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Is it possible to fix college prices?

Is it possible to fix college prices?

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Today’s college prices could easily come as a shock. Annual published tuition fees at higher education institutions regularly exceed $ 55,000, and it is unusual for state flagships to list tuition fees for students outside the state of $ 25,000 or more.

These are staggering figures when the average family income in the U.S. is less than $ 68,000 and families have to pay for non-tuition expenses. However, only the wealthiest students pay these prices for stickers, as many institutions offer significant financial aid packages without funding in a practice called a tuition discount. But few students and their families know how much a college will actually cost if they apply, forcing some to drop out of institutions they can afford.

Philip Levin, a professor of economics at Wellesley College, argues that the opacity of college prices is detrimental to both families and institutions in his new book“Adaptation problem.”

Ideally, students would go to the institutions that suit them best, Levin said.

“Some people are good for Ohio or four-year government agencies. Some students are great for public colleges,” Levin said. “But if the reason all people fall into the categories they fall into is pricing and a misunderstanding of pricing, that’s the problem.”

Institutions are also not happy with this system. Top-ranked private colleges worry that they are not recruiting enough low-income students, while their less selective counterparts are forced to offer assistance to attract students. Government agencies are concerned that they are short of students enrolled in public colleges. And two-year schools are concerned about prospective students who are considering dropping out of college because of estimated costs.

“There are all these misallocations of students,” Levin said.

Senior Ed Dive spoke with Levin about what prompted the book, what he learned by researching college prices and what can be done to improve the system.

This interview has been edited for clarity and brevity.

HHIHER ED DIVE: Was it your personal experience that prompted you to write this book?

Philip Levin

Wellesley College

PHILIP LIVINE: A little. I am an economist – I earn a good living – and I have been postponing college since the day my children were born. But since they were about 12, 13, 14 years old, I just wanted to know if I had saved up enough money, and for that I needed to know what college would actually cost me.

I wanted to know if I was eligible for financial aid, and realized that, in fact, this question is impossible to answer. That’s where the very long process for me began. I realized that if this is a problem for me, then it should be a problem for other people. I have a Ph.D. in economics. I am very good at working with numbers and understanding things, and I could not understand it.

What are the most common ways institutions make this information difficult to understand?

The system itself makes it difficult for families to understand. The only figure the federal government requires institutions to report is what is called the cost of attendance, which is the full level of tuition, plus accommodation and meals and the estimated cost of other expenses – toothpaste, books and the like.

Just the vast majority of students do not pay that price. I like to think that this is the maximum cost of a visit. $ 30,000 is not uncommon on the website of the state university. For a private elite institution, $ 80,000 is not uncommon. Most students don’t pay these amounts, but it’s a figure in everyone’s head.

There was some recognition that this was a problem. In 2008, an amendment to the Higher Education Act was passed requiring all colleges and universities to introduce net price calculators. It’s a tool designed to help you understand how much a college will cost given your circumstances, and it’s great.

This is a very targeted intervention that just didn’t work very well in practice. These tools usually require people to enter information that is difficult for them to enter. They ask you about your tax information. People don’t like taxes. Once you start asking them about taxes, you lose them, so these tools are usually not very successful.

Who is most affected by these problems?

Obviously, this is more of a problem for low-income students who believe that the cheapest option is not the cheapest option. Or those who think that what they can afford, they cannot afford.

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