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US Department of Education Publishes College Cost and Net Price Rankings

Mark Kantrowitz

July 01, 2011

As required by Congress, the US Department of Education is now publishing lists that rank the most and least expensive colleges. Colleges are ranked according to tuition and fees as well as net price within each college type category. The US Department of Education is also publishing lists of colleges with the greatest increases in tuition and fees or net price. The lists will be updated annually every July 1.

The lists are available on the US Department of Education web site at collegecost.ed.gov.

Flawed Ranking Methodology

While the new cost rankings are a first step toward holding colleges accountable for their costs, the lists suffer from several flaws.

The new lists lack any real teeth. Certainly the public shaming aspects will put pressure on colleges to limit their cost increases. The publication of this data by the US Department of Education will draw attention to it, but ultimately the lists will not be very effective in getting colleges to cut costs.

Presenting the data in 54 separate lists is not necessarily the best way to provide the information to consumers. The lists would have more impact if they were integrated into the College Navigator and FAFSA web sites, perhaps by providing a red flag next to the names of the more expensive colleges. Or perhaps the US Department of Education could create a college affordability index as a summary score reflecting whether a college is among the most or least expensive colleges. That way the data would be available to families when they are actively searching for colleges, when it has the opportunity to influence their decision-making.

When the US Department of Education started listing graduation rates prominently on the online FAFSA form, graduation rates suddenly became one of the top five criteria for the initial selection of colleges considered by high school seniors, according to the College Decision Impact Survey conducted by Fastweb and Maguire Associates.

The definition of net price is also flawed. Net price is defined as the cost of attendance minus average grant and scholarship aid. However, the average grant and scholarship figures are calculated as an average among just the grant and scholarship recipients, not all students, yielding a figure that is too high. As a result, the net price figures used in the rankings will understate the actual net price for typical students. Substituting the mean grants — the total grants divided by the total number of students, including those who did not receive grants — for the average grants would be more realistic.

Average total grants are always greater than mean total grants. For example, the average total federal, state, institutional and private grants to a student with family income under $25,000 was $6,256 in 2007-08, about 17% higher than the mean total grants of $5,368. For students with family income of $25,000 to $50,000, the average total grants of $6,630 is 38% higher than the mean total grants of $4,802. For students with family income of $50,000 to $75,000, the average total grants of $6,845 is 66% higher than the mean total grants of $4,115. For students with family income of $75,000 to $100,000, the average total grants of $6,827 is 88% higher than the mean total grants of $3,633. For students with family income of $100,000 or more, the average total grants of $7,314 is 112% higher than the mean total grants of $3,450. (Note also that the average grant increases with greater family income.)


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