t look at tuition charged for bachelor’s degrees or at public and private nonprofit universities, which together educate roughly 90% of postsecondary students.
The authors said their findings lent “credence to the…hypothesis that aid-eligible institutions raise tuition to maximize aid.”
Steve Gunderson, president of the Association of Private Sector Colleges and Universities, a trade group for for-profit schools, disputes a link between federal aid and prices, saying colleges merely respond to market demand.
The study’s authors warned their findings don’t apply to public colleges and private nonprofit schools, which they say are different because they aren’t motivated by profits and because their prices are largely determined by state funding and donations. http://online.wsj.com/article/SB10001424052702303296604577454862437127618.html?wpisrc=nl_wonk

Citation:

Does Federal Student Aid Raise Tuition? New Evidence on For-Profit Colleges
Stephanie Riegg Cellini, Claudia Goldin
NBER Working Paper No. 17827
Issued in February 2012
NBER Program(s): DAE ED PE
We use administrative data from five states to provide the first comprehensive estimates of the size of the for-profit higher education sector in the U.S. Our estimates include schools that are not currently eligible to participate in federal student aid programs under Title IV of the Higher Education Act and are therefore missed in official counts. We find that the number of for-profit institutions is double the official count and the number of students is between one-quarter and one-third greater. Many for-profit institutions that are not Title IV eligible offer programs and certificates that are similar, if not identical, to those given by institutions that are part of Title IV. We find that the Title IV institutions charge tuition that is about 75 percent higher than that charged by comparable institutions whose students cannot apply for federal financial aid. The dollar value of the premium is about equal to the amount of financial aid received by students in eligible institutions, lending credence to the “Bennett hypothesis” that aid-eligible institutions raise tuition to maximize aid.
You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.
Information about Free Papers
You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a “.GOV” domain name, or a resident of nearly any developing country or transition economy.

The reasons for escalating tuition are complex.

David H. Feldman writes in the article, Myths and Realities about Rising College Tuition for the National Association of Student Financial Aid Administrators.

The dysfunction narrative is the alternative tale of rising cost, and it is a sexier story with lots of villains. But it doesn’t fit the evidence very well. In this brief space I cannot address every part of that narrative, but a few choice nuggets of information should suffice.
Competition: If prestige competition were a driving engine of college cost, we would expect to see cost rising more rapidly in four-year schools than at community colleges. Four-year programs house the expensive research facilities and hire the superstar scholars. Yet the growth rate in expenditures per student at four-year and two-year programs is quite similar.
Administrative Bloat: Within the dysfunction narrative, any increase in the number of “administrators per student” is often taken as evidence of inefficiency. This notion is flawed on at least two grounds. Schools have dramatically reduced their clerical employment, and this raises the percentage of the employee base that is administrative. This is not a sign of inefficiency. At the same time, schools have added professional staff in everything from IT to counseling. But these same shifts are happening almost everywhere in the U.S. economy. The percentage of Americans who work in jobs classified as administrative has risen substantially over the last quarter century. This context is often missing from bloat stories, as is the benefit to student retention rates and graduation rates from the professionalized support staff available to help them.
Tenure: Lastly, faculty tenure and workplace culture have very little to do with college cost. For starters, tenure is a declining institution. The fraction of the faculty on tenure track has fallen steadily over the past few decades, especially at cash-strapped public institutions. Although the academy is not a particularly efficient institution, there is no good evidence that it has become more inefficient over time.
The Realities Are More Complex
The most important engine of cost growth in higher education is the fact that productivity growth in some industries, like manufacturing, has outstripped productivity growth in others, including artisan services like higher education. But this effect does not necessarily make college less affordable to the average family. Productivity growth, after all, adds to the nation’s income. To understand college affordability problems, we must look elsewhere.
Two features of the economic landscape have had a big effect on affordability. The first is a sea change in budget priorities in the states. In 1975, states allocated roughly $10.50 to higher education for every $1,000 of per capita state income. Today the figure is around $6.00, despite a massive increase in the number of students seeking postsecondary education. This type of budgeting has resulted in tuition increases at public universities, which have negatively impacted the availability and quality of their academic programs. The effect on affordability is clear. In 1975, the states picked up 60% of the tab for a year in college while families shouldered 33%. The federal government picked up the remaining 7%. Today, the states pay only 34% while families bear 50% of the cost. The federal government’s share, through grants and tax credits, is currently 16%. Much of this surge in the federal government’s share is a temporary response to the 2008 financial crisis and recession. Over the last 30 years, the federal share has normally been in the 10% range….
Private schools have long used tuition discounting as a way to reach families whose personal finances make an expensive private program a financial stretch. But discounting is itself a force for pushing up the list-price tuition that wealthier families pay. Schools need revenues to finance their programming, and if they discount the price to some students who otherwise could not come, they must increase it for others who can pay.
Over the last 20 years, private universities have pushed the envelope on tuition discounting, and this has increased the average list price. In 1993, for instance, the discount rate at private universities was roughly 25%; ten years later it had reached 32%. This means that list-price tuition rose by 30% more than if the discount rate had remained the same. Coupled with rising tuition at cash-starved public universities, the result is that many upper middle-income families increasingly bear the full impact of rising list-price tuition at both public and private institutions. http://www.nasfaa.org/advocacy/perspectives/articles/Myths_and_Realities_about

Many private schools are not only discounting tuition, but many are offering fixed tuition guarantees.

M.L. Johnson of AP reported about college tuition guarantees in the article, Hundreds Of Colleges Offering Fixed Tuition With Promises To Not Raise Rates:

Freshmen at Northland College, a small Wisconsin liberal arts school known for its environmental focus, will pay no more than $30,450 in tuition next year. They’ll pay the same the following year. And the year after that.
The college on the shore of Lake Superior is joining a growing number of schools promising fixed-rate tuition — a guarantee that students will pay a single rate for four or even five years.
The programs at schools like George Washington University, University of Kansas and Columbia College in Missouri aim to help families budget for college without worrying about big price jumps. They also give recruiters something to tout on the road to try to ease the sticker shock.
Tuition and fees at four-year public colleges rose 27 percent in the past five years, while those at four-year private schools went up 14 percent, according to the College Board.
About 320 colleges and universities offered tuition guarantees during the 2012-13 school year, according to an analysis of U.S. Department of Education data done by the National Association of Student Financial Aid Administrators. The schools represent about 6.7 percent of the nation’s nearly 4,800 institutions where students receive federal financial aid.
Many fixed-rate plans are coupled with a commitment to hold financial aid steady so students have a firm cost estimate, but they are not discounts. At Kansas, students starting as freshmen pay more than standard tuition in their first two years to offset lower rates in the last two. Other schools try to estimate expenses and inflation and set rates that cover costs when averaged over four years. Transfer students generally pay tuition for the year they enter; at Kansas, they pay standard tuition.
Students say the programs help them hold down costs by allowing them to budget wisely and borrow less….http://www.huffingtonpost.com/2013/12/23/fixed-tuition-colleges_n_4494525.html?utm_hp_ref=education&ir=Education

Fixed tuition plans don’t affect the overall cost of tuition.

Amanda Fox-Rouch reported in the Generation Progress story, Fixed-Rate Tuition: A Solution to Unpredictable College Costs:

Although some schools provide calculators with which students may estimate their cost of attendance for four years, the tuition rate for the first year of attendance alone is often the only predictable. After year one, tuition hikes are often expected to inflate college costs.
Tuition fees are subject to increase at any time and are often imposed at the whim of a board of trustees, unlike financing a car or mortgage a house, which are financial obligations that often require relatively predictable payments over time.
Fears of rising tuition are not completely ungrounded. Tuition rates have increased by an average of eight percent during the past year.
According to a CampusGrotto study, in 2007 only one school—George Washington University—had a total cost including tuition, housing, and other fees that exceeded $50,000. In 2011, by contrast, 19 universities had fees totaling more than $55,000, indicating wildly fluctuating costs within the college market.
Fixing tuition ultimately deprives universities of their power to initiate tuition hikes that may compromise students’ abilities to continue their schooling.
Those colleges that currently offer fixed tuition may have been spurred by President Obama’s announcement earlier this year of a plan that would reward colleges with federal funds if they actively work to minimize tuition costs.
Fixed-rate plans may not do much to significantly impact the cost of attending college, as many schools that provide a fixed tuition rate have raised the tuition for subsequent classes at a higher than average rate. In addition, the fixed rate only applies to tuition; schools that offer a fixed tuition plan can still raise other costs such as housing and technology fees.
In addition, guaranteed fixed-rate tuition is difficult to impose in public universities due to the state regulations that the schools must adhere to.
Trustee boards at private universities, however, have a bit more leeway—and thus more of an obligation—to make their schools more affordable….
http://genprogress.org/voices/2012/10/11/18132/fixedrate-tuition-a-solution-to-unpredictable-college-costs/

A couple of questions. First, has anyone ever looked at how efficient the academic world is in spending current resources? Second, is the current institutional model one that works? Should there be changes in the institutional model?

There is no simple answer to the question of why college tuition has risen so fast, but it is time to look at the college as an institutional model and to ask whether there could be a more efficient institutional structure. See, Can free online universities change the higher education model? https://drwilda.wordpress.com/2012/01/23/can-free-online-universities-change-the-higher-education-model/

Related:
Myth: Increases in Federal Student Aid Drive Increases in Tuition http://www.acenet.edu/AM/Template.cfm?Section=Home&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=45224

The Center for College Affordability & Productivity http://centerforcollegeaffordability.org/archives/8046

Did Federal Aid Break the Education Market?
http://www.educationnews.org/higher-education/did-federal-aid-break-the-education-market/

Where information leads to Hope. © Dr. Wilda.com

Dr. Wilda says this about that ©

Blogs by Dr. Wilda:

COMMENTS FROM AN OLD FART©
http://drwildaoldfart.wordpress.com/

Dr. Wilda Reviews ©
http://drwildareviews.wordpress.com/

Dr. Wilda ©
https://drwilda.com/

Tuition is only the beginning of college costs

15 Aug

Moi wrote about college costs in Figuring actual college costs:
Beckie Supiano and Elyse Ashburn wrote With New Lists, Federal Government Moves to Help Consumers and Prod Colleges to Limit Price Increases in the Chronicle of Higher Education http://chronicle.com/article/Governments-New-Lists-on/128092/ about the U.S. Department of Education’s new site about college costs. As college becomes more unaffordable for more and more people, they are looking at ways to cut college costs.
Suzanna de Baca wrote the great Time article, The 12 Hidden College Expenses:

Here are some less obvious but common — and pricey — expenses to watch for:
Books and media: According to the College Board, the average annual cost of books for a college student ranges from $850 to $1,000. This is one item you shouldn’t skimp on. To save money, buy used textbooks (even cheaper used books can be found online vs. in the bookstore) or use library resources. If books cost more than you expected, revise the textbook budget for future semesters accordingly.
Class and parking fees: Some classes — like art or chemistry — charge fees for materials and studio or lab use. Know in advance which classes come with additional fees and plan for them so you aren’t blindsided. Also, many schools or cities charge for parking on or near campus, so find out how much a parking pass costs.
Having fun: Campus life often includes socializing and entertainment. However, movies, concerts and sporting events come with a cost. If this is a priority, explore purchasing a discounted season sports or events package vs. paying per event. Also, set entertainment spending limits for yourself or your child.
Fraternities and sororities: The Greek system can be pricey. Dues may be required (from modest to expensive), and joining halfway through the year can require paying for months past, which can double the dues. Other required Greek spending, like clothing for special events and traveling, can also add up.
Getting involved: Learning experiences outside the classroom are an important part of college, but clubs, intramural sports and memberships may cost money and require the purchase of T-shirts or member memorabilia. When considering activities, think about what’s most important and weigh the varying costs.
Furnishings: You have likely purchased items not included in the dorm plan, like bedding, towels, lamps, decorations, furniture, laundry and waste baskets, bulletin boards, hair dryers and even storage and appliances. Once settled, you may have a new list of things you discovered you’re missing, like a vacuum or other electronics. Think about what is necessary, as many of these items have a limited life postcollege and can often be rented or shared.
Electronics: According to the National Retail Federation’s 2012 Back to School report, electronics are popular expenditures with college students: 60% said they will buy a new computer, MP3 player, smart phone or other device and will spend an average $217.88. Tack on a new flat screen for the dorm room, and the cost of electronics seems daunting. Determine what non-necessary electronics you can afford to splurge on in advance, and avoid peer pressure around purchasing the hottest new item.
Cable TV: Most dorms have common areas with TVs that have cable access. However, many students opt for cable in their room or apartment on or off campus — at a fee! Evaluate how much time you spend at home or in your room and determine whether the cost is worth it, especially given the options now available in streaming media for both entertainment and news.
Wardrobe: While purchasing back-to-school clothing is an annual affair for most students, once on campus, unexpected clothing purchases may emerge. Internship interviews and extracurricular activities along with other special events may all require specific attire. Try to anticipate these expenses and think about delaying your shopping trip until after you get to campus. Consider which purchases are priorities and make budget trade-offs if you tend to spend more on clothes.
Mobile-phone service: Understanding the right mobile-phone plan is important. Your chatting, texting and data-downloading habits may change at school as you keep in touch with friends or use services throughout business hours. Staying on the family plan is usually a good option, but determine which provider has the best service on campus.
Food and beverage: While you may have a food plan, the cost of eating out and buying snacks and beverages for the dorm may be more than you think. You also might overspend on these things as you navigate campus life.
Travel: Most students go home to visit several times a year, so budget for gas or plane tickets. Since these trips will likely happen at heavy travel times, plan ahead to get good prices. If you’re a parent planning to visit your child’s campus, don’t forget to plan for your trips, which can include many of the same costs as a vacation: travel, food, transportation and entertainment. Talk about how often is realistic for you to see your family based on travel costs and consider using technologies like Skype to eliminate some of these costs.
http://healthland.time.com/2012/11/16/the-13-hidden-college-expenses/#ixzz2CzQ5qfnK
https://drwilda.com/2012/11/25/figuring-actual-college-costs/

Families must look at all college costs to plan a budget.

Phillip Elliott of AP wrote the article, Tuition Costs Trumped By College Housing, Food Bills: College Board:

A look at typical college students’ budgets last year and how they’re changing:
COMMUNITY COLLEGES
The public two-year schools charged in-state students an average $3,131 last year, up almost 6 percent from the previous year. While the tuition hike was larger than at other types of schools, students at community colleges saw the smallest increase in room and board costs – a 1 percent increase to $7,419. Total charges for students to attend an in-state public two-year school: $10,550.
Tuition and fees at community colleges are up 24 percent beyond overall inflation over the past five years, according to the College Board.
PUBLIC FOUR-YEAR SCHOOLS
Tuition for students attending public four-year schools in their state was an average $8,655 last year, a 5 percent jump from the previous year. They paid more than that – $9,205 – for housing and food. These schools, like other four-year schools, posted a 4 percent jump in housing costs. Add in books and supplies, transportation and other costs and the total reaches $17,860 to attend an in-state public school, such as a student from Tallahassee attending Florida State University. When grants and scholarships are included, the average student pays $12,110 at such schools.
For students who choose to attend state schools outside their home state, the costs increase to $30,911. They pay the same $9,205 price tag for room and board, but the tuition rates are more expensive. The typical student who crossed state lines to attend a public college in 2012 paid $21,706 in tuition and fees after grants and scholarships – a 4 percent jump from the previous year.
Over the past five years, the tuition sticker price at public four-year colleges is up 27 percent beyond overall inflation.
PRIVATE SCHOOLS
On the surface, private four-year schools are the most costly colleges, with the average student’s sticker price coming in at $39,518 for all expenses. Tuition and fees were $29,056 last year – another 4 percent jump – while room and board ran to $10,462. After grants and scholarships, the average student paid $23,840 to attend schools such as Yale or Stanford.
The tuition at private schools was up 13 percent beyond overall inflation over the past five years adjusted for inflation. http://www.huffingtonpost.com/2013/08/13/tuition-costs-college-housing-food_n_3748511.html?utm_hp_ref=email_share

Applying to a college is just the first step. Students and families also have to consider the cost of particular college options.

Resources:

Five Ways to Cut the Cost of College http://www.cnbc.com/id/41626500/Five_Ways_to_Cut_the_Cost_of_College

Secrets to paying for college
http://money.cnn.com/2012/03/27/pf/college/tuition-costs.moneymag/index.htm

College Preparation Checklist
https://studentaid.ed.gov/sites/default/files/college-prep-checklist.pdf

Federal Student Aid
http://studentaid.ed.gov/resources

Related:

Choosing the right college for you https://drwilda.com/2012/04/15/choosing-the-right-college-for-you/
Many U.S. colleges use the ‘Common Application’ https://drwilda.com/tag/college-cost/

Where information leads to Hope. © Dr. Wilda.com

Dr. Wilda says this about that ©

Blogs by Dr. Wilda:

COMMENTS FROM AN OLD FART© http://drwildaoldfart.wordpress.com/
Dr. Wilda Reviews © http://drwildareviews.wordpress.com/
Dr. Wilda © https://drwilda.com/

Is federal student aid the cause of rising tuition?

12 Jun

About 25 years ago, Secretary of Education Bennett introduced a hypothesis about the rising cost of college. Andrew Gillen describes the “Bennett Hypothesis” in The Center for College Affordability & Productivity report, Introducing Bennett Hypothesis 2.0:

A quarter of a century ago, then Secretary of Education William J. Bennett made waves by declaring:

If anything, increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase.”1

From that point forward, the notion that increases in financial aid cause increases in tuition has gone by the moniker of the Bennett Hypothesis, and its validity has been hotly debated ever since. http://centerforcollegeaffordability.org/uploads/Introducing_Bennett_Hypothesis_2.pdf

The debate about what causes increases in college costs continues.

Josh Mitchell has an intriguing article in the Wall Street Journal (WSJ) article about a study documenting increased tuition in for-profit colleges where there is increased federal student aid. In New Course in College Costs, Mitchell reports.

The new study found that tuition at for-profit schools where students receive federal aid was 75% higher than at comparable for-profit schools whose students don’t receive any aid. Aid-eligible institutions need to be accredited by the Education Department, licensed by the state and meet other standards such as a maximum rate of default by students on federal loans.

The tuition difference was roughly equal to the average $3,390 a year in federal grants that students in the first group received, according to the National Bureau of Economic Research working paper by Claudia Goldin of Harvard University and Stephanie Riegg Cellini of George Washington University.

The authors only examined programs that award associate’s degrees and nondegree certificates in fields including business, computer sciences and cosmetology. They didn’t look at tuition charged for bachelor’s degrees or at public and private nonprofit universities, which together educate roughly 90% of postsecondary students.

The authors said their findings lent “credence to the…hypothesis that aid-eligible institutions raise tuition to maximize aid.”

Steve Gunderson, president of the Association of Private Sector Colleges and Universities, a trade group for for-profit schools, disputes a link between federal aid and prices, saying colleges merely respond to market demand.

The study’s authors warned their findings don’t apply to public colleges and private nonprofit schools, which they say are different because they aren’t motivated by profits and because their prices are largely determined by state funding and donations. http://online.wsj.com/article/SB10001424052702303296604577454862437127618.html?wpisrc=nl_wonk

Citation:

Does Federal Student Aid Raise Tuition? New Evidence on For-Profit Colleges

Stephanie Riegg Cellini, Claudia Goldin

NBER Working Paper No. 17827
Issued in February 2012
NBER Program(s):   DAE   ED   PE

We use administrative data from five states to provide the first comprehensive estimates of the size of the for-profit higher education sector in the U.S. Our estimates include schools that are not currently eligible to participate in federal student aid programs under Title IV of the Higher Education Act and are therefore missed in official counts. We find that the number of for-profit institutions is double the official count and the number of students is between one-quarter and one-third greater. Many for-profit institutions that are not Title IV eligible offer programs and certificates that are similar, if not identical, to those given by institutions that are part of Title IV. We find that the Title IV institutions charge tuition that is about 75 percent higher than that charged by comparable institutions whose students cannot apply for federal financial aid. The dollar value of the premium is about equal to the amount of financial aid received by students in eligible institutions, lending credence to the “Bennett hypothesis” that aid-eligible institutions raise tuition to maximize aid.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Information about Free Papers

You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a “.GOV” domain name, or a resident of nearly any developing country or transition economy.

The reasons for escalating tuition are complex.

David H. Feldman writes in the article, Myths and Realities about Rising College Tuition for the National Association of Student Financial Aid Administrators.

The dysfunction narrative is the alternative tale of rising cost, and it is a sexier story with lots of villains. But it doesn’t fit the evidence very well. In this brief space I cannot address every part of that narrative, but a few choice nuggets of information should suffice. 

Competition: If prestige competition were a driving engine of college cost, we would expect to see cost rising more rapidly in four-year schools than at community colleges. Four-year programs house the expensive research facilities and hire the superstar scholars. Yet the growth rate in expenditures per student at four-year and two-year programs is quite similar. 

Administrative Bloat: Within the dysfunction narrative, any increase in the number of “administrators per student” is often taken as evidence of inefficiency. This notion is flawed on at least two grounds. Schools have dramatically reduced their clerical employment, and this raises the percentage of the employee base that is administrative. This is not a sign of inefficiency. At the same time, schools have added professional staff in everything from IT to counseling. But these same shifts are happening almost everywhere in the U.S. economy. The percentage of Americans who work in jobs classified as administrative has risen substantially over the last quarter century. This context is often missing from bloat stories, as is the benefit to student retention rates and graduation rates from the professionalized support staff available to help them.

Tenure: Lastly, faculty tenure and workplace culture have very little to do with college cost. For starters, tenure is a declining institution. The fraction of the faculty on tenure track has fallen steadily over the past few decades, especially at cash-strapped public institutions. Although the academy is not a particularly efficient institution, there is no good evidence that it has become more inefficient over time.

The Realities Are More Complex

The most important engine of cost growth in higher education is the fact that productivity growth in some industries, like manufacturing, has outstripped productivity growth in others, including artisan services like higher education. But this effect does not necessarily make college less affordable to the average family. Productivity growth, after all, adds to the nation’s income. To understand college affordability problems, we must look elsewhere. 

Two features of the economic landscape have had a big effect on affordability. The first is a sea change in budget priorities in the states. In 1975, states allocated roughly $10.50 to higher education for every $1,000 of per capita state income. Today the figure is around $6.00, despite a massive increase in the number of students seeking postsecondary education. This type of budgeting has resulted in tuition increases at public universities, which have negatively impacted the availability and quality of their academic programs. The effect on affordability is clear. In 1975, the states picked up 60% of the tab for a year in college while families shouldered 33%.  The federal government picked up the remaining 7%. Today, the states pay only 34% while families bear 50% of the cost. The federal government’s share, through grants and tax credits, is currently 16%. Much of this surge in the federal government’s share is a temporary response to the 2008 financial crisis and recession. Over the last 30 years, the federal share has normally been in the 10% range.

Over the same span of years, the income distribution in the United States has changed dramatically. This is another major force for creating affordability problems in higher education. In the 1960s, an average person with a high school diploma could live a comfortable, middle-income lifestyle. That statement no longer holds true. As people who were once solidly middle class find themselves falling further down the distributional ladder, their children increasingly find a college education more difficult to finance.

Figure 2 shows how the U.S. income distribution has changed over the last 45 years.  Two things are apparent: First, the bulk of the income gains over the last generation have gone to people with above-average income; these people are mostly the well-educated. Second, over the last decade, all but the extremely wealthy (top 1-2%) have seen their real income stagnate. This is why the affordability problem has so captured the public’s attention in recent years. Even families with incomes well above the national median are feeling pinched.

Private schools have long used tuition discounting as a way to reach families whose personal finances make an expensive private program a financial stretch. But discounting is itself a force for pushing up the list-price tuition that wealthier families pay. Schools need revenues to finance their programming, and if they discount the price to some students who otherwise could not come, they must increase it for others who can pay. 

Over the last 20 years, private universities have pushed the envelope on tuition discounting, and this has increased the average list price. In 1993, for instance, the discount rate at private universities was roughly 25%; ten years later it had reached 32%. This means that list-price tuition rose by 30% more than if the discount rate had remained the same. Coupled with rising tuition at cash-starved public universities, the result is that many upper middle-income families increasingly bear the full impact of rising list-price tuition at both public and private institutions.  http://www.nasfaa.org/advocacy/perspectives/articles/Myths_and_Realities_about_Rising_College_Tuition.aspx

Related:

Myth: Increases in Federal Student Aid Drive Increases in Tuition http://www.acenet.edu/AM/Template.cfm?Section=Home&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=45224

The Center for College Affordability & Productivity http://centerforcollegeaffordability.org/archives/8046

Did Federal Aid Break the Education Market? http://www.educationnews.org/higher-education/did-federal-aid-break-the-education-market/

Gillen concludes his report with the following conclusion:

Original Bennett Hypothesis + a couple refinements + Bowen’s Rule = Bennett Hypothesis 2.0.

The original Bennett Hypothesis held that increases in financial aid will lead to higher tuition, but the empirical evidence testing the hypothesis is inconclusive. The next generation of the concept, Bennett Hypothesis 2.0, adds three refinements.

1. All Aid is Not Created Equal

2. Selectivity, Tuition Caps, and Price Discrimination are Important

3. Don’t Ignore the Dynamic Story

These three refinements not only help explain the mixed empirical evidence, but also provide a better understanding of the relationship between financial aid and tuition. While the first two refinements weaken the link between the two (lessening our concern about Bennett Hypothesis 2.0), the third refinement strengthens the link, implying that we should almost always be concerned about financial aid leading to higher tuition. Given the current structure of the higher education system, Bennett Hypothesis 2.0 implies that the government will always be fighting a losing battle to increase access to college or improve college affordability since “additional government [financial aid] funds keep providing revenues that, under the current incentive system, increase costs.”54 As higher financial aid pushes costs higher, it inevitably puts upward pressure on tuition. Higher tuition, of course, reduces college affordability, leading to calls for more financial aid, setting the vicious cycle in motion all over again.

Bennett Hypothesis 2.0 exacerbates rather than causes out of control spending by colleges, the ultimate cause of which is Bowen’s Rule. Nevertheless, that is no excuse for ill-designed financial aid programs to pour fuel the fire. As Bennett noted:

Federal student aid policies do not cause college price inflation, but there is little doubt that they help make it possible.”55

Those words remain just as true today as they were a quarter century ago. http://centerforcollegeaffordability.org/uploads/Introducing_Bennett_Hypothesis_2.pdf

A couple of questions. First, has anyone ever looked at how efficient the academic world is in spending current resources?  Second, is the current institutional model one that works? Should there be changes in the institutional model?

There is no simple answer to the question of why college tuition has risen so fast, but it is time to look at the college as an institutional model and to ask whether there could be a more efficient institutional structure. See, Can free online universities change the higher education model? https://drwilda.wordpress.com/2012/01/23/can-free-online-universities-change-the-higher-education-model/

Dr. Wilda says this about that ©

Many U.S. colleges use the ‘Common Application’

15 May

Many students are preparing to apply to college and they will be using the the “Common Application” which is used by over 450 universities including some international schools. According to the “Common Application” site:

GENERAL QUESTIONS

WHAT IS THE COMMON APPLICATION?
The Common Application is a not-for-profit organization that serves students and member institutions by providing an admission application – online and in print – that students may submit to any of our 456 members.

The Common App Online Demo for Students (Flash Movi

WHY USE IT?
Once completed online or in print, copies of the Application for Undergraduate Admission can be sent to any number of participating colleges. The same is true of the School Report, Optional Report, Midyear Report, Final Report and Teacher Evaluation forms. This allows you to spend less time on the busywork of applying for admission, and more time on what’s really important: college research, visits, essay writing, and senior year coursework.

IS IT WIDELY USED?
Absolutely! Millions of Common Applications are printed and accepted by our members each year. In addition, last year almost 2.5 million applications were submitted via the Common App Online.

IS IT TREATED FAIRLY?
YES! Our college and university members have worked together over the past 35 years to develop the application. All members fully support its use, and all give equal consideration to the Common Application and the college’s own form. Many of our members use the Common Application as their only undergraduate admission application.

CAN ALL COLLEGES PARTICIPATE?
Membership is limited to colleges and universities that evaluate students using a holistic selection process. A holistic process includes subjective as well as objective criteria, including at least one recommendation form, at least one untimed essay, and broader campus diversity considerations. The vast majority of colleges and universities in the US use only objective criteria – grades and test scores – and therefore are not eligible to join. If a college or university is not listed on this website, they are not members of the consortium. Sending the Common Application to non-members is prohibited.

WHAT IS THE COMMON APP ONLINE SCHOOL FORMS SYSTEM?
As part of the application process, schools require a variety of information to be provided by teachers and guidance counselors who have interacted with you in the high school environment. Until last year, those forms were only available as PDF files that could be printed, copied, and mailed to the appropriate colleges. Now each teacher and counselor will have the option to complete the forms online via the Common App Online School Forms system if they desire. There is no cost to you or high schools, and using the online system is completely optional for your teachers and counselor.

When you create an account on the Common App Online, you must first indicate what high school you attend. Once this information has been saved, you can access a ‘School Forms’ section of the Common App where teachers and counselors can be identified. By adding a teacher or counselor to the list of school officials, an email is triggered to the teacher or counselor with information about how to log into the Online School Forms system or how to opt for the “offline” or paper process. You are then able to track the progress of your various teachers and counselors via a screen within the Common App Online.

The Common App Online School Forms System Demo (Flash Movie) Camera

WHAT IF I’M A TRANSFER STUDENT?
There’s a Common Application for Transfer Admission as well as First-Year Admission. The Transfer Application is available primarily for online submission; however, the form can be downloaded in PDF format from our Download Forms page.

https://www.commonapp.org/CommonApp/FAQ.aspx

In addition to U.S. colleges, colleges in England, France, Germany, Italy, and Switzerland use the “Common Application.” For a good synopsis of the pros and cons of using the application, go to Should I Use The Common Application? http://www.usnews.com/education/blogs/college-admissions-experts/2011/09/07/should-i-use-the-common-application

Valerie Strauss writes in the Washington Post article:

When the Common Application was developed in 1975, officials hoped it would reduce the number of separate applications and essays a student applying to numerous colleges would have to complete. Actually, many colleges still require additional information, including more essays. So students, beware: There’s a lot of work to do.

So what are the undergraduate application essays? They are pretty much the same as last year, and the year before. Here are the instructions:

Please write an essay of 250-500 words on a topic of your choice or on one of the options listed below, and attach it to your application before submission. Please indicate your topic by checking the appropriate box. This personal essay helps us become acquainted with you as a person and student, apart from courses, grades, test scores, and other objective data. It will also demonstrate your ability to organize your thoughts and express yourself. NOTE: Your Common Application essay should be the same for all colleges. Do not customize it in any way for individual colleges. Colleges that want customized essay responses will ask for them on a supplement form.

* Evaluate a significant experience, achievement, risk you have taken, or ethical dilemma you have faced and its impact on you.

* Discuss some issue of personal, local, national, or international concern and its importance to you.

* Indicate a person who has had a significant influence on you, and describe that influence.

* Describe a character in fiction, a historical figure, or a creative work (as in art, music or science, etc.) that has had an influence on you, and explain that influence.

* A range of academic interests, personal perspectives, and life experiences adds much to the educational mix. Given your personal background, describe an experience that illustrates what you would bring to the diversity in a college community or an encounter that demonstrated the importance of diversity to you.

* Topic of your choice.

http://www.washingtonpost.com/blogs/answer-sheet/post/2012-13-common-application-previews-available/2012/05/15/gIQAnQ79PU_blog.html

Applying to a college is just the first step. Students and families also have to consider the cost of particular college options.

Beckie Supiano and Elyse Ashburn have written the article, With New Lists, Federal Government Moves to Help Consumers and Prod Colleges to Limit Price Increases in the Chronicle of Higher Education about the Department of Education’s new site about college costs.

Resources:

College Preparation Checklist

College Preparation Checklist Brochure

Federal Student Aid At A Glance 2011 – 2012

Funding Education Beyond High School

Dr. Wilda says this about that ©

3rd world America: College increasingly out of reach

27 Oct

Moi really doesn’t know what to make of the idea of privatizing state universities.  In the recent past, government had the goal of raising the standard of living and producing the economic conditions that fostered livable wage jobs. The goal of most politicians was to create the conditions that promoted and fostered a strong middle class. Particularly, after WWII and the Korean War, with the G.I Bill, one part of that equation was the wide availability of a college education. This push produced an educated workforce and a college education was within reach, no matter one’s class or social status. This educated workforce helped drive this country’s prosperity. Now, have we lost the goal of providing educational opportunity the widest number of people possible, no matter their class or social status? This question causes moi to wonder about privatizing state universities.

Sam Dillion was writing about the prospect of privatizing public universities in the New York Times in 2005. See, At Public Universities, Warnings of Privatization In 2004, William Symonds wrote an opinion piece in Business Week about the role of public universities 

Justin Pope, AP Education Writer details just how fast college costs are rising all over the country in the article, College prices up again as states slash budgets:

Average in-state tuition and fees at four-year public colleges rose an additional $631 this fall, or 8.3 percent, compared with a year ago.

Nationally, the cost of a full credit load has passed $8,000, an all-time high. Throw in room and board, and the average list price for a state school now runs more than $17,000 a year, according to the twin annual reports on college costs and student aid published Wednesday by the College Board.

http://www.time.com/time/nation/article/0,8599,2097835,00.html

Prospective students and families will not only have to worry about getting into college, but finding a way to pay for college.

Beckie Supiano and Elyse Ashburn have written With New Lists, Federal Government Moves to Help Consumers and Prod Colleges to Limit Price Increases in the Chronicle of Higher Education about the Department of Education’s new site about college costs. The College Affordability and Transparency Center is useful for students who are applying to college.

More people are switching careers several times during their working career and that means that they must be retrained. Many students cannot afford a traditional four year college either in terms of cost or time spent away from home. Community colleges have always offered these students educational opportunity. KCBS radio in California has a report of the push by legislators to have community colleges in California offer four year degrees. In Community Colleges Pushed to Offer Four Year Degrees Melissa Culross reports….

There are two issues when community colleges offer four year degrees and they are increasing access to educational opportunities and the realities of budgetary constraints. Each college will have to decide whether offering four year degrees fit within the college mission and the needs of the individual community. See, Robert Franco’s The Civic Role of Community Colleges: Preparing Students for the Work of Democracy

Daniel de Vise has a great article in the Washington Post, 25 Ways to Reduce the Cost of College which reports online information from the Center for College Affordability and Productivity.    

The question lawmakers should be asking themselves is why society developed public universities and do those reasons still exist? In the rush to get past this moment in time lawmakers may be destroying the very economic engine, which would drive this country out of the economic famine that currently exists. While tuition is increased for students, the pay of college administrators remains hefty. Administrators are in effect pigs at the trough and should come under some scrutiny. Of course, if the current public universities were privatized, we wouldn’t have to worry about pigs still at the trough or would we? In a totally privatized university environment, administrators could be paid what the market will allow or the regents can go wink, wink at. Wait, wasn’t unfettered pay one element in the U.S. financial meltdown?

Dr. Wilda says this about that ©