Category: Tuition Costs

Now That You Have Your College Acceptances: Last Minute Advice for Which College to Choose

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And my advice is:  follow the money.  Or at least consider if going to, say, Cornell, is going to offer enough bang for your bucks.  Paradoxically, there is evidence that, if you are a “First-Gen” college student, or your family has limited financial means, the extra money is more likely to pay off in the kind of social capital that upper-middle class and wealthy students take for granted.  I will link some evidence for my claims below.  For now I am just going to outline some basic truths, both in general and from my own experience:

  1.  Selecting a college these days is a lot like buying a house.  Money should be as important as the amenities and location in choosing a college, just as it is when buying a house.  And like buying a house has the basic function of providing shelter, so the purpose of college is to provide you an education.  Connections are great and all, and I will get to those later, as promised, but don’t get blinded by the future promise of the connections you think you will make, or by the present promise of a really cool gym and dorm room, or all that tradition and ivy-covered walls.  When I have worked with groups of students who ended up going to different colleges, they have come back to me and confirmed that the basic product–a good education–is remarkably similar, campus-by-campus.  Continuing my house analogy, I just looked up foreclosures in the wealthy enclave of Alamo, CA, and opened up a house going into foreclosure that has 8,000 square feet and seven bathrooms.  The ego benefit of having a Harvard sticker may not outweigh paying five hundred bucks a month for student loans for seven or ten years, or handing on debt to your children, just as the ego benefit of having 8k square feet with a view from the side of Mount Diablo is meaningless when you cannot pay for it, or are trapped by the payments.  Keep in mind that financial aid packages can be adjusted upward or downward every year.  Don’t get buyers remorse next year, or the year you graduate and get your first loan payment letter.
  2. The most important thing about a college education is not the name of the school.  It is the degree itself.  I know this sounds like what I just argued, but bear with me for the details.  The social connections made at an elite college provide a boost that is notable mostly for low-income and First Gen students.  Most solidly middle class (and up) students already have connections; for them, brand name and social considerations should not be at the top of the list, if money will be a problem.  But studies show that the degree is the main thing–if you have 100,00 dollars in debt after going to an elite school, versus say 20k after going to a state school, you are not likely to see enough of a difference in income to make that a good payoff.  To repeat, with feeling:  Getting a degree is the most important thing, not which college it is from, in terms of incomes after college, and  doubly not so for any technical major (engineering, et al) or finance or business . . . The takeaway is put the degree itself and the cost at the top of your considerations. If you are from a family that will not get good financial aid, and tuition, et al,  will be hard to carry–especially if private student loans are going to be needed–and you have other options, I suggest really considering those cheaper options.  Also note how long the latest financial expansion is and plan on a recession starting anywhere from next month to, at the latest, your junior year in college.  Still feeling good about the financials?
  3. If you want to  major in something like Art History or English, but feel you cannot because of cost, you should look for a cheaper school.  If you do well in any major, and plug in the right minor that gives you some skills, you can get a good job.  A recent client, for example, majored in lit, with a Comp Sci minor and is not doing animation and web design, with all kinds of things opening up for him.
  4. You should ignore people like Peter Thiel, who claim college is somehow not necessary, and go, if you can.  Notice that Thiel has not one, but two Stanford degrees.  But I do agree with Thiel on one thing:  too many people are leveraging and taking on debt to go to college.  So go to a community college with a clear university target to follow, if money is an issue.  And make that university a public, in-state school for the best bang for your buck.

And now, here is some evidence for my claims:

From the Brookings Institute, the positive impact of college on earnings for students from backgrounds of poverty:

As the figure shows, however, without a college degree a child born into a family in the lowest quintile has a 45 percent chance of remaining in that quintile as an adult and only a 5 percent chance of moving into the highest quintile. On the other hand, children born into the lowest quintile who do earn a college degree have only a 16 percent chance of remaining in the lowest quintile and a 19 percent chance of breaking into the top quintile. In other words, a low-income individual without a college degree will very likely remain in the lower part of the earnings distribution, whereas a low-income individual with a college degree could just as easily land in any income quintile—including the highest.

Also from Brookings, the effect of a college degree, categorically, without reference to college pedigree:

For more on that Brookings study, which shows that the poor still don’t get as good a deal as the rich (but still:  get the degree):  Brookings.

And more evidence on the effect of college on earnings:

So what role do U.S. colleges play in promoting upward mobility? According to the authors, their analysis of the data yielded four main findings.

First, access to colleges varies greatly by parent income. For example, children whose parents are in the top one percent of the income distribution are seventy-seven times more likely to attend an Ivy League college than those whose parents are in the bottom income quintile. Contrary to public perception, colleges in America are just as socioeconomically segregated as the neighborhoods where children grow up.

Second, within a given college, children from low- and high-income families end up earning very similar amounts. In other words, colleges are successfully “leveling the playing field” for the students they admit, and poor students don’t appear to be “overmatched” at selective colleges as some observers have suggested. On average—and regardless of socioeconomic background—the subsequent earnings of students who attend “elite” schools put them in roughly the eightieth income percentile versus the seventieth percentile for students at other four-year colleges and the sixtieth percentile for students at two-year colleges.

Third, upward mobility rates vary substantially across colleges. For example, California State University–Los Angeles catapults a whopping 10 percent of its student body from the bottom quintile to the top, and some campuses of the City University of New York (CUNY) and the University of Texas system have mobility rates above 6 percent. Yet one in ten colleges has a mobility rate of less than 1 percent. (More on these variations below.)

Finally, although the fraction of low income kids attending college increased from 38 to 46 percent during the 2000s, the number attending colleges with high mobility rates fell sharply, while the fraction of low-income students at four-year colleges and selective schools was unchanged—even at Ivy League colleges, which enacted substantial tuition reductions and other outreach policies. Most of the increase in low-income enrollment occurred at two-year colleges and for-profit institutions.

 

For more on that last study, go here:  College Effect on Upward Mobility

 

The Brave New World Of College Applications

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Back in the old days, say in the year 2005, the only worry you really had when applying to college in California was whether or not you would get in.  Now, not only is it harder to get into college, you also have to worry about  how politics (and the economy) are impacting the universities to which you want to apply.  Most of the problems you will face, from finding a school to paying the ever-increasing tuition to getting into the more and more crowded classes have a common cause: funding.  And funding is a function of political priorities as much as it is a result of economic swings.

Bear with me while I explain,  and then I will offer a simple strategic proposal after I  outline the current situation.

We could start with the fact that Cal State students launched a hunger strike earlier this month in response to tuition increases and cuts in courses and enrollment.  Their solution is focused on administrative pay, which is a satisfying target, but won’t solve the problem.  The problem is much bigger.

In March, the Cal State system announced that it is planning to cut up to 3,000 staff members for the 2012-2013 academic year, as well as slashing enrollment–this seems assured if the tax initiatives on the ballot for November, 2012, do not pass.  Even if the initiatives do  pass, Cal State schools will not be accepting transfers next Spring, meaning the twenty-five or so thousand community college students who are ready to move on to a CSU will have to wait half a year.  This means that the current best-case scenario amounts to a freeze in enrollment while services are cut.

If this outrages you, put it into perspective:  the system has experienced increasingly severe cuts for the last decade, and at this point it has the same amount of money as it did in 1997, but it has 90,000 more students to serve. Decades of cuts have accelerated in the last four years, and something has to give, so plan not only on paying more tuition per term at a CSU, plan also on spending more time in school because you can’t get the classes you need to graduate.

More time in school means spending more money, so factor an extra term or two in as an additional cost when you set up your application list.

Moving on to the University of California system,  the regents are proposing a 6% tuition increase for this fall–this is on top of the increases already planned and implemented–and this increase is almost certain since the U.C. regents say it is based on whether or not funding will be increased for 2012-2013 (hint:  it almost certainly won’t be.)  This will put the total tuition for 2012-2013 at 12,923, plus other fees.   As a result, students attending a U.C. this fall can expect to pay about twice what a student paid in 2007.  Worse yet, if the tax measure on the ballot for November fails to pass, U.C. regents will meet to “consider” an additional  double-digit increase effective for the next term.    Yes, at least 10% will be added on to the planned 6% in the same academic year.  The sky is indeed cracked and it will start falling in 2012 if more revenue is not generated.

The focus of rage at this point is misguided but understandable–the hunger strikers I referenced above are upset about administrative salaries, and I agree that it is unfair for admins to get raises while students are hit in the wallet, but saving even tens of millions dollars by freezing or cutting admin pay is the proverbial drop in the bucket relative to cuts of at least 750 million dollars  for U.C. and Cal State for this year alone.  It might help a little to cut admin pay, and I don’t think any administrator anywhere should be getting a raise when profs and students are taking a beating, but it’s a symbolic act to cut admin pay, not a solution.

Keep in mind that increased tuition accompanied by fewer class offerings are not the only effects of budget cuts.  Instructors are increasingly hired as adjuncts and lecturers, which means you increasingly have part-time teachers who are paid less and don’t get the benefits of full-time professors and who teach larger and larger classes. Everything from research to maintaining quality of instruction is compromised as the system cuts costs.

Meanwhile, understanding what is going on is more difficult due to the economic troubles of an entirely different industry–journalism.  Local reporting is mixed in its quality, with ABC 7 in L.A., for example, putting out reports like this one, in which the reporter writes about how the U.C. system still has “pricey” constructions projects going “gangbusters.”  The reporter finally explains that these projects were funded through bonds, often seven or more years ago, but the headline and focus of articles like this one–which doesn’t really explain anything until the article is halfway through–creates confusion about what the real problems are.  Construction which is currently underway has nothing to do with the  budget crisis we have right now, but it’s hard to tell that if you are scanning articles like this one.

And the problem is clear, if you step back a bit:  the collapse of the housing bubble and deep recession of the last four years have not so much caused  university funding to collapse as they have revealed the deep structural problems in education funding in California, problems which go back to the year 1978 and Proposition 13.  And speaking of going back to future, Jerry Brown was governor when Prop 13 passed, and while he opposed it strenuously and publicly, he also bowed to the will of the people and implemented it to the letter after it passed.

Governor Brown is nothing if not forthright, and just as he did in 1978, he is presenting the citizens of the state with a clear alternative:  vote in November to raise taxes or the budget will be cut even more severely. If you understand state budgets, you know this means big cuts for next Spring, but even bigger cuts for the fall of 2013.  And I mean the kinds of cuts that are causing me to tell my college advising clients who live in California  to apply to multiple universities outside of California.

And I am going further than that:  I am telling my clients who are planning to go to college in the fall of 2013  that, if the ballot initiatives fail in November 2012, they should plan on going to college out-of-state and even outside of the United States.  Going out of state or out of the country can be close to the cost of going to school in California now,   and in many places outside of the (formerly) Golden State, students will be more easily able to get the classes they need and so to graduate on schedule, which also saves money.

With current U.C. increases planned to push tuition above 18,000 dollars over the next four years, and with the potential for that to increase  to over 20,ooo dollars a year by 2017 if the tax initatives fail, going out of state is looking like a good bet to be on par in tuition and expenses or an even cheaper alternative, if you search widely and well.

As an example, out of state tuition at the University of Oregon  is currently in the 25,000 range for out-of-state students, but cost of living is lower than at many U.C. schools, and if the November tax initiative fails, tuition in California will race to catch up or pass out-of-state tuition in many states, including Oregon.  Oregon has its own severe budget problems, but they do not currently have the catastrophic potential of  those in California, and with U of O looking at an endowment  and other strategies to boost funding, along with tuition breaks at smaller schools like Southern and Western Oregon, I expect costs in Oregon to be significantly more stable and potentially cheaper than in-state California tuition by 2018, and if you go to a WUE school, it could be cheaper within a year or two. Add to that the fact that U of O is seeking more out-of-state students, and you also have a comparative advantage in being admitted in the first place.

Before moving on, I want to reinforce that Oregon and Washington have serious budget problems and face continuing increases in tuition, which is why you should be looking internationally as well, but relative to California, Oregon and Washington schools are becoming more attractive.  See this report for a breakdown of what is happening in the sunny west.

So that’s the takeaway:  if you live in California, apply to universities in at least two or three states, and you should also be looking at universities beyond U.S. borders.  In fact, nobody should be applying only to California or even solely to West Coast universities.  But don’t assume that leaving California means everything will be hunky-dory.    Do your homework in assessing the budgets for all universities in all states in which you plan to apply.  Most places are suffering.  It’s just far worse in California than anywhere else.

In the near future, I will be writing in more detail about the situation outside of California and outside of the United States, with analysis on specific schools in Oregon, Washington, Arizona, Canada and Great Britain as well as Ireland, but this content will only be available in full to my  subscribers and clients.

Good luck and Godspeed in researching colleges, and be sure to look up budget matters–or hire me to help you with that.