Paying for College

College Costs: Are More Expensive Schools Better?

You’ve probably heard the saying, “You get what you pay for.” I have found that to be generally true. Most of the more expensive items that I’ve purchased over the years have served me well. I’m thinking of clothes that have worn like iron and tools that have been through many homeowner wars and just keep on working. No doubt, you can probably think of some good examples too. However, you can also probably identify some lesser-expensive (maybe even cheap) items that have provided you with unusually good service, despite their low cost. One example that comes to my mind is a few used Honda automobiles, which I bought for relatively low cost. They gave me many years of reliable service. I received a remarkably high return on my investment.

When it comes to college, though, the picture can become confusing. Have you ever wondered if a high price tag means that a certain college delivers a high-quality education? Let’s examine some issues.

Higher education can be a lot like any other consumer product. In many cases, you’ll get what you pay for. Aside from its Nobel-laureate-laden faculty, one aspect of the top-priced schools that struck me recently while walking the grounds of a picturesque Ivy League university is the advantage of a quality physical plant. By this I mean modern facilities: newer classroom buildings, clean and shiny living accommodations, sophisticated sports facilities, comfortable (and don’t forget tasty) dining amenities, and so forth. You can’t appreciate the value of such things unless you’ve attended an institution where the facilities aren’t up to par. The nice stuff isn’t cheap, though.


This coming fall, the nation’s most expensive schools will have student budgets (tuition, room and board, fees, books, and travel) hovering in the low sixty-thousand-dollar range. That’s right — $60,000 or so. That’s more than many families bring in for one year. These are not just the Ivy League schools. Some highly selective, “non-Ivy,” so-called “elite” colleges, and universities have price tags in that region.

In a recent article here, I wrote about one New York City university that featured a total gross yearly cost of around $75,000. Without financial aid, that would mean around $300,000 in gross expenses for a four-year undergraduate degree. Even with some financial aid (I’m talking grants here, not loans) the cost of a degree at a school like this (assuming that a student can graduate at the end of four years) can easily exceed the cost of a primary residence. That’s a sobering thought.

 

The 2013 median family income in the U.S. was $51,000. In looking at college costs these days, it’s not hard to see why student loan debt has reached crisis proportions. Just do a Web search for the phrase “student loan debt” and you’ll find a cascade of amazing articles and statistics. For example, here’s one headline from a recent article about the scope of this issues:

Americans owe $1.2 trillion in student loans, surpassing credit card and auto loan debt totals

It’s hard to comprehend 1.2 trillion dollars. One way I look at it is that it represents 1,200-thousand million dollars. That’s $1,200,000,000,000,000. The mind boggles. The article goes on to note:

Americans owe $1.2 trillion in student loan debt, a number that has tripled in the last decade. New York State residents hold $60 billion of that debt, and college grads in the state owe on average $27,310 in student loans, according to the Federal Reserve Bank of New York … Student loans have passed credit cards and auto loans to become the second biggest source of personal debt in the U.S., trailing only mortgages …

Getting back to the you-get-what-you-pay-for maxim, let’s consider some more economical options and ask a few logical questions. Other colleges, such as two-year, community-commuter schools, can cost as little as $10,000 or less per year. That’s about 80-85 percent less than the Big Guys.

What’s the difference? Can one school be over eight times better than another one?

It depends on what you’re looking for. Many people are looking for the least-expensive route to a professional or technical credential that can move them into a skilled job. For them, the live-at-home commuter option makes the most sense. If you’re looking for a broader, more diversified approach to education, then some variation of the live-away-from-home choice makes sense, though it’s more expensive.

Keep in mind that expensive schools may have superior financial aid available. This can bring their net cost a little closer to the lower-priced schools. One challenging theory says, “Get into the best and most expensive school you can.” Financial aid is the reason. The more expensive schools usually have more money to give in financial aid, thus making their true cost lower for families who really need the help.

But  and I preach this sermon with annoying regularity  beware of the student loan “wolf” disguised as a “financial aid” sheep. College financial aid package award letters arrive in the wake of acceptance euphoria. For the uninitiated (that is, families experiencing their first college admissions process), the euphoria of getting into a first-choice or other highly desired college can blind them to the harsh realities of loans, not to mention that devious practice called “front loading.” Many colleges make their best financial aid offer for freshman year, then the grants decrease as the loans increase in each of the following years. This can quickly lead to the Black Hole of Debt. Ergo, front loading their help.

So, does a more expensive school always offer a better education? I’ll leave you with this tease from a stimulating article entitled Not Getting What You Paid For from Inside Higher Ed:

Everyone knows there’s a reason the most expensive colleges in the country — generally private residential institutions — charge so much. The money they spend on hiring the best faculty members (full-timers of course) and on keeping student-faculty ratios low results in a higher-quality education. Right? …

Right? Not so fast there. Check out the rest of this article for the interesting results from a recent study.

I’ll just leave it at that. You can draw your own conclusions.

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Be sure to check out all my admissions-related articles on College Confidential.