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The Price You Pay for College: An Entirely New Road Map for the Biggest Financial Decision Your Family Will Ever Make

By Ron Lieber

What you’ll learn

If you were to make a note of everything you need to apply to a single school, let alone a whole bunch of them, you might not ever begin. Students and parents alike often feel smothered by the burden of calculating financial aid, scholarships, and monthly payments, not to mention the plight of simply getting in. Fortunately, the financial writer and father of two Ron Lieber digs into the oft-ignored aspects of the higher education system, providing relevant solutions to the things parents wonder that are too often swept under that expensive dorm room rug. Selecting a school might not be a smooth and simple snap decision for students and their parents but with some help, it can be a fruitful and wise deliberation for both—and maybe a bit of bonding, too.

Read on for key insights from The Price You Pay for College.

1. College diplomas are more costly than ever—and no less significant.

A university diploma functions like a paper signpost. Whether it’s displayed in a professional office, or stored in a box in the corner of your closet, the message a college degree embodies stretches beyond any particular time period or set meaning. According to Kevin Carey, the author of the 2015 work The End of College: Creating the Future of Learning and the University of Everywhere, “There is an extremely strong cultural investment in a specific idea of college, where people don’t just go to get a credential.” Nowadays, it seems that going to college is a nonnegotiable, even despite its steadily inclining bill. But the financial pains parents must weather to help their kids acquire that desired degree push their wallets to the brink of depletion.

In a 2019 study of tuition rates over the last two decades, the College Board revealed that the visible “net price” of both public and private institutions leaped by 70 percent and 21 percent respectively. As a result, parents and students are in an increasingly expensive snag—one that might run them a tab of up to $300,000 for entrance into the most distinguished private institutions. Despite the popular assumption that decades of savings and tax-payer dollars are squandered in superficial campus improvements, like in a few schools’ lazy river systems (which the author claims are not-at-all enticing), a study by Demos found that only a slight 6 percent percent of the tuition incline at public schools is fueled by these campus needs, or more accurately, appealing perks.

As most would hope, the higher education system is a bit wiser in determining where to put all their students’ dollars. Among other costs, including a growth of university administrators and a decline in state aid for public institutions, the most expensive feature of a given university is the one that defines it. Supplying professors and faculty members with well-deserved wages, favorable schedules, and other career advantages may be costly, but it ensures that a university remains relevant in the education system—which is an even more difficult feat considering that these wise advisors are now subject to the whims of spotty Wi-Fi.

2. You might not be able to customize your college, but you should at least choose the atmosphere you want.

When Covid emptied college classrooms as quickly as the last bell before summer, Ron Lieber thought the pandemic might have sealed the deal for higher ed. Since the early 1970s, in fact, people have prophesied the gloomy decline of the education system, telling tired tuition-payers that the university as they know it will soon be no more. And yet, the institution’s paper-printed prestige and reason-defying price still persist—simply because it's much more than that. Despite the empty campuses and the dwindling quality of instruction that the pandemic inevitably brought, higher education isn’t obsolete just yet. If anything, it just got its second wind.

The fact that classroom doors didn’t shut eternally in the aftermath of the Covid-19 pandemic reveals a lot about the world of academia. Most importantly, it reaffirms the necessity of the in-person higher education experience as a whole. To successfully venture into the oftentimes disorienting college selection search, Lieber recommends that parents and their students think deeply and ask, “What is the definition of success?” That typical “college experience” isn’t so typical if you really think about it. As Christopher G. Takacs aptly notes, “We have one word for a million different things.” After talking with various families, Lieber identified three common motivations people experience and must distinguish between when thinking about college—papers, people, and prominence.

Whether a student is seeking an intellectually enriching four years, a relationally expanding atmosphere, or simply a necessary checkmark on her way toward somewhere bigger and better, many universities offer equally valid and distinct lifestyles for students. Imagining themselves on a particular campus, enrolled in a certain course, or involved in a unique club may help students recognize which factors of their future experience will be most significant to them. Some other potentially significant features of university life to keep in mind include the size of a school, the quality of the campus, the availability of mental health care, and even the gender of the student population (think: all-women universities). 

Distinguishing an ultimate endpoint before you scour the Earth for an academic landing place will bring direction to the arduous, convoluted process of picking a school—and then, of course, paying for it, too.

3. Paying your way through the education system is hardly ever a visible route.

So how on Earth are all these parents managing to pay the increasingly stratospheric paychecks of their kids’ college tuition, anyway? In reality, many families simply don’t. According to a 2020 research study of more than 300 institutions of private higher education, the National Association of College and University Business Officers (NACUBO) found that the typical freshman student (or her gracious parents) didn’t hand over the entire university bill. A surprising 52.6% of students received a helpful “discount” on their expenses, instead. Distinct from the pay breaks students receive after filling out a FAFSA application, this “merit aid,” is awarded to accomplished students by pricey universities in order to make sure their schools stay full—for better and for worse.

According to the work of Elizabeth Duffy and Idana Goldberg in Crafting a Class: College Admissions and Financial Aid: 1955-1994, campuses weren’t always hard-pressed to charge high prices or offer considerable breaks to particular students. After WWII, the higher education system transformed into a grocery store of products with more student shoppers enrolling and partaking in academia than ever before. This inevitably led to friction among universities as each vied for the enrollment (and the cash) of the nation’s soon-to-be college students. In the 1980s, some schools were ready to improve their game—with a little help from some “merit aid.” Though this scheme was looked down upon at first, often as the plot of inferior schools, as more institutions adopted its methods, it evolved into an industry expectation.

Considering that the price tag for the contemporary college often gallops into the hundreds of thousands, this might not seem like a bad deal for a student—especially if she happens to be talented. But an institution’s “enrollment management” department, an outgrowth of the 1980s and a $1 billion venture into discovering “worthy” students, isn’t entirely straightforward. Many colleges pay consulting companies to gather relevant information and employ algorithms to identify which students they should be trying to attract based on their particular and oftentimes changing aims. Some universities are pretty hush-hush about the deal, too, and they often conceal the determinants they use to pick the students they want—that is, until their student-hopefuls pay the application fee and receive the “good news” (which might actually be pretty bad for the parents writing the checks).

The allocation of merit aid isn’t inherently wrong and may actually be a welcome break for many families, but the practice isn’t without its potential pitfalls. Studies show that merit aid often disadvantages less wealthy students, those who are already enthusiastic about attending a particular school (and less likely to need the sway of extra aid), and basically any parent or student who attempts to traverse the mystifying world of higher education. But universities are locked in—with tuition fees mounting irreversibly, their options to stay appealing are few. Roping in some students with oftentimes unneeded help (and the guise of accomplishment) might create problems, but it allows college gates to remain open.

4. The schools at the top of the academic totem pole often recirculate status among those who already have it.

Sometimes, the students on the other side of a “merit aid” offer are apprehensive to sign their name on the university’s dotted line. The option might be less taxing on their parents’ bank accounts, but what about Princeton, Harvard, or Cornell? The glistening Ivy Leagues sing their siren song of postgraduate clout, luring the ears of hopeful students and their (hopefully paying) parents, too. Though most families don’t have the funds to ship their kid to the North, many parents still want to ensure their child has the best chance at snagging an internally (and financially) fulfilling job afterward. Unfortunately, in many cases, parents aren’t wrong to think that a degree from one of the nation’s most renowned institutions would yield plentiful benefits—many studies reveal that students who graduate from these sought-after schools may receive some postgraduate perks.

In 2019, Lieber endeavored to measure the pervasiveness of this status recirculation. Compelled by the contradictory conclusions of Lauren A. Rivera’s scathing account in Pedigree: How Elite Students Get Elite Jobs and Frank Bruni’s far sunnier Where You Go Is Not Who You’ll Be: An Antidote to the College Admissions Mania, he initiated his own investigation. After determining which schools to consider “selective,” a group of 45 institutions that expands beyond the Ivy’s eight, Lieber calculated that not even a mere 3 percent of college freshmen enroll in these places—a finding that makes the next percentages mind-boggling.

When Lieber surveyed the members of some of the most well-paying jobs and positions in the nation, he discovered that a disproportionate number fell to those who spent their years on the cinematic campuses of higher education’s top dog schools. For instance, these students populated 33 percent of the U.S. Senate, 22 percent of Congress, 45 percent of MacArthur Foundation “genius grant” recipients, and even 57 percent of baseball team managers. One might argue that higher ed’s looming leaders merely attract the nation’s quickest, most promising students, but these percentages reveal a larger trend—in many cases, the university isn’t a precipice of opportunity but a door without a key. Those who are wealthy enough to hand over large sums in exchange for entrance are typically those students who are already inside.

But for the majority of families on the other side of that glass door, attending an Ivy League or one of its similarly notable cousins is not the be-all-end-all of one’s postgraduate dreams. On the contrary, a 2014 Gallup poll found that the accolade of one of those degrees is losing its influence, holding sway over a mere 9 percent of employers. Situations may vary from student to student, but it might be wise (and maybe even less expensive) to take another look at some lesser known institutions.

5. Don’t shun the underdog university; true education depends on involved professors not location.

Many schools are knowledge sinkholes—that lively interplay between professor and student is increasingly rare, even despite institutional price-gouging. In an illuminating statement, past Harvard president Derek Bok asks and answers, “If universities truly compete with one another, why do they neglect their teaching so? At least part of the explanation is that rewards for excellent research far exceed those available for excellent teaching.”

In other words, if universities wish to remain in the public eye (and in the good graces of the U.S. News & World Report), they must focus on acquiring noteworthy professors with papers, ideas, and experiments to their name. And if educators dream of climbing that institutional ladder, they need to craft for themselves tenure-worthy acclaim, too. Unfortunately, in this fight for influence, the education of students often becomes a secondary concern—an annoying glitch in the higher education system.

Fortunately, many people are beginning to recognize the harm this trend might have not only on a students’ college experience (and their parents’ pockets) but on their later lives as well. In 2014, Mitch Daniels, Jr., president of Purdue, and Brandon Busteed, an official at Gallop, initiated a comprehensive assessment of what higher education was really offering to students. In this “2014 Gallup-Purdue Index Report,” they revealed that one of the greatest determining factors in students’ workplace contentment after graduation is whether they find a true “mentor” beforehand. This person, a professor or another member of the campus staff, gives a student her time, attention, and mental energy to instruct and inspire her on an individual basis—a task that exceeds simply scribbling a grade at the top of the hundredth essay of the day. With a mentor in their proverbial corner, students are more fulfilled in their career life thereafter.

For many students though, this isn’t a reality. In fact, the Gallup study also discovered that only 14 percent of graduates encountered an instructor of this kind. Shockingly, the universities you’d never dream would have less-than-perfect professors were in the back of the line for satisfying instructorship with the large public universities trailed by the seemingly indomitable Ivys. Equally surprising, the students who were most apt to receive the guidance of an instructor came from the arts and the humanities—those degrees that cause many people to pester poor graphic design majors and literature lovers with the dreaded words: “What in the world are you going to do with that?” Well, they may at least, have a satisfying experience.

Though every student’s educational aims are different, as Leiber notes, it wouldn’t hurt to scope out the environments and campuses that prioritize individual growth above other oftentimes less important concerns.

6. If you get going before your kid gets in, you’ll have a school stash saved for later.

Though it often seems strange and maybe a tad overly ambitious to begin storing up for fall enrollment before a child has even learned the alphabet, this is actually a brilliant move. With years of financial know-how, Lieber encourages parents to do as writer Carl Richards says and “save as much as you reasonably can,” no matter the child’s age. This might not amount to much at first, but even pennies can yield a full bank account down the road. And when it’s time to send that student away, opportunistic parents will be thankful they didn’t wait until the application deadline to think about college (even if their child did).

To lay out their savings scheme, parents should first determine how much they aim to spend on higher education. Discussing their expectations with each other, parents can sketch a skeleton for the work they’ll need to do over the years. With this in mind, Lieber recommends the financial planner Kevin McKinley’s sage outline for allocating the tuition price of a particular school into a family’s financing. For instance, however much a family endeavors to pay when August rolls around should be fractioned. Lieber uses the example of a $100,000 tuition payment (over four years, of course) and separates it into $25,000 increments to be provided for by gradual saving, the household paycheck, and eventual loans (which take up a couple segments of the whole).

Once a family has their savings idea in mind, even if it’s not as defined as McKinley’s, they should consider employing a little thing called a “529 plan.” These function as tax-free accounts wherein parents can accumulate their school stash and use it later for that intimidating university bill. Depending on the opportunities within their state, parents essentially have their choice between two varieties of 529 plans including a “prepaid plan” and an “investment plan.” 

Contrary to what many parents think, building a small or even a considerable school stash in one of these 529 plans won’t make their family seem too well-off to receive some federal help through FAFSA, either. And they might be able to stretch the power of the 529 even further (if their state allows it) by continuing to siphon money into that account even after a child enrolls in college. Depending on the circumstances, if there’s remaining money in an account after enrollment and parents want to withdraw it, they can do so. But in most cases, they’ll miss out on at least a fraction of their profits if they aren’t used toward some kind of schooling. These 529 plans vary widely, so families can customize as they see fit. Even just a bit of thoughtful saving makes a dent in an otherwise insurmountable wall of expenses.

Whether a student is headed for community college, a state school, or a private university, the toil of getting on campus grounds is far from simple. A lot needs to happen before a student can lug her suitcase through the entrance of her college and finally sigh in the (definitely cramped) space of her new dorm room apartment. Sometimes, it seems like way too much. But when all’s said and done, as classes begin, assignments flow in, and the application process is nearly forgotten, she might just take a glance out her window and appreciate the gift her parents helped to give her.

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