Out-of-State Public Universities–A Good Idea?

Today’s issue of Inside Higher Ed has an article about public universities eager to boost revenues–and head count–by recruiting out-of-state students.

Many public universities are facing deep budget cuts, and some are hoping to make up their revenue shortfalls by recruiting out-of-state students.   The article expresses many doubts that this will be a good strategy for most state universities.

One of the doubts–raised by me, as I was quoted in the article–is that most students from the west and south who desire to go out-of-state for college are looking at either the most prestigious and reputable public universities (Virginia, Michigan, North Carolina) or at the private colleges and universities.  Why, for example, would a qualified Colorado student choose the University of Massachusetts at Amherst (at out-of-state tuition prices) when he can go to the University of Colorado at Boulder?

I also pointed out that some public universities closer to home may be attractive to some students, especially if they offer generous scholarship programs.  The  University of Wyoming and Montana State University, for example, offer great packages to some students to attract them to their campuses.

But it seems unlikely that many state universities will be able to make significant increases in their out-of-state applicants.

With budgets being cut back, might it actually be time to reassess how  many university slots a state actually needs?  If there is more supply than demand, then why not cut back the supply to match that demand?

Or, might it  make more sense for a UMass-Amherst to put more energy into retaining and graduating students within six years?  For example, recent data suggest that only 84% of freshmen at UMass-Amherst return for their sophomore year.  If UMass could raise that to 93% (which is the first-year retention rate at University of Washington-Seattle), it would be able to make up a heck of a lot of revenue that way.

Similarly, only 68% of entering freshmen at UMass will graduate in six years.  If UMass could raise that rate to, say 78% (which is the six-year graduation rate at the University of Texas-Austin), the university would fill quite a few holes in its budget.

Sometimes the solution to a problem is closer at hand than we think.

Mark Montgomery
College Counselor

University Students Push for Tuition Increases

That’s right, folks.

On some campuses, students actually want their universities to bill them more this year than last.  It’s a matter of quality, they say.  Some things you just can’t skimp on, apparently.

An article entitled “The True Cost of Tuition Freezes at Public Colleges” in yesterday’s Chronicle of Higher Education (registration required) focuses on public universities in states where legislators and governors have made it a priority to freeze tuition.  These pols find it politically popular to do their utmost to keep higher education affordable.

But students are fighting the freezes, because the are seeing the results of the budget cuts that necessarily accompany tuition freezes.  If tuition does not rise, faculty positions, academic programs, and student services have to be cut.

I wont leave until you raise my tuition fees!

Some states have tried to fill that gap by budgeting more money to the universities so that these cuts need not be made.  But with the economic downturn, these states are going to be hard-pressed to keep shoveling money at the universities, when there are potholes to fill, bridges to repair, farmers to subsidize, and health care to dispense.

So students in states like Maryland, Florida, and Montana have been militating to eliminate these freezes, raise tuition rates, and continue to provide quality education.  Students know that an education is a good investment. If class sizes increase, if academic programs are cut, or if the lines are longer in the cafeteria and outside the advising office, the quality of that education will decline.  At some point, affordability is trumped by quality.

The problem here is that students recognize that there is no free lunch.  Most parents have saved less than $5,000 for their child’s education.  The same parents don’t want tax increases to fund higher education.  Legislators are disinclined to bankroll lazy, pinheaded professors who enjoy employment for life (even though in actual fact fewer than 30% of all instructional faculty at public and private universities are tenured or on the tenure track).

So who’s going to pay?  The students!  They are the only ones left who see value in obtaining a Bachelor’s degree, and they are willing to go into debt to get one.  Of course, it’s important for students to be prudent about how much debt they shoulder.  But the fact is, someone has to pay for this education, and in the United States, the default decision is that higher education is not a public good, but a private one.

Students have this figured out.  If we want a different system, we could certainly have one.  But a new funding structure would require political risk, a reorienting of priorities, and huge changes in how students are admitted to various programs.  I think such a national debate about restructuring public higher education would be very healthy, and in the long run, we’d probably end up saving money as a society, and perhaps we’d even boost quality.

But I’m not going to hold my breath.

Besides, in short run, students may continue to clammor for tuition increases.  Go figure.

Mark Montgomery
College Counselor


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Applications to Public Colleges Surge, While Private Colleges Freeze Tuition

The New York Times has an article today about the surge in applications from bargain hunting applicants.

Also today, Inside Higher Ed has posted an article about private colleges freezing, lowering, or at least drastically reducing  tuition increases in a bid to hang on to current students and attract new ones.

The down economy is making it tough for colleges and universities to plan. Their enrollment models are based on past averages and historical data. But all that past experience has to be thrown out the window.

It’s an interesting year, that’s for sure.

A Cubist's View of US Community Colleges: Different Aspects Viewed Simultaneously

Two recent articles from education sections of two different publications paint different aspects of our community colleges. If we put the two together, we get an interesting sort of reality.
Picasso would have loved this. We can develop a composite picture of a single entity by looking at it from different angles…and then reconstructing the whole with an entirely new understanding.
Anyway, the art lover digresses. Back to the point.
The first article is from the Chronicle of Higher Education (registration required):
Community College Enrollments Are Up, but Institutions Struggle to Pay for Them.
The gist is that the sour economy will likely boost enrollments at community colleges at a time that state funding for those institutions has declined. For example, Florida, New Mexico, Rhode Island, and Tennessee have all cut funding for community colleges by 5% this year, and both Alabama and South Carolina have axed 10% of their community college budgets.
So the ironic thing is that even as enrollments may shoot up in the next couple of years (Connecticut is planning for a 13% increase this year over last), students will perhaps find fewer courses (even fewer departments), larger class sizes, and fewer degree or certificate programs, as community college administrators will be forced to shed staff and eliminate courses.
Community college leaders are lobbying state legislatures to increase funding, or at least give the two-year colleges a budget reprieve from the chopping block. But what nobody wants (and the article conspicuously does not even mention) is tuition increases.
The other article comes from US News & World Report: Community Colleges: Cheaper but Not Necessarily Better.
This article raises the question whether even the lower tuition costs of a community college are really worth the money. Here’s a snippet:

Choosing a two-year college could actually harm students’ long-term prospects. Research has shown that community colleges, overall, do a poor job of getting students into four-year schools. In a 2008 paper, Harvard professor Bridget Terry Long found that, among similar students, those who chose two-year colleges were less likely to get a bachelor’s degree than those who went straight to a four-year college. Since employers tend to pay those who actually earn a degree more than those who’ve had only a few years of college, saving a few thousand dollars on tuition when you are 18 might end up costing you hundreds of thousands of dollars over your lifetime if you get discouraged in community college and don’t persevere to a bachelor’s.

As the article points out, however, that we shouldn’t paint all community colleges with the same brush (back to the artistic analogy). There is a surprising amount of variation in the quality of two-year colleges. Some are good at preparing students to transfer to four-year institutions, while others are better at conferring certificates upon fire fighters and EMTs.
So how to pick a community college? The same way you pick a four-year school. You have to know first what you hope to achieve by obtaining an education. Then you have to find the right institutions that will best help you achieve those goals. The community college in your area may not be as good for you as the one in the next county.
The fact is that the answer to the question about whether a community college is “worth it” is exactly the same as the question whether an expensive, private, four-year college is “worth it.”  It depends on your perspective.  It’s both worth it, and it’s not, depending on who you are, what you want to focus upon, and how you integrate those differing perspective into your own mind and your own life.  Picasso, Brach, and the other Cubists were onto something.
So mapping your educational path boils down to this:
Know thyself.
Shop wisely.
Isn’t that what was printed above the entrance to the Oracle at Delphi? Something like that….
Mark Montgomery
The Oracle of College Counselling
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Advice for Completing FAFSA Form for Financial Aid

One of the most daunting tasks in the college admission and financial aid process is completion of the FAFSA, the Free Application for Federal Student Aid.  A colleague forwarded this link to a great video that explains what the FAFSA is and how to complete it in five entertaining minutes.  Have a look.

Okay, it glosses over the details (which may lead to hair loss among some parents).  But at least it points out how important this form is in helping families get the best financial aid packages possible.


Mark Montgomery

College Counselor





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Ten College Planning Tips For Tough Economic Times

I’ve received a number of questions from readers, clients, and friends about how to navigate the college admissions and financial aid process in tough economic times.  By far the biggest worry on everyone’s mind is finding the resources to pay for college.

 

In some ways we have a perfect storm a-brewing.  As personal savings and college funds shrink, colleges are tightening their belts, and are likely to be stingy with financial aid.

 

So where does that leave the student who will graduate this spring or next?  What strategies does he or she pursue in order to get the best education at the best price?

 

Here are ten tips for weathering this storm.

 

1.  Don’t panic.  Keep a cool head.  Do your homework.  Get help, if you need it.  While the statistics look bleak, you are not a statistic.  Use every resource at your disposal to plan, prepare, and get the best deal for yourself.

2.  Whether the market is up or down, good students always have more options than poor students. Good students with good grades and good test scores should not dampen their ambition or lower their sights.

3.  Remember that if your assets and income have gone down, your federally-calculated financial need will go up.  Come January, you will complete the FAFSA forms, which will calculate your family’s “Estimated Financial Contribution” or EFC.  This is the amount the government calculates that you should be able to pay toward a college education–given your financial picture today.

4.  Pay close attention to financial aid statistics reported by colleges, with special emphasis on the percentage of financial need that college has met in the past.  Even in good financial times, many colleges have been unable to meet all of their student’s financial need with the usual combination of grants, work study jobs, and federal loans.  Most rich, well-endowed colleges and universities can meet 100% of their students’ financial need.  But some colleges have met only 80% or 65% or less of their students’ needs.  These are the colleges that have relied heavily upon the willingness of students and families to take out huge loans on the private markets.  As these loan markets have dried up, these colleges are the most panicked by the economic downturn.  Yet even financially strapped colleges may offer big bargains to some students (see tip #6 below).

5.  Redefine what a “stretch” or “reach” college will be for you.  It’s not simply about getting accepted to college–it’s about being able to pay for it.  The tougher it is for you to gain admission, the less likely you will receive adequate financial aid to attend that same school.

6. Develop a “top 25%” strategy that will help increase the likelihood you will get the aid you need.  While there is a great deal of variation in financial aid policies, most colleges shower their best financial aid packages on those students in the top 25% of their incoming class. Colleges routinely report the average ACT or SAT test scores by identifying the “middle 50 percent” range of scores of admitted students.  So if  Elmer Fudd College reports an middle 50% ACT range of 22 to 26, this means 25% of students scored lower than 22, and another 25% scored 27 or higher.   An applicant to Elmer Fudd College with an ACT of 29 has a much better chance of receiving a solid financial aid package than the applicant with a 22.

7.  Remember that not all debt is bad debt.  Racking up tens of thousands of dollars on a credit card is not the same as taking out a Stafford loan.  The former is a drag on current and future spending, and high interest rates on credit cards lead to wrack and ruin.  But a student loan is an investment in your future.  The relatively low interest rate on these loans will allow you to increase your earning potential tomorrow by making it possible to get a good education today.  The average student loan debt for graduating college senior is about $20,000, which is an acceptable amount for most students.

8.  If you plan to take out a loan to partially finance an education, start shopping for that loan now.  Do not wait until admissions decisions are made. Learn what loans are available (or not) so that you can make a realistic plan for how much you can borrow.  This knowledge will make it easier to compare financial aid packages later when they are finally announced.

9.  Don’t assume that your in-state colleges and universities offer you the best deal. As an example, see my post here about cost comparisons for a Colorado student considering University of Colorado vs. Montana State University or the University of Wyoming.

10.  Students with less-than-stellar academic records in high school should consider getting their start at community colleges.  Most states now have guaranteed transfer agreements between their community colleges and flagship universities.  Go to community college, pay less, do well–and you can still graduate from a top-notch university.  In fact, you have a better chance of getting accepted as a transfer if you do well in those general education courses at the community college.

 

Mark Montgomery

Educational Consultant

 

 

 

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College Shopping Tips: When Out-of-State is Cheaper than In-State Tuition

The financial downturn has high school seniors and their parents running scared.  How can we reduce costs?  How can we get the best deal?


The conventional wisdom says that an in-state college is the cheapest option.  As with most conventional wisdom, this assumption is wrong.


Let’s compare costs for a Colorado student considering majoring in business at three state universities in the region.



A few notes explain where these numbers come from:

  1. CU-Boulder tuition is $10,852, but Colorado students automatically are eligible for the Colorado Opportunity Fund, which effectively reduces tuition by $2760.
  2. Colorado students with an ACT of 28 or higher attending Montana State are eligible for a tuition discount under the Western Undergraduate Exchange (WUE–pronounced “woo-ee”).  Students with even higher ACT scores are eligible for other scholarships that reduce the overall price even further.
  3. Colorado students attending the University of Wyoming also are eligible for the WUE discount.


Sometimes what you major it makes a difference, too.  Business is the most expensive major at CU Boulder.  If you major in Arts & Sciences,  tuition is less:  $7,278 per year.  Engineering, however,  is $9,568.


So parents, don’t cut off your nose to spite your face!  If your student is interested in going out of state to college, do your homework before you assume that staying in state is the cheapest option.  Here we have compared only state schools, but even some private colleges will end up costing you less than the University of Colorado at Boulder.


As with most everything in life, it pays to comparison shop!


Mark Montgomery

College Counselor





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Economic Considerations Remove Blindfold from Need Blind Admissions

A few days ago I wrote a post providing some of my predictions about how the credit crunch will affect college admissions.  The New York Times ran a story yesterday about how both rich and poor colleges are reacting to the economic downturn.


There are two points from this article I want to emphasize.


First, colleges and universities will try their best to freeze or reduce their expenses.  Representatives of colleges quoted in this article talk about hiring freezes, salary freezes, and putting building or renovation projects on hold. The plan is not to reduce financial aid offered to incoming freshmen.  I feel that the the press is exaggerating the effect of the credit crisis on the dollars colleges will devote to financial aid, largely because they do not understand that most financial aid is not actually money, but discounts off the full price of tuitoin.


The second point has to do with “need blind” admissions.  All colleges would like to be able to admit students regardless of their ability to pay.  However, only the most wealthy colleges can be “need blind” in their admissions policies, and even they are never fully blind to the financial implications of the admissions process (more on this topic in another post).  The issue is not that colleges will have fewer dollars to offer, in absolute terms.  It’s that more students may have more need this year, because families’ financial situations may be more bleak this year than in the past.  With assets having been decimated, the financial aid formulas will require colleges to spread around their financial aid dollars in creative ways in order to build the class that they want.


The effect, then, is that colleges will have to lift their blinders and take a cold, hard look at their budgets–as well as the credentials of the students seeking admission.  As I mentioned in my previous post, it will thus be easier for full-pay students go get into competitive colleges.


Mark Montgomery

Educational Consultant




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Tuition Costs Went Up. What a Surprise!

The annual report from the College Board indicates that the cost of tuition went up last year.  On average, costs increased from 5-6%, depending on the type of institution.  If you want more specifics, you can see the summary of the report in today’s edition of Inside Higher Ed.


The big question is how much colleges will have to raise tuition in the next budget cycle.  A lot will depend on how their admission and financial aid numbers look.  But most colleges set their budgets for the coming year before the incoming class has been accepted–much less made commitments to attend by putting down deposits.  I expect colleges will be very conservative in the coming budget cycle.  Will colleges and universities raise tuition?  Is the sky blue?  Of course they will raise tuition.  But will prices rise by a much higher percentage than in the past?  Hard to tell at this point.


Mark Montgomery
Educational Consultant




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Scholarships May (or May Not) Decline as Colorado Colleges and Universities Feel Financial Pain

The Denver Post reports today that endowments at Colorado colleges and universities have shrunk significantly, which may mean fewer scholarship dollars for students.


Endowments pay for important aspects of college, from prestigious professor positions to millions in private scholarships and science labs.


However, there are two things worried parents should recognize before hitting the panic button.  First, most scholarships are not based on real money.  They are actually merely discounts off the price of tuition.  This is especially true at private colleges.


Second, most in-state students headed for our public universities would not be eligible for much in the way of merit scholarships, anyway.  The amount of money available from those endowed, private scholarships is small, in comparison to the tuition discounts offered. And most state universities have already discounted tuition as much as they can.  The tuition price may go up somewhat in response the market free-fall, or if inflation begins to rise, or if tax revenues fall–meaning less state support of our universities.


So while the pools of money that may fund private scholarships have shrunk, the discounts will remain more or less in effect, unless budgets become permanently squeezed.  I would worry much more about potential tuition increases at public universities over the next four years than about whether the scholarship funds have shrunk.


My advice to parents is not to suddenly abandon all hope of getting a good scholarship at a private college or university.  We may have to adjust the strategy of where to apply in light of financial realities. But private colleges will still have every incentive to discount their tuition for very attractive students.  And with deep discounts, the cost of attending a private college can be competitive with the cost of a public university.


Here’s the tally of how much the endowments of Colorado colleges and universities have shrunk in recent weeks.


University of Colorado:           12%, or $63 million
Colorado State University:       8%, or $19 million
University of Denver:              7.5%, or $22 million
Colorado College:                  no comment–but probably somewhere in the ballpark


While these figures are significant, the losses are not nearly as huge as the ones I’m staring at in my own 401K and 403B plans. Colleges and universities are relatively conservative with their investments.  While we all sometimes compare universities to businesses, the fact is that universities are not in the business of making profits–they have every incentive to save for the stormy days that we are now experiencing.


The storm still rages, but I expect our institutions of higher education in this state will weather it better than most.


Mark Montgomery

Educational Consultant




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