Federal data on the net prices students in different income bands pay after grants can be misleading. Here's why:

Are Poor Families Really Paying Half Their Income at Elite Colleges?

The problem with government affordability data

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Are Poor Families Really Paying Half Their Income at Elite Colleges?

The problem with government affordability data

August 7, 2014
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At elite colleges, the full cost of attendance — tuition, fees, room, board, and other expenses — can be more than $60,000.

But those colleges tend to offer generous need-based financial aid, so many students pay much less.

To show prospective students what families like theirs pay, the federal government recently started to collect and publish the average net price for different income groups after grants and scholarships.

Most elite colleges look at family income in two ways. One helps determine the federal financial aid a student can get, the other, how much institutional aid the student will receive.

The federal method uses students’ answers on the Free Application for Federal Student Aid to calculate their families’ income. Here, that figure is based on information about this student and single parent.

But many wealthy colleges will ask more questions to figure out how much money the family has. In this case, how much the parent who doesn’t live with them makes.

The colleges also take a closer look at any business or (here) farm the family owns.

In cases like this, a college will come up with a different income than the federal method does. So in reporting to the government, which income do colleges use?

It turns out they don’t all do it the same way.

The Chronicle informally surveyed elite colleges about how they put students into income groups for government data. Some use the federally calculated income, and others use their own.

To show why that matters, the University of Notre Dame shared its data as an example. Here are its average net prices when students are categorized by their federally calculated income.

The information Notre Dame reports to the government, based on the federal methodology, shows that its lowest-income students (whose families make up to $30,000) are paying an average net price of $11,626. That’s an awful lot for a poor family to come up with.

But watch what happens if we recategorize students using the incomes Notre Dame calculates for them.

A bunch of students move out of the lowest income group. Notre Dame didn’t think they were actually low income when it took a closer look. But the reason the average for low income students is so high is that it includes prices paid by students who the university does not think are poor.

Some students also move in the opposite direction. Compared with the federal system, Notre Dame determined that their families had less money. If Notre Dame categorized students using its own income calculations, some of them would be in different groups.

Once all the students are reclassified, look what happens to the average net price for the lowest income group.

Now that the lowest-income group includes only the students Notre Dame actually thinks are poor, the average is less than half of what it was before. In fact, all the averages change.

The result: The average net price for the lowest income group would be less than half of what it was before. In fact, all the averages would change.

Since Notre Dame uses the federally calculated income to categorize students, and some of its peers use institutional figures, what looks to a family — or a group trying to hold colleges accountable — like an apples-to-apples comparison really isn’t.

Meaning the consumer information the government hopes will lead families to good choices might end up misleading them instead.

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About the data: The data Notre Dame shared with The Chronicle are slightly different from what it reported to the federal government. For The Chronicle, the university calculated net price based on its published cost of attendance and the assumption that each student lives on campus. The government does its own calculation of net price using information the university reports.