Net Price: Transparency Isn’t the Main Problem

October 27, 2011

Head Count, the Chronicle of Higher Education’s blog on admissions and enrollment matters, has a guest post this morning from Marvin Smith, Senior Associate Director of Financial Aid at Purdue University.  In “How Calculators Can Help Counselors Help Students,” Smith makes as good a case as can be made for the new federal requirement that all colleges and universities have  a net price calculator on their website to help prospective students and their parents figure out how much it may cost to enroll at a particular college or university.

He also praises the new federal government (NCES) website (www.collegecost.ed.gov) at the College Affordability and Transparency Center (part of College Navigator) that helps prospective students and their families make comparisons and work out total four-year costs.

The intent of both initiatives, www.collegecost.ed.gov and the requirement of net price calculators, is to introduce more transparency into individual decision-making about going to college.  And indeed more transparency may help.  Financial aid has become a very (too!) complicated matter; it certainly is difficult for students and their families to understand their options.  The rise of merit aid has made this all the more confusing.

But transparency isn’t the main problem when it comes to college costs.  The main problem is that there simply isn’t enough money available to help young men and women go to college.  State governments have been withdrawing their subsidization of public colleges and universities.  Colleges and universities have been increasing tuition levels at a pace that exceeds not only inflation but (a more important marker) increases in family incomes.  Colleges and universities have been shifting their financial aid resources from need-based to merit-based aid.  And student loan debt burdens (and defaults) are rising rapidly.

I’ve argued earlier that the base cost (a price someone has to pay) for providing a decent college education is around $15,000 per year.  Most families in the United States cannot afford to pay that amount.  As of 2006 (before the great recession) here is the distribution of income in the United States (source: US Census, 2006 Current Population Survey, Table HINC-06).  Only 28% of households make more than $75,000.  Can we expect families making less than that to pay $15,000 per year (per child)?

The hope in focusing on transparency is that better understanding will ‘rationalize’ the higher education marketplace.  But do we expect that it will lead more colleges to put more resources into need-based aid?  I have my doubts.  And even if they did, would that shift back to need-based aid provide enough money to support a decent college education for all young men and women?  I have even more profound doubts.  What it will take is greater public subsidization of education from state or federal governments.

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About Doug Bennett

Doug Bennett is Emeritus President and Professor of Politics at Earlham College. He has a wife, Ellen, and two sons, Tommy (born 1984) and Robbie (born 2003).
This entry was posted in Access, Money Matters, Regulation. Bookmark the permalink.

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