• April 24, 2014

With New Lists, Federal Government Moves to Help Consumers and Prod Colleges to Limit Price Increases

Colleges have stumbled into an age of accountability. The government and the public are evermore interested in holding them responsible: for what students learn when they're on campus, for how many of them leave with a degree, and for the debt and job prospects they face when it's over.

The U.S. Department of Education released its latest batch of consumer information today, a set of lists of the colleges in each sector with especially high or low prices, or large price increases.

Some of the findings are expected: Sarah Lawrence College, with the highest published tuition and fees among private, nonprofit four-year institutions in 2009-10, has already received more than its fair share of ink for that dubious designation. Pennsylvania (home to almost two dozen of the public four-year colleges with the highest tuition and fees) has long expected in-state students to shoulder more costs than other states do. And California State University's deep state budget cuts and accompanying tuition hikes have played out vividly in both public protests and newspaper pages.

Other findings are less intuitive: Among private, nonprofit four-years, Bible colleges and other institutions with strong religious connections account for a substantial portion of those with the largest percentage increases in net price, or total cost of attendance minus all federal, state, and institutional grant aid. The same types of colleges also make up a sizable portion of the list of those with the lowest net prices (a few actually make both lists). And art colleges have some of the highest net prices, but not big increases.

What to make of it all?

"We hope this information will encourage schools to continue their efforts to make the costs of college more transparent so students make informed decisions and aren't saddled with unmanageable debt," Arne Duncan, the U.S. secretary of education, said in a statement releasing the lists, which the department is required to create and post on its College Navigator Web site by the Higher Education Opportunity Act of 2008.

They are, Mr. Duncan said, a useful new tool.

But some higher-education experts already see limitations to how much the lists will help consumers or change colleges' behavior. "Data elements related to colleges are just notoriously hard to judge," said David Hawkins, director of public policy and research with the National Association for College Admission Counseling. Congress wanted the lists to give consumers clear information on costs, Mr. Hawkins said, but "whether they're going to be everything Congress thought they would be—I'm skeptical."

For one thing, the data look at different years for different variables because only published tuition and fees (and not aid figures) were available for 2009-10. On net price, they look only at first-time, full-time freshmen who received grant or scholarship aid—so students paying full price or receiving only federal loans as aid aren't captured.

Also, in an effort to compare only like colleges, the department created 54 different lists—comprised of six different variables (such as net price) and nine different sectors of higher education (such as four-year public institutions). The six variables are:

  • The 5 percent of colleges with the highest published tuition and fees in 2009-10.
  • The 5 percent with the highest net price in 2008-9.
  • The 5 percent with the largest percentage increase in published tuition and fees from 2007-8 to 2009-10.
  • The 5 percent with the largest percentage increase in net price from 2006-7 to 2008-9.
  • The 10 percent with the lowest published tuition and fees in 2009-10.
  • The 10 percent with the lowest net price in 2008-9.

The lists are to be updated each year.

In addition, because low-cost colleges could have a relatively large percentage increase in price without its meaning a big change in the dollar amount, colleges are exempt from inclusion on the relevant lists if their tuition and fees or net price increase by less than $600 in the time period examined.

It's admittedly a lot to follow. "This definition of net price is far from perfect," said Sean P. (Jack) Buckley, commissioner of the National Center for Education Statistics. "But again, it was spelled out in the law."

Colleges, he says, are always asking for measures that take aid into account, and the lists reflect that. Those that have the largest increases in net price or tuition and fees will have to submit a report to the department explaining the parts of their budgets with the largest cost increases and offering a plan to contain those costs.

Putting Pressure on Colleges

It could have been far worse for colleges. Rep. Howard P. (Buck) McKeon, Republican of California, has long championed the idea of holding colleges responsible for their costs. Back in 2005, when Mr. McKeon was chairman of the House of Representatives' higher-education subcommittee and his party was leading efforts to draft legislation to renew the Higher Education Act, he suggested the government withhold federal financial aid from colleges that had consistently large tuition increases. That measure was later toned down, and eventually the Democrats worked the current version into the reauthorization bill that was finally passed in 2008.

From the beginning, the idea was to both provide consumer information and pressure colleges, Mr. McKeon said: "It's a twofer—if you inform consumers, then the institution may be pressured to focus some on controlling their cost."

Higher-education lobbyists fought the inclusion of the measure. One major concern is that cost information will be presented without context, said Bryan J. Cook, director of the Center for Policy Analysis at the American Council on Education. "There are a lot of factors that go into why a college's tuition increases," he said.

Others see both promise and pitfalls in the lists. "Providing families with more and better information does have an impact," said Mark Kantrowitz, publisher of the Web site FinAid. Mr. Kantrowitz compared the release of the lists to another recent move by the Education Department: publishing colleges' graduation rates on the form students use to apply for federal financial aid. After that change, he said, a survey showed that high-school seniors weighed graduation rates more heavily as they considered where to go to college.

But, Mr. Kantrowitz added, it's not clear that the affordability lists will have the same kind of effect, because they won't be staring students in the face at a key point in their college application process.

Mr. Hawkins agrees that consumers may have a hard time finding their way to the information. The Education Department has done little to promote its College Navigator tool, he said, and even though his group has worked to publicize it to high-school counselors, many of them rely on guide books instead.

Limits in the Data

Kathy Kurz, a partner in the enrollment-management consulting firm Scannell & Kurz Inc., questioned how useful the lists would be in illuminating college affordability. Because the net-price data used in the lists looks only at first-time, full-time freshmen, the costs of four years may be masked at colleges that front-load grant aid in the first year, she says. Those numbers also do little to inform prospective transfer students. Furthermore, she said, the data are limited by looking only at net price for students who receive grant aid—which could be a wildly different proportion of the student body at different campuses. As a result, the metric will favor colleges that give more money to a smaller number of students over those that award smaller amounts to more of their students, she said. Different colleges follow one practice or another for philosophical reasons, and there is debate over which method better-serves students.

Ms. Kurz also questioned how much the public release of the lists would affect individual colleges' financial-aid strategies. They might tinker around the edges to look better, she said—for example, a college that gives some fraction of its students very small scholarships might nix those to raise its overall level of grant aid per recipient. But, she added, most colleges are using their aid to meet enrollment goals and cannot quickly change course.

Sally Stone Richmond, director of admission at Occidental College, had yet to hear of the lists on Wednesday, but her gut reaction was that they would have limited benefits for students.

"Any time a family can look at info that allows them to draw some comparisons, that has value," she said. But will students notice that Occidental was on the list of private colleges with the highest tuition ($38,935 in the 2009-10 academic year, and about $41,000 for the coming year)—but not for highest net price, which is a better indicator of what students actually pay?

The college takes in less money from tuition and fees, Ms. Richmond said, than it costs to educate students, about four-fifths of whom receive at least some financial aid from the college. Occidental's sticker price reflects many things, including that it has a relatively modest endowment of approximately $330-million, which finances about 17 percent of the college's operating budget.

Moreover, the college's location, in Los Angeles, complicates comparisons to similar institutions elsewhere.

"Like everything else in this country, geography matters," Ms. Richmond said. "The cost of running an institution in California, in a city, is measured differently than it would be in a less-expensive part of the country. So their ability to see, in a snapshot, the wide vista of institutions in the U.S. is limited."

Location, too, is a complication for many art colleges—which typically make their homes in major cities with vibrant art scenes, and high-real estate costs—said Bill Barrett, executive director of the Association of Independent Colleges of Art and Design. The colleges' low student-to-faculty ratios, space demands, and expensive equipment also drive up costs. "You've got a lot of fixed spaces," he says. "You just can't do anything in the ceramics studio other than ceramics."

In their current form, the lists may not cause any major changes in how colleges set tuition or how prospective students choose a college. But that could change in time. Mr. Hawkins compared the new data to the recently released "gainful employment" rule, which similarly is a much softer version of the original idea. Some supporters of that rule to whom Mr. Hawkins has spoken have said that having the law on the books in any form is a big step and that Congress can always make it stronger down the road. The same is true of the affordability lists, he said. "There's a toehold in the law now, and that's what everyone has to be concerned about."

In a telephone conference with reporters on Wednesday, David A. Bergeron, the deputy assistant secretary of education in the Office of Postsecondary Education, said he expects lawmakers will use the lists and the required explanations for rising costs when the Higher Education Act comes up for reauthorization again in a year or two. Those discussions, he said, might lead to further changes in regulations or the law.

In the meantime, Mr. Bergeron said, he hopes the lists persuade colleges to take seriously the data that they report to the federal government. The department gave colleges several opportunities to review the data and make necessary changes, he said.

Some colleges were still caught off-guard.

Officials at Our Lady of Holy Cross College, in New Orleans, were shocked that the college topped the list for largest increase in net price for private, nonprofit four-year colleges. "That's not consistent with our mission," says the Rev. Anthony J. De Conciliis, the college's president. "We pride ourselves on affordability."

The numbers used in that calculation—which showed that the net price jumped from $428 in 2007-8 to $2,874 in 2008-9—must be wrong, he said. Father Conciliis believes the problem is with the older number, but the person in charge of compiling that data has since left the college, and the institution is still working to get to the bottom of the issue.

While such discoveries may be painful for individual colleges, they may be one of the hard-won lessons the department wants higher education broadly to learn. "There is a strong expectation," Mr. Buckley says, "that information they report be accurate."

Eric Hoover contributed to this article.

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