American Student Assistance 2006 Symposium The Price Tag of Higher Education

This year saw ASA’s most successful symposium ever. The event, coinciding with ASA’s 50^th Anniversary, was hosted in Boston and drew a record crowd of 375 attendees. Financial aid professionals from the world over gathered for the two-day event. This year’s theme: Insights: A Conversation on Student Debt, looked squarely at how debt is impacting the college and career choices of today’s students.

Roundtable Discussions

One of the things that sets ASA’s symposium apart from other conference events is the opportunity attendees have to take part in roundtable discussions on important issues facing the higher education financing industry today. This year our roundtables focused on:

– Direct to Consumer Marketing
– The Price Tag of Higher Education
– Counseling Graduate and Professional Students and Families on Debt
– Your Financial Aid Wishlist

The Price Tag of Higher Education

Below are the proceedings of the roundtable discussion on the price tag of higher education from the ASA 2006 Annual Symposium.

Moderator:

Why has the cost to attend postsecondary institutions been rising? Are universities troubled by the need to raise tuition and fees? What can be done in response to rising costs?

Respondents:

– Costs are increasing due to new providers and changing demographics, such as the rise in non-traditional students. Traditional universities are creating new programs in response. Competition among colleges for prestige and enrollment are factors as well.
– We saw nationally, in times of economic downturn, that states were less likely to kick in financial support. University of Maryland saw a 22% price increase and the University of Connecticut saw a 14% increase in one year—and those are public institutions. Private institutions have been steadier. It makes it hard for families to plan. Colleges are concerned, but the money has to come from somewhere. Private college tuition is increasing at around 4-5% annually.
– The perception is that schools will always have cutting-edge facilities, but consumers don’t realize the costs involved. Expectations from families drive costs up. Consumers are not willing to give up services in order to keep costs the same. Consumers do not understand that colleges absorb the same cost increases for utilities as consumers do.
– In Canada, the government sets fees. There’s been lower investment by the government recently, but costs are going up (such as for research and faculty). We become worried about the quality of education in this scenario—that’s the greatest concern to the campus administration.

Moderator:

Are you consulted by the body that makes tuition increase decisions? Does the rise in federal aid result in higher tuition?

Respondents:

– I was consulted by the president of our institution regarding the tuition increase. The increase was not tied to the availability of federal aid, but rather to increasing costs. Families are not planning for four years of education - that leaves them unprepared.
– Higher education has lost control of the message. They don’t talk about what colleges do to educate the 21st century student. All of the information is centered on the Northeast, and is then assumed to be true across the country, although it is not true.
– People concentrate on the Ivies, etc. Because of the prestige factor, they’re deemed to be a better investment than other institutions. The question of facilities vs. costs is a chicken/egg thing. Do colleges invest in the facilities in order to be more competitive, or are enrolled students demanding improved facilities? Public frustration is that college cost increases are outpacing increases in everything else.
– Human capital is valuable. These days, people need a BS or BA to get a job. Public institutions do not have the ability to make decisions about costs. The attention concentrates on Northeastern schools because those are the schools in the US News ranking. Other rankings do a better job demonstrating the value of the investment.
– How do you rate the education, how do you explain the value of the education to a student? From the perspective of a smaller institution, particularly when speaking to a family where the student is the first generation to consider college, you need to take a more personal approach. Use your own experience if applicable. Financial aid offices need effective strategies for how to talk to students.
– The burden is shifting from employer to students at companies that previously offered tuition benefits. A lot of money is dedicated to loans, but not to making systems more efficient. Labor costs will be one of [most] companies’ biggest cost components. When there’s a decrease in philanthropy, it creates a larger burden on families. The cost of education goes beyond tuition, books, and housing. Expanded services are going to drive up the cost. Students don’t always have to choose the traditional, four-year, expensive colleges. More questions exist regarding the value of various options. And where is the money coming from? The federal programs are too complex to administer.

Moderator:

It’s important to work with families to help them figure out how they will pay these costs. There is a population that spends beyond its means. Sometimes the college is too expensive, but parents say the student deserves to go. Some parents are willing to co-sign loans or support their children taking loans even if not in the student’s best interest. Do you in financial aid ever say “this is not in your best interest”?

Respondents:

– I worked with a student who did not file his FAFSA on time with his first-choice school, and although he received funds at other schools, he took a $27,000 loan to go to the first choice school anyway. His family did not listen to my advice, and the student did not like his first-choice school after all. In the end he transferred, but he now has this debt. These days, parents are opting to have students borrow instead of having them work or the parents taking on debt themselves.
– At the lowest-cost institution in the state, lots of low-income and minority students attend, and 65 percent of all attendees get sufficient federal and state aid to pay all costs plus get a refund for living expenses. We’re seeing an increase in interest among students in borrowing Stafford loans, probably to purchase items that are not directly related to their education. We’re seeing students who have hit their undergraduate aggregate loan limits.
– Parents act like the act of co-signing a loan for student is helping them, when really it’s not beneficial to encourage their kids to take on more debt.
– Our school is very diverse, mostly first-generation college attendees and low-income students. We mostly deal with students directly. Many students come from single-parent homes, and many students need to work to support their families while in school. We have limited aid. It’s very hard to explain the financing options so that students understand them. We don’t often get to speak with parents.
– There’s no fluff in our budget. We took things like transportation and personal expenses out. Employment is offered in every package. Students need to document things like computer purchases. There’s a limited rent allotment. Students seem to expect a handout now; they don’t consider working.
– Why is it ok for college costs to rise so quickly? We wouldn’t find it acceptable if military costs did. Colleges and finance partners need to take responsibility. Other options are now available, like distance education. Look for off-shore options taking the place of U.S. colleges.
– Do we need to shift the paradigm? Universal K–13 or –14? Universal free K–12 did not always exist. We could make it include an associate’s degree at least.

Moderator:

“Investment” is an interesting word. Sometimes students feel that an investment is worth it. When you talk with students about borrowing, do you refer to it this way? Do they look at it this way?

Respondents:

– It’s not uncommon for students to take alternative loans, and parents seem to be pushing them. It makes them ask, why are they going to school? They usually say to get a better job and make more money. It points out that too much debt means a smaller income after loan payments are made. It gets them to rethink.

Moderator:

It’s important not to talk to families too late. How many people in the room collaborate with school districts and begin prior to junior or senior year of high school? Not about going to college, but about how you pay for college?

Respondents:

– The ASA/TERI program runs quarterly programs about financial aid and financing options for younger students and families, but no one comes.
– We did an early awareness campaign at CT DHE and Gear Up. We had no problem getting into middle schools. We don’t have to sell college any more. We had trouble getting into high school classrooms. We were allowed into after school programs only, and no one would come.
– We have assemblies that are required for students, but it’s hard to include outsiders such as parents.
– An admission counselor who does urban access brought financial aid staff to one of our high schools. The headmaster was very excited, but no one else was. The audience of counselors was bored, and it felt like we were stepping on their toes.
– Some guidance counselors love that someone else (college financial aid officers) takes care of financial aid stuff so they don’t have to.
– We have to overcome the attitude that “where there’s a will there’s a way”—families tune out and look for a miracle. We haven’t been successful at balancing the value of education versus its cost to students.
– The best years of your life are in college? That’s not true necessarily. Students and parents are not thinking about the years beyond college. We need to get experts in to talk about debt management early and possibly help for the years after freshman year.
– At our institution, we did an experiment. We priced out the daily cost of attending and compared it to other things, like staying in a hotel and prison. It creates an interesting perspective—it was an eye opener.

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