Everyone knows that money plays a major role in students’ college enrollment decisions. How big a role?
According to a recent study by Royall & Co., the enrollment management and alumni fundraising arm of EAB, “almost one-fifth of students who were admitted to their top choice of college or university in 2016 but decided not to go there turned it down because of the cost of attendance.”
The study’s finding was echoed in my recent conversation with a well-heeled mother of a high school senior, who expressed sentiments I’ve heard repeatedly for more than 20 years. Her daughter wanted to attend an Ivy League institution that had accepted her. The mother preferred that her daughter accept a large merit award to a prestigious research university. It was a simple cost-benefit analysis by parents, who likely would not qualify for financial aid, seeking relief from high tuition sticker prices.
The Royall findings were fairly uniform with different SAT scores and minority groups. Royall’s managing director, Peter Farrell, concludes: “Something has happened more recently that’s accelerated change. It could be demographics. It could be what we’re seeing on the macroeconomic scale about low socioeconomic (status) families being pinched. I don’t know the actual causality of this change in sentiment, but the slope line of concern seems to be upticking.”
When viewed from other perspectives with different data, the conclusions are the same. The fact is that over 40 percent of the first-time college experiences of admitted students are in a community college.
How Colleges Market “Cost of Attendance” Matters
The obvious answer may be that the sticker prices – now approaching $70,000 at a handful of the selective private colleges and universities — are the culprit. In their interpretation, however, Royall argues that families are more fundamentally questioning the value proposition. Royall asserts that colleges must focus on both their marketing and aid strategy. It’s not so much the discount but the marketing and packaging of the cost of attendance.
“Cost of College” Result of Many Factors
The Royall study also highlights other problems in how Americans understand the cost of a college education. Much of the confusion emerges from a variety of factors including how colleges price themselves, what role state and federal aid play in cost of attendance calculations, the differences between need-based and merit financial aid, and the growing importance of merit aid among higher income families.
The consumer and political pressures over the level of indebtedness that stretch back to the days in which some states offered free college tuition further compounds this problem.
New York’s Free Tuition Plan Resonating Across Other States
It is especially relevant today as the progressive agenda in American politics moves forward with new free tuition plans. Governor Cuomo’s program to extend free tuition to New Yorkers whose families make $125,000 or less annually is last week’s dramatic example.
But the New York State approach will likely resonate elsewhere as the progressive wing of the Democratic Party seeks programs and strategies that will re-attach the American middle class by re-aligning the Party’s value proposition to popular middle class entitlements.
It’s gone beyond major policy shifts emerging from polling and anecdotes that have formed the basis of some education policy. The fact is that America has a growing student debt problem set against a backdrop of persistent and historically worsening income inequality.
Free Tuition Plans are Not Without Costs
It may be that free college tuition is a good next move in enlightened federal policy. It’s just that the “all in” costs of added labor, capital, marketing, assessment, and regulatory reporting expenses seem absent from the cost calculation in the program.
It is equally uncertain that free tuition will do anything to build a seamless pathway for students to improve retention and graduation rates.
For families and independent students, it’s all very confusing. Neil Swidey’s feature in the Boston Globe was a sobering assessment of how students did not fully appreciate the ramifications of their grant and loan commitments.
America’s colleges and universities must bear significant responsibility for the confusion students and families face in determining costs and indebtedness. They are hotbeds of cultural inertia, embracing college aid and pricing strategies from the last century that no longer apply, however noble the original intention might have been.
The hard truth is that the pricing of tuition, fees, room and board has broken down. It’s an “all individuals for themselves” approach that conflates and confuses grants and loans without simple definitions and clear direction. It pits one educational institution against another.
It’s a hopeless educational quagmire because the range of state, federal, corporate, donor and college partners all operate under different rules that make it extraordinarily hard to calculate what and whether to save, where to go, and how to know when you have struck the best deal.
It’s time for common sense to win out in tuition pricing strategies. For families, it begins with a better sense of who’s on first base. For tuition-dependent institutions in an uncertain political environment, time is running out.
It may be an effort to continue Bernie Sander’s legacy by re-introducing the “free college” movement. It may also be a way to recast the Democratic Party in its “return to the working class defender” role. Or, it may be that New York Governor Andrew Cuomo is staking his claim to be one of the new crop of Democratic contenders after the end of the Bush and Clinton American political dynasties.
Whatever the reason, Gov. Cuomo’s proposals on making college affordable and halting student debt will be watched closely.
Gov. Cuomo proposed last week to offer free tuition at New York’s large, comprehensive statewide university systems. Significantly, it would be the first program to expand the free college tuition promise from two to four years. Currently, Tennessee and Oregon have two-year options available.
Cuomo’s plan, called the Excelsior Scholarship, would provide free college tuition at New York’s public two- and four-year institutions to students whose families make up to $125,000 a year. Gov. Cuomo will phase in the program over three years, ending in 2019. It’s meant to provide immediate relief and establish a track record – all before the 2020 campaign.
Students will need to be enrolled full-time to participate in the Excelsior Scholarship. It will also be a “last dollar” strategy after existing state and federal grants have been applied to tuition costs. Cuomo’s office estimated that about 80 percent of New Yorkers make less than $125,000 per annum and about 940,000 of them have college-eligible dependents.
$163 Million Cost is Fraction of New York’s $10+ Billion Higher Ed Budget
The program is projected to cost $163 million annually once the state completes its phase in. New York already has an existing Tuition Assistance Program that provides about $1 billion in support. When capital projects and additional services are factored in, New York spent about $10.7 billion on higher education in 2016.
Governor Cuomo deserves praise as an activist and innovator by offering a potential remedy to rising tuition costs and high levels of student debt. Some critics point out that many lower-income students already qualify for enough aid to cover tuition costs. They note his proposal does not cover the full cost of attendance beyond tuition. Additionally, about one-third of the students attend the CUNY and SUNY systems part-time and would likely not be eligible to participate in the program.
As you might imagine, skeptical Republicans want to look at the cost of this new entitlement program.
In a sense, it’s a little like the opening salvos on the Affordable Care Act. Like access to health care, there is strong public support to address college debt. The federal government has already invested billions in grants and loans extended to millions of Americans through popular existing programs like the Pell grant.
Set against this national backdrop, New York represents an excellent test case. With two huge state university systems in place as the foundation of a comprehensive higher education platform, New York is also the home to the country’s largest collection of private colleges and universities. Many of these private colleges serve their local communities admitting predominantly New York State residents. They share the same admissions market with their public neighbors.
What Impact Will Excelsior Scholarship Have on Private Colleges?
The first and most obvious question is what will happen to New York when its statewide admissions recruiting is thrown into chaos and disarray when Mr. Cuomo’s proposal disproportionately tilts the scales toward public sector institutions?
Since the less well-endowed private colleges are heavily tuition dependent, what impact will the migration of large numbers of students to public colleges and universities have on the viability and durability of local private institutions?
It is unreasonable to assume that increasing the college going rates will have a net neutral effect on the size of private college admission classes after the state government intervenes to price out private colleges from the competition for incoming students.
Can New York’s Public Higher Ed Handle Influx of Students?
Further, can the community college and upper division public college and university systems handle the projected influx of students given their current faculty and staff levels, programmatic base, and facilities infrastructure? Is it fair to have the state government expect them to do so? If not, what is the real “all in” cost of Mr. Cuomo’s proposal?
Third, does the admission of larger numbers into the public sector pipeline translate into worsening persistence and graduation rates as the numbers are not matched by corresponding spending increases, including in counseling and support services that are critical to making expanding public sector opportunities viable? There is considerable danger in having government argue in complex higher education communities like New York that government-aligned institutions like CUNY and SUNY can be redeployed to solve problems like student debt and the college-going rate. Let me be clear here. They are part of the solution and their funding should reflect their enormous value to their localities, regions, and the state.
The history of New York suggests that the best solution is a thoughtful collaborative one that values education where it happens. The economic vitality of the state going forward will depend on it.