Sunday, March 31, 2013

Net Price Confusion

Today's NY Times notes the importance of considering the net price families pay for college, not the sticker price, using an example from Wisconsin. Specifically, in a column by David Leonhardt, Professor Sarah Turner presents data from the College Navigator tool (which in turn draws on the 2009-2010 IPEDS information) to show that "at the less-selective campuses in the University of Wisconsin system, for example, the average net annual cost for a year of tuition, room, board and fees in 2010-11 was almost $10,000 for families making less than $30,000, Ms. Turner said. At the flagship campus in Madison, by contrast, the equivalent net cost was $6,000."

While I'm certainly friendly to Turner's primary point-- that because of institutional financial aid attending the state's flagship may be effectively less expensive for needy students than attending another public university-- the recitation of this figure gave me cause for concern.

First, as I pointed out here, $6,000 remains a darn lot of money for families making less than $30,000.  We need to stop and realize that paying (or borrowing) at least 20% (and probably more) of your income for college is beyond the realm of possibility for most low-income families.

But secondly, and more importantly this particular conclusion is outdated.  Look at UW-Madison's website for its net price calculator for 2013-2014.  There, a Wisconsin resident family with an expected family contribution of $0 (incomes usually well below $30,000) is said to face a net price of $13,635.   That's way up from 2010-2011.   So, either these numbers reflect enormous increases in net price over time at Madison, or something else is off.  Using those current numbers, the comparison for  UW-Oshkosh is a net price of $10,101 for a Wisconsin resident with an $EFC of $0 and at UW-Platteville it is $8,593.

Despite claims at our rapid tuition increases were being offset by financial aid holding the poorest students "harmless" things have rapidly changed at UW-Madison. We went from offering one of the lowest net prices for poor students in the state to being among the least affordable for those same people. This seems to be because the cost of attendance at Madison jumped from $21,617 in 2010-2011 to $24,404 in 2013-2014, increases were not nearly so substantial at the other System schools, and aid did not increase at the same rate.

Punchline: despite what the New York Times and federal data indicate, today it is not cheaper for a low-income student to attend UW-Madison compared to another in-state university. It once was, but things have changed for the worse.   The payback at Madison may be greater, but let's not pretend that simply "knowing the net price" makes this decision simple or easy.