Office of Institutional Research, Planning & Effectiveness How Living Costs Undermine Net Price As...

Office of Institutional Research, Planning & Effectiveness

How Living Costs Undermine Net Price As An Affordability

Metric

Braden J. Hosch, Ph.D.Asst. Vice President for Institutional Research, Planning & Effectiveness

Association for Institutional Research Annual ForumDenver, COMay 29, 2015


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


* 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


• 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


LIVING COSTS AS SHARE OF COA

4-year or above 2-year Less-than 2-year0

20

40

60

80

100

59.170.5

58.8

35.6

49.3 50.243.5 45.4 47.3

Reported Living Costs as Share of Cost of Attendance

Public Private not-for-profit Private for-profit

Institutional Level

Pe

rce

nt


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


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


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


• 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)


“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)


Primary source: IPEDS IC 2013-14

Selection 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


Costs are not uniform within counties• Urban areas: Gasoline/rent costs vary within

small areas• Rural areas: Transportation costs vary by

distance to college

Does not reflect variation in needs within students that can be captured by professional judgments

LIMITATIONS


• 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


COUNTY-LEVEL ESTIMATES, 9 MONTHS

Room & Board Costs Other Costs

Total Housing 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.


COUNTY-LEVEL ESTIMATES, 9 MONTHS


9,126 24,856

Avg. Estimated Living ..


ESTIMATED LIVING COSTS BY REGION


West Midwest South Northeast$0

$5,000

$10,000

$15,000

$20,000

Living Cost Allowances (over 9 months) for Off-Campus Students Not Living with Family, by Region, 2013-14


REPORTED VS. ESTIMATED LIVING COSTS

Public Privatenon-profit

Privatefor-profit


Privatefor-profit


Privatefor-profit

4-year or above 2-year Less-than 2-year

0

10

20

30

40

50

60

70

80

90

100

18.9

36.8 31.3 29.1 31.0 29.645.2 47.0

38.4

71.6

55.4 60.6 63.2 53.1 58.540.8

48.5

45.8

9.5 7.8 8.1 7.715.9 11.9 14.0

4.515.8

Below Estimate By $3,000+ Within $3,000 of Estimate Above Estimate By $3,000+

Pe

rce

nt



Milwaukee County

$0

$5,000

$10,000

$15,000

$20,000

Comparison of Living Cost Allowances to Estimated 9 Months Living Costs, Denver County, Colorado

Estimated Living Cost Room & Board Other


Community Coll of Denver 13,893

Metropolitan StateUniversity of Denver11,592

University of ColoradoDenver15,066 Johnson & Wales Univ

6,565

University of Denver12,394

National American Univ7,305

College America-Denver13,168 United Beauty College

13,860

Emily Griffith Tech Coll 11,592

Regis University 12,102

Argosy University-Denver 10,400

Massage ThInst of Colo 14,661 The Art Institute of

Colorado 11,688

Colorado Heights Univ 13,931

Westwood College-Denver South 10,689

Aveda Institute 12,637

Lincoln College ofTechnology-Denver 14,499

LIVING COSTS, 9 MONTHS, DENVER COUNTY

-7,313 1,188

Avg. DiffReportFromEst

Denver County Estimate: $13,878


Milwaukee County

$0

$5,000

$10,000

$15,000

$20,000

$25,000

Comparison of Living Cost Allowances to Estimated 9 Months Living Costs, Philadelphia County, Pennsylvania



LIVING COSTS, 9 MONTHS PHILADELPHIA (DETAIL)

University of Pennsylvania14,720

Lincoln Tech Inst14,500

Drexel University18,365

Kaplan Career Inst11,691

Community College ofPhiladelphia9,355

Curtis Institute of Music18,140

Peirce College7,790

The University of the Arts11,889

Moore College ofArt and Design14,790

Pennsylvania Academyof the Fine Arts15,340 Hussian

School of Art15,742

ITT Tech Inst11,878

Jean MadelineAveda Institute11,169

Art Inst of Phila.11,688

Empire Beauty Sch12,861

Metropolitan Car. Ctr.11,622

Philadelphia Co Estimate: $16,020


Milwaukee County

Regen

cy B

eaut

y Ins

t

DeVry

U-W

iscon

sin

Mar

quet

te U

Straye

r U-W

iscon

sin

Milw

auke

e Car

eer C

oll

VICI A

veda

Inst

Adv In

st of

Hai

r Des

ign

Inst

of B

eaut

y and

Wel

lnes

s

UW-M

ilwau

kee

U of P

hoen

ix-M

ilwau

kee

Empi

re B

eaut

y Sch

ool

Milw

auke

e Sch

of E

ngin

Vision

s in

Hair D

esig

n In

st

Alvern

o C

Cardi

nal S

tritch

U

Wisc

onsin

Lut

hera

n

ITT T

ech

Inst-

Germ

anto

wn

ITT T

ech

Inst-

Green

field

The A

rt In

st of

Wisc

onsin

Milw

auke

e Are

a Tec

h Col

l

Mou

nt M

ary U

Milw

auke

e In

st of

Art

& Des

Bryan

t & S

tratto

n-Bay

shor

e

Bryan

t & S

tratto

n-W

auwat

osa

Bryan

t & S

tratto

n-M

ilwau

kee

0

5000

10000

15000

20000

25000

Comparison of Living Cost Allowances to Estimated Living Costs, Milwaukee County, Wisconsin



Bryant & Stratton Coll.5,180

Strayer Univ15,219

Wisc. Lutheran Coll.11,960

Marquette University16,116

Milw. Area Tech Coll11,225

U of Wisconsin-Milwaukee13,770

DeVry Univ.16,652

Bryant & Stratton Coll.5,180

ITT Tech Inst11,878

Alverno College12,224

Milw. Inst Art & Design10,180

Empire Beauty Sch12,861

Regency Beauty Inst21,276

Univ of Phoenix13,060

Cardinal Stritch University12,042

Adv Inst Hair Design14,814

VICI Aveda Institute14,814

Milwaukee Career College14,815

Mount Mary University10,448 Visions in Hair Design

12,528

LIVING COSTS, 9 MONTHS, MILWAUKEE CO

Milwaukee Co. Estimate: $12,753


Washington, DC

0

5000

10000

15000

20000

25000

Comparison of Living Cost Allowances to Estimated Living Costs, Washington, DC


* No reported data


LIVING COSTS WASHINGTON, DCUniversity of DC18,913

American University15,359

National Conservatory ofDramatic Arts20,342

George Washington Univ12,828

Corcoran Coll Art & Design14,000

Technical Lrn Ctrs17,424

Univ of Potomac9,924

Strayer Univ15,219

Career Tech Inst12,483

Univ of Phoenix13,060

Gallaudet University16,788

Trinity Washington Univ15,705

Bennett Career Inst9,387

Catholic Universityof America16,876

District Estimate: $20,394


Cost variation is not limited to urban areas (but easier to observe)

RURAL EXAMPLE: SUMTER, SC

0

4000

8000

12000

16000

20000

Comparison of Living Cost Al-lowances to Estimated Living Costs,

Sumter SC

Estimated Living Cost Room & BoardOther


LIVING COSTS, SUMTER CO., SC

University of South Carolina-Sumter13,755

Sumter Beauty College15,705

Morris College8,725

Central Carolina Technical College11,231

-3,164 3,816

Avg. DiffReportFromEst

Sumter County, SC Estimate: $11,889

Scale: 2 miles


• 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


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


ON-CAMPUS LIVING COSTS BY YEAR

2006 2007 2008 2009 2010 2011 2012 20130

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Public 4-year

Public 2-year

Private nonprofit


OFF-CAMPUS LIVING COSTS BY YEAR

2006 2007 2008 2009 2010 2011 2012 20130

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Public 4-year

Public 2-year

Private nonprofit

For-profit (a-cademic year)

For-profit (program)


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)


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)


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/

[email protected]

RESOURCES & CONTACT INFO

http://wihopelab.com/publications/Kelchen%20Hosch%20Goldrick-Rab%202014.pdf



http://wihopelab.com/publications/

http://wihopelab.com/publications/



mailto:[email protected]

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