Office of Institutional Research, Planning & Effectiveness
How Living Costs Undermine Net Price As An Affordability
MetricBraden J. Hosch, Ph.D.
Asst. Vice President for Institutional Research, Planning & Effectiveness
Association for Institutional Research Annual ForumDenver, COMay 29, 2015
Office of Institutional Research, Planning & Effectiveness
Except for institutions with very few commuters, net price is not a valid measure of affordability because cost of living budgets are determined without sufficient standards and consistency
Research partners through Wisconsin HOPE Lab:• Robert Kelchen, Seton Hall University• Sara Goldrick-Rab, Univ. of Wisconsin-Madison
OVERVIEW
Office of Institutional Research, Planning & Effectiveness
* based on living arrangements
NET PRICE AND COST OF ATTENDANCE CALCULATIONS
Cost of Attendance- Grant Aid
Net Price
TuitionRequired Fees
BooksRoom & Board*
+ Other CostsCost of Attendance
Office of Institutional Research, Planning & Effectiveness
• Set in a manner “determined by the institution”(SEC. 472. 20 U.S.C. 1087)
• Sparse guidance in FSA Handbook:• periodic surveys of student population,• assessing local housing costs or other pertinent data• otherwise reasonable methods
• NASFAA Monograph
HOW LIVING COSTS ARE DETERMINED
Office of Institutional Research, Planning & Effectiveness
LIVING COSTS AS SHARE OF COA
59.170.5
58.8
35.649.3 50.2
43.5 45.4 47.3
0
20
40
60
80
100
4-year or above 2-year Less-than 2-year
Per
cent
Institutional Level
Reported Living Costs as Share of Cost of Attendance
Public Private not-for-profit Private for-profit
Office of Institutional Research, Planning & Effectiveness
Grant aid is generally applied• First to offset direct costs (tuition and req. fees)• Then to offset books, supplies, living expenses
Residual net price after application of aid weights cost of living components even more as share of total COA
APPLICATION OF GRANT AID TO COSTS
Tuition & Required Fees Living ExpensesBooks
Grant Aid Net Price
Cost of Attendance
Office of Institutional Research, Planning & Effectiveness
Federal Uses:HEOA Watch Lists College NavigatorWhite House Score Card Rating System (?)
Selected Ranking Publications:Washington MonthlyU.S. News Best Value CollegesKiplinger’s Best Value Colleges
SELECTED RANKINGS USING NET PRICE
Office of Institutional Research, Planning & Effectiveness
Generate county-level estimates of cost-of-living
Compare campus-reported costs for living expenses off-campus, not with family to county-level estimates
Results analyzed by sector and geospatially
METHODOLOGY
Office of Institutional Research, Planning & Effectiveness
• Model approach on the MIT Living Wage Calculator (Glasmeier & Arete, 2014), using data available when 2013-14 COA numbers were developed
• Adjusted for regional differences using 2013 County Cost of Living Index when needed
• Room and board:• Housing: HUD median rents by county for efficiency
apartment without roommates (FY 2012)• Food: USDA low-cost food plan (June 2012)
REGIONAL ADJUSTMENT APPROACH (1)
Office of Institutional Research, Planning & Effectiveness
“Other expenses”:• Transportation: BLS Consumer Expenditure Survey for
individuals under 25 years old (2012)• Health care: Average premium by state from the Kaiser
Family Foundation—national average used if missing data (2010)
• Miscellaneous: BLS Consumer Expenditure Survey for individuals under 25 years old (2012)
REGIONAL ADJUSTMENT APPROACH (2)
Office of Institutional Research, Planning & Effectiveness
Primary source: IPEDS IC 2013-14Selection criteria:• Values reported both for • Room & board, off-campus not with family• Other expenses, off-campus not with family
Reporting status differences• Academic year reporter values treated a 9 months• Program reporters normalized to 9 months
Excluded institutions from U.S. Territories
INSTITUTIONAL DATA
Office of Institutional Research, Planning & Effectiveness
Costs are not uniform within counties• Urban areas: Gasoline/rent costs vary within
small areas• Rural areas: Transportation costs vary by
distance to collegeDoes not reflect variation in needs within students
that can be captured by professional judgments
LIMITATIONS
Office of Institutional Research, Planning & Effectiveness
• Higher cost estimates in urban/rural counties• Half of institutions in most expensive quartile of
counties• Huge institutional variation at county level:• 56.4% of institutions within $3,000 of estimate• 10.8% of institutions $3,000+ above estimate• 32.8% of institutions $3,000+ below estimate
OVERARCHING FINDINGS
Office of Institutional Research, Planning & Effectiveness
COUNTY-LEVEL ESTIMATES, 9 MONTHSRoom & Board Costs Other Costs
TotalHousing Food Total Transp.Health
Care Misc. TotalMin 2,862 1,665 4,572 2,061 1,224 621 4,077 9,12625th pctile 3,969 1,872 5,877 2,331 1,809 702 4,860 10,86350th pctile 4,662 1,944 6,606 2,421 1,890 729 5,040 11,67875th pctile 5,623 2,068 7,711 2,565 2,025 774 5,371 12,940Max 12,051 3,690 15,489 4,590 3,933 1,386 9,189 24,426
Mean 5,040 2,003 7,039 2,490 1,990 753 5,233 12,272SD 1,572 214 1,719 266 457 80 682 2,213
Source: Kelchen, Hosch & Goldrick-Rab (2014). Table 3.
Office of Institutional Research, Planning & Effectiveness
COUNTY-LEVEL ESTIMATES, 9 MONTHS
Source: Kelchen, Hosch & Goldrick-Rab (2014). Table 3.
9,126 24,856
Avg. Estimated Living ..
Office of Institutional Research, Planning & Effectiveness
ESTIMATED LIVING COSTS BY REGION
Source: Kelchen, Hosch & Goldrick-Rab (2014). Table 2.
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
West Midwest South Northeast
Living Cost Allowances (over 9 months) for Off-Campus Students Not Living with Family, by Region, 2013-14
Office of Institutional Research, Planning & Effectiveness
REPORTED VS. ESTIMATED LIVING COSTS
18.936.8 31.3 29.1 31.0 29.6
45.2 47.0 38.4
71.655.4 60.6 63.2 53.1 58.5
40.848.5
45.8
9.5 7.8 8.1 7.7 15.9 11.9 14.04.5
15.8
0102030405060708090
100
Public Privatenon-profit
Privatefor-profit
Public Privatenon-profit
Privatefor-profit
Public Privatenon-profit
Privatefor-profit
4-year or above 2-year Less-than 2-year
Per
cent
Below Estimate By $3,000+ Within $3,000 of EstimateAbove Estimate By $3,000+
Source: Kelchen, Hosch & Goldrick-Rab (2014). Table 4.
Office of Institutional Research, Planning & Effectiveness
Milwaukee County
$0$2,000$4,000$6,000$8,000
$10,000$12,000$14,000$16,000
Comparison of Living Cost Allowances to Estimated 9 Months Living Costs, Denver County, Colorado
Estimated Living Cost Room & Board Other
Office of Institutional Research, Planning & Effectiveness
Office of Institutional Research, Planning & Effectiveness
Milwaukee County
$0
$5,000
$10,000
$15,000
$20,000
$25,000
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Comparison of Living Cost Allowances to Estimated 9 Months Living Costs, Philadelphia County, Pennsylvania
Estimated Living Cost Room & Board Other
Office of Institutional Research, Planning & Effectiveness
LIVING COSTS, 9 MONTHS PHILADELPHIA (DETAIL)
Office of Institutional Research, Planning & Effectiveness
Milwaukee County
0
5000
10000
15000
20000
25000
Comparison of Living Cost Allowances to Estimated Living Costs, Milwaukee County, Wisconsin
Estimated Living Cost Room & Board Other
Office of Institutional Research, Planning & Effectiveness
Office of Institutional Research, Planning & Effectiveness
Washington, DC
0
5000
10000
15000
20000
25000
Comparison of Living Cost Allowances to Estimated Living Costs, Washington, DC
Estimated Living Cost Room & Board Other
* No reported data
Office of Institutional Research, Planning & Effectiveness
LIVING COSTS WASHINGTON, DC
Office of Institutional Research, Planning & Effectiveness
Cost variation is not limited to urban areas (but easier to observe)
RURAL EXAMPLE: SUMTER, SC
0
4000
8000
12000
16000
20000
SumterBeauty Coll
U of SouthCarolinaSumter
CentralCarolinaTech Coll
MorrisCollege
Comparison of Living Cost Allowances to Estimated Living
Costs, Sumter SC
Estimated Living Cost Room & Board Other
Office of Institutional Research, Planning & Effectiveness
LIVING COSTS, SUMTER CO., SC
University of South Carolina-Sumter13,755
Sumter Beauty College
15,705
Morris College
8,725
Central Carolina Technical College
11,231
-3,164 3,816
Avg. DiffReportFromEst
Sumter County, SC Estimate: $11,889
Scale: 2 miles
Office of Institutional Research, Planning & Effectiveness
• Net price statistics for institutions with sizeable commuter populations are not necessarily valid across groups
• Net price should not be used for accountability within broad groups of institutions without correction for living costs
• Benchmarking activities should examine variation in COA budgets prior to examination of net price
IMPLICATIONS
Office of Institutional Research, Planning & Effectiveness
Manipulation of net price to game accountability
• Subverts transparency agenda
• Artificial lowering of living costs
• Incentives to lower living cost budgets may stress students who qualify for less aid
UNINTENDED CONSEQUENCES
Office of Institutional Research, Planning & Effectiveness
ON-CAMPUS LIVING COSTS BY YEAR
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2006 2007 2008 2009 2010 2011 2012 2013
Public 4-year
Public 2-year
Privatenonprofit
Office of Institutional Research, Planning & Effectiveness
OFF-CAMPUS LIVING COSTS BY YEAR
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2006 2007 2008 2009 2010 2011 2012 2013
Public 4-year
Public 2-year
Private nonprofit
For-profit(academic year)For-profit(program)
Office of Institutional Research, Planning & Effectiveness
1. Determine living costs at federal level with regional (county) adjustments
2. Failing federal determination, authorize ED to establish rigorous methodology for cost of living budgets
3. Do not include net price in ratings system or 3rd
party rankings, unless statistically adjusted
RECOMMENDATIONS (1)
Office of Institutional Research, Planning & Effectiveness
4. Failing adoption of #1-3, for the purposes of net price calculations, consider using (nearest) campus living costs for off-campus costs
5. Conduct more research on living expenses at different geographic scales, esp. health care
6. Research community should take more active role in examining reliability and validity of prominent educational statistics
RECOMMENDATIONS (2)
Office of Institutional Research, Planning & Effectiveness
Kelchen, R., Hosch, B., Goldrick-Rab, S. The Costs of College Attendance: Trends, Variation, and Accuracy in Institutional Living Cost Allowances. Association of Public Policy and Management (2014). http://wihopelab.com/publications/.
http://www.stonybrook.edu/commcms/irpe/reports/
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