At the center of the admissions and financial-aid process is a massive
information imbalance: Schools make their decisions with detailed data about each
applicant that goes well beyond test scores and transcripts. Many universities
have access to comprehensive financial profiles, sometimes down to the type of cars a family drives. Some analyze patterns and interpret
even the most subtle indicators from students, such as the order in which schools are listed on the federal financial-aid application,
or even how long a student stays on the phone with an admissions officer.
Students
are not so lucky. Schools offer comparatively little information about exactly
who they’re awarding aid to and for what. College-bound teens and their parents
often resort to college forums, sharing their personal “stats” — their financial
and academic
profiles — with strangers online to get advice on which colleges are likely to
be generous with aid. Once they get their financial-aid awards, some even go
back to these forums to compare their aid packages in an attempt to
reverse engineer colleges’ criteria.
Most colleges offer
“vague and superficial” disclosures about how they allocate their financial-aid
dollars, said Mark Kantrowitz, a financial-aid expert with Edvisors, which publishes
websites about paying for college. “They don’t give details about the actual
formulas they use.”
Take Newman
University, a Catholic liberal-arts college based in Kansas.
What are the actual criteria the
college uses to determine who gets aid and how much? “That’s proprietary information,” said Pam Johnson, Newman’s interim dean of admissions and financial
aid. “It’s part of our competitive strategy.”
Six other universities we contacted declined, or did not
respond, to our request for details on how they allocate aid, including Columbia University, George Washington
University, and Indiana Wesleyan University.
While universities don’t want to disclose the details, they
have become increasingly strategic in recent years about how they use their aid
and which students get it. Aid isn’t just given to students in need, it’s also used
now for what schools call “financial aid leveraging” — often to entice
high-scoring students who will help a school’s ranking or to give a small,
feel-good discount to attract out-of-state students who will still
end up paying a higher price.
Such strategies can result in curious outcomes.
At Newman, for example, the most recent data available shows
the school charging students in the
lowest income bracket, on average, several thousand dollars more than students in the two income bands
directly above them.
It’s “certainly
not intentional,” Johnson said. “There’s not a financial-aid grid that says,
‘Give more money to rich kids.’ It’s kids who meet other criteria that are getting
financial assistance.”
Johnson says the school provides need-based aid in addition
to its merit-based grants and athletic scholarships. But, according to Johnson,
even “need-based” grants aren’t based solely on need: The size of the grants
also depends on a student’s academic merit — a fact the school’s website doesn’t
mention.
The Obama administration and Congress have
tried to nudge colleges toward greater transparency, rolling out a number of
consumer tools to help make information about college more accessible and
comparable across institutions. Among the tools available are the model
financial-aid award letter and colleges’ net-price
calculators, which provide students with
individualized cost estimates.
Both were meant to help students understand
what college will cost. But neither brings any transparency to how colleges
themselves are helping to determine those costs when they give aid dollars to
some students and not to others.
“I think opening up the information would be a
good thing,” Kantrowitz said. “It would enable perhaps something even better
than a net-price calculator, which are just approximations.”
In fact, a
mechanism for greater transparency may already exist.
There’s currently regulation on the books requiring colleges
participating in federal student-aid programs to disclose to current and prospective
students “the criteria for selecting recipients [of financial aid] from the
group of eligible applicants,” as well as “the criteria for determining the
amount of a student’s award.” That goes not only for federal and state dollars,
but also for the financial aid that universities give out themselves.
The law
and regulation don’t spell out what details colleges have to disclose.
U.S. Department
of Education Press Secretary Dorie Nolt sidestepped
our questions about what the regulation actually requires. Nolt also did not
say whether the department has ever enforced the transparency regulation.
The ambiguity
leaves colleges and universities a lot of wiggle room, and exactly what financial-aid
information is available varies depending on the school.
Jon Oberg, a
former congressional liaison in the Department of Education’s Office of
Legislation, told ProPublica that Secretary of Education Arne Duncan could give
the regulation teeth with a simple letter that spelled out what “criteria”
universities would have to reveal about their decisions about financial aid.
“The need for disclosure is paramount right
now because of the shenanigans going on,” said Oberg, who worked with
Congress on matters of interpretation, enforcement and regulation related to
federal higher-education law. “Without that, it’s very open to people saying,
‘It’s vague, so we don’t know,’ or schools saying, ‘If it’s vague and there’s
no enforcement, we don’t have any obligation.’”
As it stands, colleges’ disclosures about their aid criteria “could be very
ambiguous and still meet the statutory framework,” said David Bergeron,
formerly the top advisor on
higher education at the Department of Education. “Unless
you have a regulation that’s specific about more detailed disclosure, I don’t
think the Department can enforce anything.”
Bergeron and Oberg say that colleges are doing things now with
institutional aid that those writing the regulations could not have anticipated
at the time.
“It’s a very old
provision,” Bergeron said. “It predates a lot of
the significant activities and changes over time. It likely predated a lot of
the public higher education financial aid.”
Bergeron worries about the unintended
consequences of disclosure — particularly, that the colleges that do give
generous aid to needy students would feel pressure to equalize aid across all
income classes to make their practices seem more palatable to the public. He’s also
not sure, he said, whether the greater disclosure would ultimately be helpful
to students, or whether it would get lost among the other paperwork sent their
way.
Oberg, on the other hand, believes that the
benefits of greater transparency would outweigh potential drawbacks — and that
it’s better for people to know more rather than less.
“The consequences of being able to keep these
decisions behind closed doors have been very bad for a lot of people,” Oberg
said. “I would argue that transparency leads to positive things for higher
education.”
Nolt said the Education Department has
encouraged more transparency, pointing to the standardized financial-aid letter
the agency has developed and that colleges can voluntarily adopt.
“The U.S.
Department of Education and Secretary Duncan think that institutions should be
transparent about the cost of college and should empower students with the
information necessary to make a smart decisions about where they will attend
college,” Nolt said in a statement. “Students are best served by receiving
clear, easy-to-understand information about their aid package from their
college – and that’s what we’ve been developing in partnership with
institutions and the Consumer Financial Protection Bureau.”
