The financial aid shell game
Chronicle Review | January 26, 2015
There's often a cold rain falling when I drive out to financial-aid nights in rural North Carolina. They’re held in the depths of winter, right about the time high-school seniors start thinking in earnest about college, and that means a lot of storm-soaked evenings.
By the time I pull up outside a community-college auditorium or a high-school library, lifting a box of Fafsa guides from the trunk of an aging motor-pool car, darkness has fallen.
It’s asking a lot for parents and students to turn out on nights like these, sacrificing the dinner hour to sit in creaky seats and shuffle through tax forms. Everyone is coming off a long workday; some are facing a long work night.
They come because college finance feels like an intimidating mess. I remember that feeling, having been a first-generation student, and I am reminded of it as I listen to the questions that parents ask. They strip away all of the jargon, hoping to get straightforward advice.
Working at a large public university, a centuries-old institution with selective admissions and solid financial aid, I have the luxury of speaking plainly about our policies. I can tell students that if they earn admission, we have the resources to make it affordable.
This is the way most families think of college—get in from hard work and talent, get aid based on financial need. The language of “getting in” implies a rigorous vetting of academic potential, and “financial aid” sounds like a genuine attempt to meet family needs, a charitable nod to fairness in our educational meritocracy.
Of course, this isn’t how things work in large swaths of the higher-ed industry. And make no mistake—with stagnant revenues, steadily rising costs, and a negative investment outlook from both Moody’s and Standard & Poor’s, we are absolutely an industry. An industry under pressure.
The parents who show up for financial-aid nights don’t see college that way. They know it as an extension of school, a hurdle their kids need to clear, an economic and social imperative for building a better life. And to a remarkable extent, they trust us to do right by them and their kids.
They don’t know that some colleges will admit almost everyone; that some graduate hardly anyone; that some will outright mislead students with gimmicky aid packages or loss-leading scholarship offers. They don’t know that as higher education becomes an increasingly market-driven enterprise, many colleges are in no position to offer impartial advice or straightforward answers. They have to move product.
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For decades, policy makers have encouraged people to think of higher education—all of higher education—as a kind of civic good. And that impression has held, even as colleges are increasingly run like competitive businesses hustling for customers.
State-funded universities have been shielded from this pressure for a long time, obliged by custom and statute to serve the public interest. A great many institutions across the country are still able to meet that standard.
But market pressure is growing, and most families aren’t making hard-nosed, skeptical distinctions between nonprofit and for-profit, public and private, selective and nonselective. Especially for first-generation students with no experience of higher education, “college” can seem like a benevolent monolith.
From President Obama on down, policy makers are calling for more transparency, more consumer information, more ratings and disclosures so that students can make rational decisions about a huge investment of time and money. I’m all for it, but I have little faith that those efforts will do much to change student choices.
Standing before crowds of tired and stressed parents, I see this disconnect firsthand. Inevitably, I get asked some version of the presidential-scholarship question: “My daughter was admitted to [small, tuition-dependent, nonselective college], and they offered her the presidential scholarship,” a proud mother will say. “It’s a $10,000 merit scholarship, and she really wants to take it. What do you think?”
This question, more than just about any other, sinks the notion that families are making rational and well-researched decisions about college enrollment. It gives the lie to the idea that higher education as a whole is some kind of charitable trust, acting in the enlightened interest of students and parents. And it presents me with a dilemma.
Here’s what I want to say: “The presidential scholarship is a marketing ploy. That school costs $38,000 per year. They can’t fill enough seats at that price, so they’re offering ‘merit’ scholarships to just about any student who bubbled her name right on the SAT, hoping you’ll be flattered into coughing up the $28,000 you’ll still owe, much of which will come from loans. Unless you have an unbelievably good reason to prefer this school, enroll your kid at a public university, where she probably won’t get a merit scholarship but will still pay massively less.”
That is the kind of direct answer I’d give a family friend. It’s the kind of answer I’d want as a beleaguered parent puzzling through colleges’ business tactics.
But during financial-aid workshops, I’m not supposed to say anything like that. Colleges don’t bad-mouth one another in public, so I don’t explain that a lot of them face declining enrollment, have weak graduation rates, and won’t come anywhere close to meeting full financial need.
I’m often sitting on stage next to a representative from exactly that kind of college, some well-meaning recruiter working under immense pressure to hit yearly goals. As a matter of professional courtesy, I am not supposed to warn families that despite the gorgeous lawns and the top-notch dining hall, the school offering the “presidential” award is in a dire budget crunch. I’d be out of line saying that it offers a boatload of merit scholarships, or else risk missing enrollment targets and having to lay off half the foreign-language faculty.
That too-eager college—the one that said you were smart, gave you a merit scholarship, and called twice to see how senior year is coming along—isn’t any more prestigious or academically rigorous than the open-enrollment public university nearby, or even the local community college, where tuition might be covered by Pell Grants and state aid.
Instead of explaining all that, I congratulate the family on the presidential scholarship. And I urge parents and students to look at the bottom line, use net-price calculators, apply to a variety of colleges, and scrutinize financial-aid offers to figure out what they’d actually pay. I tell them to think carefully about academic goals before taking out loans, and to scour college websites to find graduation rates.
In other words, I ask them to think about college like wary consumers buying a particularly expensive product.
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That's a tough message to push. In pitching themselves to students and families, colleges don’t emphasize the dispassionate assessment of cost and reward. We talk instead about finding the right fit, imagining your future, achieving your dreams.
Tuition-dependent colleges hit those notes better than anyone, because they have to. They’re employing the basic tactics of a struggling firm in a competitive industry. They’re staring down some very challenging demographic trends, and I don’t blame them for trying to survive.
But if higher education as a whole is going to become ever more dependent on rising tuition, then we have to forfeit the halo that has long attached to our calling. Since our society has decided to treat students as consumers, we owe families a more honest way of speaking about the investment choices they have to make.
This is going to be an especially jarring shift for public institutions. According to the Government Accountability Office, in 2012 tuition finally eclipsed state funding to become the largest source of revenue for public colleges and universities. Struggling state universities are already feeling the same tensions and temptations long known to cash-strapped private and for-profit institutions.
Our collective unwillingness to call out sketchy aid and admissions practices, or to help people understand the vast institutional differences within higher education, will continue to place the most-vulnerable students and families at a disadvantage. We owe it to them to speak plainly about our own business, even—especially—if it discomfits us.
I think higher education is one of our country’s great strengths, and I wish many more students could attend college at a more reasonable cost. I don’t especially like the market-driven road we’re traveling; my reservations about the consumer-student model of education run deep.
But for now, since it’s the model we’ve got, we need to own it. If that means those cold financial-aid nights get a little more heated, so be it.
Eric Johnson works in student-aid communications at the University of North Carolina at Chapel Hill. The views expressed here are his own.
Originally published in the Chronicle Review at chronicle.com/article/The-Financial-Aid-Shell-Game/151321/