SACAC Session B: The True Tragic Tale of College Costs and Financial Aid

1. 4/22/2016
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The True, Tragic Tale of College Costs and Financial Aid
Version 2.0: Solutions in Sight?
SACAC Annual Conference
Miami, FL – April 2016
Holly Burks Becker & Jeffrey Durso-Finley, Directors of College Counseling
The Lawrenceville School
True & Tragic: How Did We Get Here?
40 + Years Ago: A Student Could Pay for College w/ a Job.
“Today, the average student's annual tuition is equivalent to 991 hours behind the counter.”
- The Atlantic
30 + Years Ago: Educational access expands across demographics, and
financial aid programs expand accordingly & intentionally.
20 + Years Ago: College Cost / Income Gap Explodes
“ Unmet financial need among the lowest income families (below $34,000 annually) grew by 80
percent during the 1990-2004 interval …[and] The biggest single trend affecting higher education
finance has been the incremental privatization of finance, spurred by the erosion of state and local
funding for public institutions.....” (Mortenson)Family Income and Higher Educational Opportunity, 1970 to 2002.
10+ Years Ago: The Age of “Co-Purchasing” Begins
True & Tragic: How Did We Get Here?
Today? A True, Tragic Tale:
Runaway Financial Strain
+ Confusing, Flawed FA Components
= Unsustainable FA Conventions
Going Forward: Solutions in Sight?
* PPY
* FAFSA Positioning….
* Reframing FA Discussions.

2. 4/22/2016
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True & Tragic: How Did We Get Here?
College is expensive……but it hasn’t always been so.
Public 4-Year* Private 4 Year*
1981-1982: $3,951 $6,330
2011-2012: $23,066 $33,716
* Average total tuition, fees, room and board rates charged for full-time undergraduate students in
degree-granting institutions, by type and control of institution: Selected years, 1981–82 to 2011–12
True & Tragic: The Underlying Premises
College Costs Have
Dramatically Outpaced
Income in the Last 20+
Years…
True & Tragic: The Underlying Premises
College Costs Have
Dramatically Outpaced
Inflation in the Last
20+ Years…

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True & Tragic: The Underlying Premises
1) The role of an admission office is to matriculate an incoming class at a
particular college that meets the defined number of incoming students
and at a defined budget.
2) The role of a financial aid office is to determine the financial need and aid
availability for families who apply to that particular college.
3) The role of the enrollment management apparatus is to reconcile the
predicted enrollment, retention rate, overall budget, financial aid
philosophy, admission policy, revenue expectations and other factors into a
financial aid policy that meets #1 & #2
4) The role of the applicant’s family is to figure out #1, #2 & #3 work from a
knowledge base of zero and in an opaque, byzantine (unique?) system.
True & Tragic: The Underlying Premises
All college advisors/college counselors have strategies for helping students and
families navigate the overall college application and the financial aid process,
often including:
• Determining EFC and Financial Need.
• Using the FAFSA / FAFSA4Caster.
• Employing Net Price Calculators.
• Suggesting Frank Conversations Happen Early in the Process
• Asking Admission Officers / Attending Info Sessions
• Applying to a Range of Colleges
• Scholarship Searches
• Learning About Educational Loans
• Evaluating FA Packages
...and many other techniques honed through experience.
True & Tragic: Starting the Process
Let’s start at the beginning.
First conversations about the college process often start with determining
“fit” through characteristics.
• Size
• Geography
• Major / Degree Program
• Religious Affiliation
• Setting (Urban vs Rural vs Suburban)
• Social Life & Extra-Curricular Activities…
…But, for Financial Aid Families, this Approach is Backward.

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True & Tragic: Starting the Process
…But, for Financial Aid Families, this Approach is Backward.
Imagine walking into a car dealership or and nailing down the details by deciding
you want (without knowing the price):
* The “Deluxe” Detail Package * The Extended Cab
* Advanced Horsepower * Extended Warranty
* On Demand four-wheel drive * Leather seats
…and then you are taken out on the lot and shown your 6 different options, only to
discover that every option is out of your reach financially.
It’s how college advising should work. for FA Applicants!
Enter PPY!
True & Tragic: FAFSA
If we ask about finances, we usually move right to EFC / FAFSA to
determine the targeted family contribution…
Except, EFC is a flawed and misunderstood calculation.
• It’s main purpose is to determine qualification for Federal Aid*.
• It doesn’t calculate any institutionally determined family contribution.
• It doesn’t calculate any institutionally student contribution.
• Institutional aid policies are not taken into account.
In sum, the FM / EFC from the FAFSA tells families essentially how much
aid they need if 100% of need is met, not what they’ll *get.*
True & Tragic: NPCs
Net Price Calculators
“…to help current and prospective students, families, and other consumers estimate the
individual net price of an institution of higher education for a student. The net price
calculator shall be developed in a manner that enables current and prospective
students, families, and consumers to determine an estimate of a current or prospective
student’s individual net price at a particular institution.”
- Higher Education Opportunity Act 2008

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True & Tragic: NPCs
The Problem? NPCs are a flawed tool…
• “Both the number and difficulty of net price calculator questions in our sample
varied dramatically. The number of questions ranged from eight to about 70.”
• “More than one-third of the calculators asked for information that students and
parents would not be able to provide without digging up detailed financial
records, such as parents’ “total adjustments to income” and contributions to
nontaxable retirement plans.”
• “ Many calculators asked for contact information, which students may not feel
comfortable providing.”
• “The majority of net price calculators ….did not provide any information
about whether and how students’ information would be used or shared.”
- Institute for College Access & Success
True & Tragic: NPCs
The Problem? NPCs are a flawed tool…
Families Colleges’ NPC
* Fail to complete the form fully * Ignores Gapping, Need-aware
* Use poor or estimated information (GIGO) admission practices & other policies.
* Assume the amounts are accurate, * Must carefully construct the device
and act accordingly. so as to not scare off potential apps.
* Ignore it completely, in fear of * Offers a deliberately vague target
what it might indicate.
* Some have been found to have omitted
* Families only occasionally self-help from the net price, an
have “simple” finances. omission which lowers the posted net
price.
Overall… incomplete, misleading and missing data in + incomplete, confusing,
and vague formula = a FA number that frequently misses the target.
True & Tragic: AO Meets FAO
Families attending information sessions, counselors sitting in on school visits
and students looking at brochures will most often hear these three statistics…
* Percentage of students receiving Financial Aid
* Average Financial Aid Award.
* Total amount of scholarship aid awarded
The problem? These statistics are flawed .
They do not tell a family, counselor or student what a financial package will
look like….

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True & Tragic: AO Meets FAO
Families attending information sessions, counselors sitting in on school visits
and students looking at brochures will most often hear these three statistics…
* Percentage of students receiving Financial Aid
- Easily manipulated with small awards.
- Doesn’t address % of need met
* Average Financial Aid Award.
- Skewed by small number of large awards?
- Directed toward “protected groups”?
* Total amount of scholarship aid awarded
- What does it include? Merit? Need? Federal? Tuition
discount?
True & Tragic: AO Meets FAO
Families attending information sessions, counselors sitting in on school visits
and students looking at brochures will most often hear three flawed statistics…
…but they need to hear these pieces of info instead
* Do you meet 100 % of need of admitted students ?
* Are you need-blind?
- If not, at what point are you need aware?
- If so, international students? Wait-list?
* What percentage of students have 100% of their need met?
* Do you give “merit aid” beyond demonstrated need? If so,
what is the academic profile of those students? How many?
* How are merit scholarships determined? How do students get
referred for consideration?
True & Tragic: AO Meets FAO
We Need Thre Answers!: The Lawrenceville Financial Aid Initiative
Frustrated with our financial aid database of information, scholarships and
overall knowledge of admission practice, we decided to ask all admission
officers that visited Lawrenceville these kids of questions so we might put them
in a spreadsheet:
* Do you meet 100 % of need of admitted students ?
* Are you 100% need-blind?
- If not, at what point are you need aware?
- If so, international students? Wait list?
* What percentage of students have 100% of their need met?
* Do you give “merit aid” beyond demonstrated need? If so,
what is the academic profile of those students? How many?
* How are merit scholarships determined? How do students get
referred for consideration?
One problem: We had to stop. Too few AO’s knew the answers…

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True & Tragic: Gapping
The Information Gap: Information necessary to make
good decisions is elusive.
The Curiosity Gap: Willingness to seek the information
to make good decisions lags.
The Reality Gap: What’s a “good decision” ?
True & Tragic: Gapping – The Information Gap
• Given an investment of over $200,000 in many cases, a startling lack of detail is
available to families as to how their aid is determined.
• Compare to the Mortgage Approval Process: Housing Bubble?
• Devices designed for “clarity” fail to provide it: FAFSA, CSS-Profile, NPC’s, etc.
• Randomly pick 8-10 college websites for information on financial aid policies.
• Need-blind / Need Aware?
• Average Loan Debt?
• Tend to vagueness, while the best sites are either hyper-selective or the details
can be (appropriately) worrisome.
• In the simplest terms, where do families turn to get the information they need?
• College Advisors / Guidance Counselors?
• The Department of Education?
True & Tragic: Gapping – The Curiosity Gap
• Startling lack of participation in school sponsored events on FA.
• Intensive travel, research marketing & publications to determine the right
“fit” versus the intensive research needed to understand financial aid.
• Speaking as a family (or as a counselor, to a family) about “financial limits”
and “ability to pay” considered inappropriate.
• The Ostrich Effect.

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True & Tragic: Gapping – The Reality Gap
• Families often assume that “life choices” will be supported, and they get to
define those choices.
• “Officials at Roger Williams…studied doing dramatic price cuts and concluded
it could torpedo the institution…The university hired Maguire Associates to
check the opinions of students and parents. Would they prefer a $36,000 tuition
and $13,000 in aid or would they prefer $23,000 tuition? By a 2 to 1 margin,
parents and students preferred the higher tuition and the chunk of aid.”
- Inside Higher Ed
• Merit Aid = My Child Merits Aid. (Even at a school that doesn’t offer merit
aid…)
• “We’ll find a way….”
True & Tragic: The Financial Aid Award Letter
Congratulations! You’ve been admitted!
Here’s your Financial Aid Package!
Except…
• “Total Award” often includes loans. How many “awards” do you give back?
• There’s no indication that the loans escalate over four years.
• Total Cost of Attendance might not be listed, even if “Total Award” is…
• Grants may decline as loans increase or be tied to GPA without indication..
• Sibling in college? Expect 120% of EFC…
• Self-help: Can you hit the expected mark?
• The Price of Textbooks….say no more.
• PLUS Loans are not considered “EFC”
• The first tuition bill….
But most importantly, can you tell what it will cost?
True & Tragic: The Financial Aid Award Letter
Congratulations! You’ve been admitted!
Here’s your Financial Aid Package!
“Parents should not need a PhD in economics to read financial aid award
letters…But until Congress decides to make the college shopping sheet
mandatory, they’re going to need help.”
- Mark Kantrowitz, as quoted in Forbes. 3/31/2014

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True & Tragic: The Financial Aid Award Letter
Help is on the Way! Hooray!
The Shopping Sheet…
“The Financial Aid Shopping Sheet is a consumer tool that participating institutions will
use to notify students about their financial aid package. It is a standardized form that is
designed to simplify the information that prospective students receive about costs and
financial aid so that they can easily compare institutions and make informed decisions
about where to attend school.”
- Dept of Ed Website.
True & Tragic: The Financial Aid Award Letter
Help is on the Way!**
The Shopping Sheet…
“…colleges say the shopping sheet didn’t make much of a splash: few students
seemed aware that they existed or referenced them when talking to admissions and
financial aid officers.”
– Inside Higher Ed 6/12/13
“…most colleges do not use the shopping sheet, which is voluntary.”
- NYT April 9, 2014
True & Tragic: Loan-a-palooza
Expectations for Assuming Debt Ubiquitous and Mirrors Credit Culture
• Range of Loan Options Confusing to Families
• Perkins, Stafford / Ford Direct Lending
• PLUS Loans
• Private Loans
• Subsidized / Unsubsidized
• Often “built” into award letter w/o later expectations defined.
• Startling Lack of Financial Literacy
• What is “reasonable” loan debt?
• Understanding of repayment responsibilities and amounts?
• Feeds into “we’ll just find a way…” decision making tree.
• Co-Purchasing Linkage: Both Parents & Students Assuming Loan Debt.
• Perfectly Illustrates the Evolution of College Costs and Financial Aid

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True & Tragic: Loan-a-palooza
Google Search Magic: Begin Typing “Student Loan Horror Stories…”
and Google Prompts 2012, 2013, 2014, 2015, etc.
National Credit Issue: Total student loan debt (~1 Trillion $) surpasses total
credit card debt, total auto-loan debt and second only to
total mortgage debt, with ~ 85% backed by the US Gov.
Personal Finance Issue: Student loan debt defers retirement savings, home
purchases, and other aspects of Household finances /
personal wealth building affecting economy.
…and then there’s the default issue : 14% Default rate (3-Year cohort).
True & Tragic: Outside Scholarships
“Billions of Dollars of College Scholarships go Unclaimed Every Year…”
• Sounds so easy! Such hope to fill the gaps and eliminate financial strain.
• Allure of Huge National Scholarships offering tens of thousands of dollars: Coca-Cola,
Gates Millennium, Buick, Toyota: Win one and all your financial woes will be solved.
• If not these, then thousands of state and local scholarships will supplement a student’s
financial aid award…
– (Women’s Club, Rotary, churches, Special Interest groups, Society of Engineers, etc…
…. Too good to be true?
True & Tragic: Outside Scholarships
“Billions of Dollars of College Scholarships go Unclaimed Every Year…”
Too good to be true? Sadly, yes…
• Majority of this “claim” is attributed to unclaimed employer-paid benefits.
• Odds of winning the big bucks scholarships are slimmer than slim.
• Winners have off-the-charts scores, accomplishments, life-stories…
Instead …
• Overwhelming databases: Fastweb/FinAid.org generate 100’s if not 1000’s of leads .
• Deadlines vary wildly.
• Scholarship scams abound.
• Often one-shot wonders. No renewal option.
And if that’s not discouraging enough…
• Colleges vary about who “owns” that outside scholarship money. Many colleges split to off-set a
balance of Institutional Grant $, Loans, Work Study. Student not the full beneficiary

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True & Tragic: Where Are We Now?
College Financing Issues by Socio-Economic Status
• Upper-Middle Income Bracket:
• Moved from “Ability to Pay…”
• ….to “Willingness to Pay?”
• ….to “Willing to Pay for xxx School?
• Middle Income Bracket:
• Aspirational?
• Delusional?
• Debt Laden…
• Lowest Income Bracket
• Paucity of Information, Support & Guidance
• “Undermatching..”
• Total Cost of Attendance Terrifies and Deters Students from Applying.
True & Tragic: Where Are We Now?
• Total Student Debt:
• Exceeds 1 Trillion Dollars…
• More than 2/3’s of Students Graduate with Debt
• 1 in 10 students have more than $40,000 in debt.
• Average Loan Debt = $26,000 ($320 / Month for 10 years @ 3.8%)
- Forbes. 8/27.13
• For-Profit Colleges have the highest rate of loan default.
“Only about 13 percent of students attend for-profit schools, yet the sector is responsible
for nearly half of all student loan defaults.”
- Huffington Post. 3.13.14
The Two Largest Colleges in the U.S.? For Profits. Almost 400,000 Students.
True & Tragic: Where Are We Now?
Policy and Practice Creates a Contentious, Adversarial Relationship.
In This Corner: The Colleges..
• Intentional Goal to Stretch the FA budget
• Lack of Transparency for Practice and Policy
• Gapping, Discounting, & Marketing Strategies
In This Corner, Families…
• Lack of Useful Information & Resources
• FA Application Aids Potentially Hinder More than Help
• College Aspirations and FA Realities Hit Family Sociology Hard
But, when families employ strategies to stretch their “ability to pay” dollar, try to be
strategic about their finances or strategize about their family’s finances, they are seen
as unethical….

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True & Tragic: Where Are We Now?
Family Psychology: Ponies, Porsches, and Penn State:
If your 8 year old says she wants a pony for her birthday, 99% of parents feel fine saying no..
…there are plenty of reasonable gifts appropriate for an 8 year old.
If your 16 year old says he wants a Porsche for his birthday, 99% of parents feel fine saying no..
…there are plenty of reasonable cars appropriate for an 16 year old.
If your 19 year old says he wants a $60K college over Penn State, why don’t more parents…
…feel fine saying no, esp. when there are plenty of reasonable colleges
appropriate for an anyone?
True & Tragic: Solutions!
After seeing how flawed the current system operates for families applying for
financial aid, what can we do about it?
• Begin the College Search with What Families Can Afford vs What They Want.
• New Selectivity Categories Defined.
• Redefine the Utility of the NPC.
• Clarify and Streamline Outside Scholarship Access.
• Separate the FAO from the AO.
• Credit & Financial Literacy – A Teaching Moment.
• Learn How to Ask the Right Questions & Find Helpful Information
• Clarifying Communications:
• Admission & FA Statistical Analysis: “Your Process is Different”
• CCO Attitude Adjustment: “Blunt is Better.”
• Information “Push” vs. Information “Pull.”
True & Tragic: Solutions!
Begin the College Search with What Families Can Afford vs What They Want.
• Instead of starting with physical characteristics, begin with what the family’s
FA needs will be and then act accordingly.
• Reverse the “fit” model. “Three Dimensions of Fit”
• CSS- Profile’s most annoying question re-visited….
• Push the Conversation Forward: “Have Honest Conversations up
front….yada…yada….yada”
…becomes “Find out what kind of FA applicant you are first.”

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True & Tragic: Solutions!
New Selectivity Categories Defined.
Selectivity Categories No Longer the Only Construct. Instead: Lead with FA.
• My State Institution Of Choice (Admissable)
• Schools that Meet 100% of Need:
• Schools that are Probable for Admission for me.
• Schools that are Reach/Mid-level for me
• Need Aware Schools:
• Schools where I am at the top of the admitted student profile.
• Schools where I am not at the top of the admitted student profile.
• Merit Aid Schools (Scholarship Beyond Demonstrated Need)
• Schools where I am in the upper range of the admitted profile.
• Schools where I am not in the upper range of the admitted profile.
True & Tragic: Solutions!
Re-define the Utility of the NPC
• Diversify the financial data collection. Keep calculating….
• Seek out NPCs of depth – the more questions the better.
• Use the number as a target for assessing their own need and NOT how much a family is
going to *pay* for college, necessarily….
Instead of “what you will pay,” the definition is:
“The NPC calculation is a reasonable approx. of your family’s college costs, but …
* …it assumes you complete the calculator fully and accurately,
* … the student contribution may be added at a variable level,
* …and, only at a school where they will meet 100% of need,
* …and, if your family’s finances / taxes are straightforward.
True & Tragic: Solutions!
Separate the FAO from the AO in Discussions with Families.
The two offices have different roles. (As does enrollment management).
- The perky tour guide, the witty admission officer in the info session or the
avuncular alumni interviewer won’t be not the person who is crunching your
1040A and determining your “asset draw.”
- Personal decisions on what constitutes a “necessary expense” can and will
alter your aid package.
- The FAO’s decisions will be audited for accuracy so are “quantifiable/calculable.”
“My job is to aid them, not adopt them…”
- Director of Financial Aid,
xxxx Universitry.
“Financial Aid is like prison food. It keeps you alive, but that’s about it.
- Lew Stival, Blair Academy

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True & Tragic: Solutions!
Clarify and Streamline Outside Scholarship Access.
Knowing that General Principles, Guidelines, and Fastweb type links no longer suffice. …
• Distribute philosophical & practical information that is clear and actionable early on.
• Aggressively promote advantage of smaller, more specifically targeted scholarships.
• “Push” local scholarship opportunities organized by deadline one month at a time.
• Offer data to support benefits of smaller grants (books, start-up fees, etc.)
• Refer students to local public library.
• Forward outside scholarships to relevant cohorts
• Create culture of support among peer group.
True & Tragic: Solutions!
Credit & Financial Literacy – A Teaching Moment.
Sallie Mae Repayment Calculator
“Mapping Your Future”
Take Home Pay Calculators
True & Tragic: Solutions!
Learn How to Ask the Right Questions & Find Helpful Information
* Questions to Ask the FAO / AO:
* Do you meet 100 % of need of admitted students ?
* Are you need-blind? (If not, at what point are you need aware?)
- If so, international students? Wait-list?
* What percentage of students have 100% of their need met?
* Do you give “merit aid” beyond demonstrated need? If so,
what is the academic profile of those students? How many?
* How are merit scholarships determined? How do students get referred for consideration?
• Show Parents Helpful College Websites that Give Critical Detail
• Kenyon’s FA description, Skidmore’s NPC
• www.collegedata.com

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True & Tragic: Solutions!
Clarifying Communications in the CCO:
• Admission & FA Statistical Analysis: “Your Process is Different”
• CCO Attitude Adjustment: “Blunt is Better.”
• Information “Push” vs. Information “Pull.”
True & Tragic: Solutions!
Our Potential Solutions….
• Begin the College Search with What Families Can Afford vs What They Want.
• New Selectivity Categories Defined.
• Redefine the Utility of the NPC.
• Clarify and Streamline Outside Scholarship Access.
• Separate the FAO from the AO.
• Credit & Financial Literacy – A Teaching Moment.
• Learn How to Ask the Right Questions & Find Helpful Information
• Clarifying Communications:
Financial Aid, College Costs, and the Scholarship Search**
College Costs & Financial Aid “Final Exam.”
If you learn and apply these 7 concepts? You’ll pass! (i.e. be a successful applicant).
• Take Control: Be Proactive. No Ostriches!
• Expect that FA at Lawrenceville and FA for College Will Not Be the Same.
• *You* Have to Learn to Ask the Right Questions.
• Financial Aid will Affect the Way you Shape Your List.
• The “Sticker Price” isn’t Often What You Pay for College.
• You Must Know What “Kind” of FA Applicant You Are.
• Scholarship Aid / Merit Aid is available! But, “When” Matters as much as “Where.”

16. 4/22/2016
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The True, Tragic Tale of College Costs and Financial Aid
Version 2.0: Solutions in Sight?
SACAC Annual Conference
Miami, FL – April 2016
Holly Burks Becker & Jeffrey Durso-Finley, Directors of College Counseling
The Lawrenceville School