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Navigating The College Money Maze


It's that time of year again for anxious students and their families. College acceptance letters are coming in, and federal financial aid forms are going out. That means thousands of students and families are starting down the road of deciding where to go and how to pay for it all.

The average tuition for a four-year, private college is $30,000 this year. The cost for out-of-state students at public colleges is not far behind that at $22,000 a year according to The College Board. This spring, along with NPR's Morning Edition, we will bring you stories about paying for college to help navigate that higher education money maze. You can weigh in with your own story or question on twitter at #payingforcollege.

Today, we want to start by asking why college is so expensive and how it got that way. And we also want to find out what critical information families need to make the best decisions. So to start us off, we've called Caroline Hoxby. She is a professor of economics at Stanford University. One area of research for her is college costs and school choice with a particular focus on low-income students. Professor Hoxby, welcome back. Thanks for joining us once again.

CAROLINE HOXBY: Thank you so much, Michel. I'm delighted to be here.

MARTIN: Also joining us is Marcia Cantarella. She is a former dean at Princeton University and Hunter College where she directs the Black Male Initiative, and she's also author of the author of the book "I CAN Finish College." And welcome back to you as well, Dean.

MARCIA CANTARELLA: Thank you. Delighted to be here.

MARTIN: So Professor Hoxby, let me start with you. The average cost of tuition of four-year colleges has been rising faster than the rate of inflation since at least the 1980's, that according to the Bureau of Labor Statistics. Why is that?

HOXBY: Well, college has changed since the 1980's. Instruction has become more intensive, the number of faculty per student has risen at most colleges and universities in United States and the educational experience has simply become more enriched. That being said, there are some four-year colleges whose prices have gone up a lot since the 1980's, and there are others that have just kept pace with inflation or not even kept pace with inflation. So there isn't a one-size-fits-all story.

MARTIN: OK. Good to know 'cause I was going to ask you that. Is it really as bad as it feels to the families who are facing this prospect?

HOXBY: I think, actually, people feel much - too much anxiety about college costs. They often pay a lot of attention to the costs of colleges where their children are not going to attend. And they get over-excited about the price of college because they read about it in the newspaper, and they really haven't done their homework or looked into how much financial aid their child will get.

MARTIN: Dean Cantarella, what about you? You advise a lot of high school students who are the first in their families to go to college. So what's your take on that?

CANTARELLA: I'd say that's absolutely true. That one of the things that families need to do is begin early looking at what's the level of scholarship funding that might be available even knowing things like, there's a federal tax credit for education. So there are all these pieces that are really part of the - how you inform yourself and how you begin a planning process early.

MARTIN: Professor Hoxby, what about you? In our previous conversation with you, you talked about the fact that some - in fact, a significant number of low-income students who are qualified to go to demanding and competitive institution sometimes don't go. And in fact, it might be cheaper for them that some of the public institutions or the less competitive institutions to which they are drawn. Now why is that?

HOXBY: Well, we've actually tested it by giving low-income students better information about college costs and about how to apply for college. And we find that when we give them better information, they do a better job of applying for college. I think a lot of students and families take themselves out. It's not that they are taken out because they just could not qualify for the aid they need or they could not pay for the college for which they're really well-suited.

They decide themselves not to apply because they are afraid that they won't be able to afford it. And instead of seeking the scholarships they could obtain, instead of seeking advice on how much aid they could get from various places, they're really removing themselves from a whole set of opportunities. And that's especially true of low-income students.

MARTIN: Dean Cantarella, I hope you don't mind my mentioning that your father was Whitney Young, a leader in the Civil Rights Movement. This is the kind of question that pushes some people's buttons, but I feel like I have to ask. There are some who argue that education should be a civil right or should be seen as a civil right and it is not. If it were, do you think that that would change the incentive to make the kind of information that would allow people to access these kinds of opportunities more available or not?

CANTARELLA: Well, you know, I'm glad you bought up my father. And one of the reasons that my father advocated so hard for equity in education as well as equity in the workplace is because the two things go together. And so to the extent that we want equal opportunity and equal access to the ability to have a decent quality of life, then education has really become core to that, and a college education, in particular.

MARTIN: If you're just joining us, we're launching our series Planning for College. Today, we're talking about how college became so expensive and how families can navigate the financial questions. My guests are Marcia Cantarella, author of "I CAN Finish College." She's a former dean at Princeton and at Hunter College. And Caroline Hoxby of Stanford University, who has a particular research interest into opportunities for lower-income students.

So, Professor Hoxby, I'm just going to ask you this kind of one more time. But do you have a theory about why it is that the educational marketplace isn't doing a better job of matching qualified students with the financial opportunities that are, in fact, available to them?

HOXBY: Well, we studied every single high-achieving student in the United States, and I mean every single one, not a sample, but the whole population of high-achieving students in the United States. And we found that there were many low-income, high-achieving students. Eight out of nine low-income, high-achieving students did not end up applying to the sort of colleges where they are likely to do best, where they're likely to thrive, where they're well-matched to the resources of the college and the other students.

So it's not the case that they're all finding their way to the colleges where they are well matched. Now high-income, high-achieving students do tend to find their way to those well-matched colleges, but not the low-income, high-achieving students. So clearly the information is not out there. In our research, we found that it really wasn't the college's fault.

What we found was that the students themselves often came from schools, communities, families where no one was all that familiar with selective colleges and universities. And as a result, these students just weren't applying to many of the colleges where they would have thrived and where they would have paid very little to get a great college education.

MARTIN: What level of intervention would be helpful here?

HOXBY: Well, we gave interventions to about 40,000 high-achieving, low-income students in the United States that informed them about the net price of colleges. That's what they would actually pay. It informed them about how to go through the college application process, and it gave them no paperwork fee waivers for applying to college. We did all of these things in our intervention, and we found that that was enough to nearly double the percentage of students who were low-income, high-achievers and ended up getting admitted to a college that was a good match for them.

MARTIN: Dean Cantarella, do you want to pick up the thread here? What are some of the other things...


MARTIN: ...That families should be thinking about? And could we not also leave out middle class families, too?

CANTARELLA: Well, one of the things that also happens is that students, when they do make it, can lose the money that they have. You know, most scholarships come with a requirement that you maintain a certain GPA level, usually 3.0. A student who drops below that level can lose their scholarship, and that often happens when a student is embarked on a path that isn't a good fit for them.

Many students, probably a third of freshmen, think that they're going to be doctors, and then dive deeply into sciences when they may not have had the preparation. And then the GPA suffers, and then the scholarship goes. Or there are situations where students are afraid to ask questions, and this begins even before they get to college. And along the way, they are uncertain about who they are and afraid to reveal what they don't know, and asking a question would presumably reveal what they don't know.

So it would affirm a negative stereotype about who they are in terms of class or ethnicity. Asking questions is one of the most powerful things that students could do at the beginning of the process, and what they have also understand is that this is also a career skill. So it's a good thing on many levels.

MARTIN: I could attest to that.


MARTIN: Professor Hoxby, do you have a final word of wisdom for us? So what's the most important thing that people should know in thinking about paying for college, if they - particularly if they're intimidated by the price?

HOXBY: Right, I think the most important thing is for families to start a little bit early. If you have a 16-year-old or a 17-year-old, start now. If you are a senior and you still have not figured out how you're going to pay for college, it is not too late to start. First, think about the colleges for which you'd be well-suited without reference to cost, and then with your list of colleges, go online and go to those colleges' net cost calculators.

They're all linked on the U.S. Department of Education's website, and figure out how much it would cost you. Ignore all of the information that you may hear from your neighbors and your friends about how much they think college costs or something that you hear that's alarmist. Go and figure out how much it's going to cost you and focus on that.

MARTIN: Caroline Hoxby is professor of economics at Stanford University. She joined from there. Marcia Cantarella is an advisor to college applicants, a former college dean. She's the author of "I CAN Finish College," and she was with us from NPR's bureau in New York. Dean Cantarella, Professor Hoxby, thank you both so much for speaking with us.

HOXBY: Thank you, Michel.

CANTARELLA: Thank you, Michel. Transcript provided by NPR, Copyright NPR.

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