Affordability: Two Perspectives
Families, politicians and the press are always crying out that higher education should be more affordable! What does that term “affordable institution” really mean in the context of a purchase like education?
- Is an affordable institution one that you can attend tuition-free?
- Is it the institution that is closest geographically, so you don’t have travel expenses?
- Is it the one that costs the least, regardless of the type (two-year, four-year, public, private)?
- Is it the one that offers the program of study that you seek and offers you some financial aid?
- Is it simply one that can grant you your next academic credential, your intended major notwithstanding?
Higher education is the first time that most U.S. students actually pay directly for education, and it is quite a shock to most of us when that time comes. Through secondary school, there have been public, tuition-free choices available, although some families choose private or parochial education instead.
Some families can provide for the cost of higher education, but simply don’t plan to do so. Some families can fund part of what it will cost, and will stretch farther than imaginable to try and find the rest of the resources necessary. Some families never will be able to pull together any funds at all.
But “affordable” cuts both ways. How does the family manage to afford higher education? How does the institution afford the students it enrolls?
It certainly would be nice to never lose a student who is a wonderful match for our institution simply because finances don’t come together.
Collectively and idealistically, we all wish that institutions could make it financially possible for everyone who is admitted to enroll. But three elements have a lot to do with how close any institution can come to that ideal: its mission, the structure/control under which it operates, and its financial position. The three can be separate, or they can be deeply intertwined.
- If your institution’s mission is to serve the students of your state, then your institution is likely to focus its financial aid — perhaps even exclusively — on in-state students. So a highly motivated student from Idaho who wants to study marine biology with practicum isn’t likely to qualify for much financial aid at a specific state school in Florida that has a sterling reputation in marine biology.
- Likewise, if your private college was formed to provide a low- or no-cost education to the most needy of students, then financial aid will not include any gapping (although you might be a smaller school than you would like to be in times when resources run lean). To have that mission at the point of formation, some long-sighted elders at that institution knew it would take a big financial gift to make it possible, and they knew that fundraising was going to be a crucial part of everyday functioning for the rest of the time that the institution exists. So it’s likely that the fundraising staff at that school is busier than the admission staff.
- A flagship public college that has a bilateral funding base (some state support as well as significant private donor support) will have very different financial aid resources than does a public institution in the same state that specializes in producing teachers and nurses, and as a result of that focus, now has very few extremely wealthy donors.
- How an institution spends the resources it has is deeply influenced by the body to which that institution is accountable. A public institution gets legislative regulation connected with those state funds, and the state requirements don’t drop off when state funds shrink over time. Sometimes that legislative action puts long lists of “must dos” ahead of providing financial aid to qualified students.
- A private college’s control rests in the hands of its board of trustees. Because that body’s composition changes over time, the guidelines for how resources are allocated to financial aid could change as the membership in the board changes.
- A private college that has very high prestige can fundraise at a totally different level than can one with lesser name recognition. A situation has been created where giving to the high-prestige college adds to the donor’s own prestige, just as the credential earned there previously enhanced prestige. When that high-prestige college started raising money many years ago, donors gave money for scholarships that continue to provide earnings that fund the scholarships today. So resources of the past create an expectation to supplement and multiply resources for the future.
- A university formed more recently isn’t going to have those centuries-old funds producing revenue that is designated only for financial aid. And, without a past sufficiently long enough to have created a long history of “friend-raising,” it isn’t as likely to (yet) receive those eight-digit gifts, either! It’s a sad fact that going to donors with a billion-dollar campaign called “Please give generously, because we really need the money,” simply doesn’t produce a billion-dollar outcome, no matter how real the need is.
The press lauds the wealthiest institutions that offer total grant financial aid packages to students of low and middle incomes, and creates an expectation that all institutions ought to do this for their students. So why is it that all financial aid packages can’t be gap free and composed of all (or nearly all) grant money? What are the tradeoffs that institutions that have different financial positions, different missions and different oversight/control face as they try to create a financial aid pool for their students? Here is a sampling of the not-very easy questions I have heard senior administrators asking each other:
- If we need more financial aid, should we raid the compensation pool and not give raises? (This, of course, would be a multiyear decision because few students who require financial aid are planning only one year of college.)
- If we need more financial aid dollars, and tuition represents 80–90 percent of our income, the only way to get it would be to raise tuition more aggressively and fold the extra dollars back into financial aid. Can the market bear that?
- How many more students can we manage (in terms of capacity) if they all paid an average of XX dollars? And how do we find a pool of students who will average out to exactly that amount?
- Are there really top-qualified students out there who don’t need the validation that merit aid provides?
- If we spend too much of the earnings from our endowment in order to offer financial aid, are we crippling that endowment so much that it cannot sufficiently keep up with inflation in the years ahead?
- What does it really mean when we cost too much to attract the students who will thrive here?
- How much of a gap is simply too much to ask of a lower-income family?
- Will we get to the place where wealthier students do not see a balance between the value of what we offer and paying full cost to obtain it?
- How do we make sure that the students here are sharing their educational experience with the variety of people they will surely encounter when they leave us for the world of work? And doesn’t that mean we need real economic diversity here?
- Can we put off fixing the leaky roof of the administration building for four more years in order to offer that money as financial aid?
The questions I hear do not include, “How can we make sure we keep tuition rising at the same rate as the competition?” or “Just how tightly can we squeeze those big financial aid packages?” And perhaps that’s because both kinds of affordability are really on everyone’s minds.
- Exploring Opens in a new windowFinancial Aid Implications of Changing Demographics – Part I: Forecasting the Future
- Opens in a new windowCracking the Student Aid Code: Parent and Student Perspectives on Paying for College (pdf/2.7MB)
- Cracking the Student Aid Code Webinar Opens in a new windowPowerPoint Presentation
- Cracking the Student Aid Code Opens in a new windowWebinar
- Download a PDF of “Opens in a new windowAffordability: Two Perspectives” (pdf/646 kb)
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Admissions Insights is a series brought to you by the College Board Task Force on Admissions in the 21st Century. The opinions, interpretations and conclusions of the author are his own and do not necessarily represent those of the College Board. Nothing contained herein should be assumed to represent an official position of the College Board or any of its members.