Dr. Phillip Levine's new book, A Problem of Fit: How the Complexity of College Pricing Hurts Students—and Universities.
“The numbers people have in their heads is a lot more than what [college] actually will cost,” said Levine on Monday at a presentation by the Center on Children and Families at the Brookings Institute, which studies policies that impact the well-being of marginalized American families.
Levine, a professor of economics at Wellesley College, shared data collected in a 2015 poll of ACT test takers that showed most students assumed the cost of college was the “sticker price,” and not the net amount calculated based on expected family contribution (EFC) by financial aid.
“If you ask high school seniors what they think college costs, the sticker price is that magic number,” said Levine. “That complexity is really hurting kids. They think college is expensive, and that limits access.”
In order to understand the actual cost of attending college, Levine studied the differences between sticker cost and net price for students with lower or higher EFC at four types of institutions: private institutions with large endowments, other private institutions, public flagship or R1 institutions, and other four-year public institutions. He found that financial aid at the majority of these institutions made college less affordable for students with lower income.
For students with zero EFC at “meets full need” institutions, financial aid can cover the entirety of tuition, although students will still take on other expenses like housing, food, and textbooks. Students who come from higher income backgrounds with greater EFC pay the higher costs of tuition, and the institution uses those dollars to offer more need-based scholarships.
For almost all institutions except those with large endowments, financial aid doesn’t only serve need-based students. Instead, it brings down the cost for all students. Students with a high EFC are paying only a little more than a low EFC student. This creates very large gaps in affordability.
