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Transparency Run Amok

Combating third-party sites that shape perceptions of value and affordability
University Business, December 2012

With today’s increased focus on college costs, the call for disclosure of information about affordability and outcomes has also been on the rise. Besides the traditional rankings, a growing number of websites purport to shed light on affordability, or net cost, or return on investment based on IPEDS data combined with other information sources. Examples include the Department of Education’s College Affordability and Transparency Center; Payscale’s ROI rankings; the CNNMoney Cost Calculator; and the New America Foundation Federal Education Budget Project (FEBP) searchable database.

If families are using these sites, chances are they will be getting confusing or inaccurate information—or at a minimum, will get data that is out of context. Yet, we only see a few institutions combating this sort of publicly available information with better information on their own websites.

The Push for Disclosure

Part of the push for cost and outcomes disclosure has come from the federal government’s increased role in regulating transparency and accountability in recent years. An obvious example is the Net Price Calculator requirement that went into effect last fall. Another is the U.S. Department of Education’s “gainful employment” rules. Although the main component of the “gainful employment” regulations was overturned this summer, the disclosure portion was retained, requiring career college programs and nonprofits that offer certificate programs to disclose graduation rates, placement rates, and students’ median debt.

In February 2012, the “Student Right to Know Before You Go Act” (S.2098) was introduced in Congress. A key provision of the bill would support states in creating postsecondary student-level databases that include measures of student success like average individual annual earnings by academic program, degree received, and institution—giving families the opportunity to gauge the likely outcome for specific majors at specific schools.

Around the same time, as part of the “Know Before You Owe” campaign, the first draft of the Federal College Scorecard was released. The Scorecard addition to the College Affordability and Transparency Center would give families a tool that shows average net price, six-year graduation rate, and loan repayment rate for a selected institution compared with institutions that enroll similar types of students, as well as information about student loan debt and earnings potential (placement rates, average salaries, etc.). 

On its face, this seems logical, but families would likely find a comparison between schools that are direct competitors or schools they are actually considering helpful, rather than a sampling of schools from across the country of similar profile. Also part of this campaign, The DOE and the Consumer Financial Protection Bureau have created a model financial aid disclosure form, the Financial Aid Shopping Sheet, with the intention of helping students understand the type and amount of aid they qualify for and compare aid packages offered by different colleges and universities.

Lists promise families quick, easily digestible information about the best and worst colleges.

However, as my colleague Kathy Kurz writes in her August 27, 2012 blog, the Shopping Sheet may merely add to families’ confusion surrounding financial aid award letters, rather than providing clarity, particularly as the “what you will pay” section includes total cost of attendance minus gift aid, rather than the direct costs minus gift aid which may be what is reflected on the award letter.

Apart from federal initiatives, lists are popular. Remember when David Letterman moved from NBC to CBS? While the name changed, the “Top Ten List” came along, too. Aside from the entertainment value, lists such as those provided by US News & World Report, Payscale, CNNMoney, and others offer the promise that they have condensed time-consuming research into quick, easily digestible information about the best and worst college options, saving busy families time in the daunting college search process.

Limitations of Lists

Lists have their drawbacks, though. For instance, the methodology and priorities of those creating the list may not be in synch with factors important to individual students such as location, career goals not related to financial gain, or overall “fit.” In addition, a generally low ranking for an institution can mask stand-out, high quality programs.

In a specific example, the list of institutions with the largest tuition increases on the College Affordability and Transparency Center website doesn’t mention if those same schools also increased their aid budgets, or the cause of the increase, such as dramatic cuts in state funding in the case of the public sector. Institutions need to be aware of how they are portrayed in lists and rankings not just from the standpoint of taking advantage of positive third-party verification, but also to craft messages addressing less-than-favorable press.

Comparison tools are perhaps a better vehicle for families to get empirical data to weigh their college options, but they also have their limitations. For example, a search using the Federal Education Budget Project website that shows a higher average total aid figure than the average net cost could give families a false expectation that a typical student pays nothing out of pocket, when in reality, total aid includes a significant amount of work study funds that would not be directly applied to a student’s charges.

Similarly, statistics garnered through tools such as College Navigator—say, retention and graduation rates—can be misleading when taken out of context. Schools serving predominantly at-risk students could have a relatively low retention and graduation rate compared to all higher education institutions and yet be significantly out-performing peer institutions that serve similar populations.

A Strong Value Proposition

With families’ increasing savvy and concern about college costs, and the growing number of tools available for them to compare schools, it has never been more important for institutions to convey a strong value proposition. Here are some proactive strategies to effectively communicate affordability and value:

1. Make sure scholarships have clearly defined eligibility criteria.

These may include combinations of SAT/ACT score ranges, GPA ranges, class rank, etc. displayed prominently on the web and in print. These can build demand and address questions of affordability early in the recruitment cycle, particularly for students with a high academic profile. A word of caution: when guaranteeing merit awards, be careful of “stacking” entitlements, where largest awards (number and dollars) go to those with a natural connection to the institution.

The success of graduates needs to be front and center both in print and on the web. 

2. Provide an income profile via a simple graph.

It should show the distribution of the most recent enrolled class by income ranges and can also go a long way toward demonstrating affordability early in the recruitment cycle—as can case studies and sample award packages for a cross-section of typical students. These tools help families see that others like them have been able to make it work at your institution.

3. Tout your time-to-degree.

If students are able to receive the advising and courses needed to graduate on time at your college, and especially if there is a four-year guarantee, then time-to-degree can also be a powerful message. Even more so if there are three-year degree options, generous AP/course credit transfer policies, or accelerated graduate study programs. Not only will families spend less with a shorter time-to-degree, but students will gain a higher earning opportunity by entering the job market sooner.

4. Use the net price calculator well.

Although the net price calculator has yet to become a preferred source of affordability information for families, it has the potential to be an effective recruiting tool, rather than merely a requirement for compliance. There needs to be a balance between simplicity and accuracy; if there are too many questions, families are less likely to complete it, but if you are not collecting scholarship qualification data, most students will see over- or understated results. In addition, the results page is another opportunity to reinforce the case for value by including information about financing options, estimated monthly payments, and return on investment.

5. Make the case for return on investment.

There is nothing institutional leaders can do that will have a more positive influence on demand. The success of graduates needs to be front and center both in print and on the web. Vignettes of successful young alumni are helpful, and to make the most convincing case, placement rates and average starting salaries by program should also be included, along with examples of job titles and the companies and graduate schools where students are most often placed.


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