Every year, a new generation of innocent people enter the market for a bachelor’s degree. Very quickly they receive training in some unwritten rules.
Families often do not pay the advertised price. Schools offer website calculators that estimate what families may have to pay, but they make no guarantees. Help seekers cannot receive a true price offer until they have applied and accepted.
And when a student considers a school like Manhattanville College in Purchase, NY, a strange thing could happen when the student both seeks the estimated cost and gets the actual cost after being accepted: the college will charge the prices from name five competitors, although the student did not ask for it. These rates may also all be higher than Manhattanville’s.
These estimates come with a big disclaimer: they can be wrong. As you can imagine, some of these other schools are not enthusiastic about this state of affairs. So why would an institution that offers math and economics classes give out suspicious numbers?
That question — and its elusive answers — underlies a fundamental problem that crops up every admissions season: College applicants and their families are at a significant information disadvantage, and many of the people who could do something about it are in no hurry to do so do uncomplicated.
Since 2011, the federal government has been asking all universities to publish a so-called net price calculator on their websites. College buyers enter a range of financial information and an estimate of what the college may charge an admitted student comes out.
Net price calculators are much better than nothing. At best, they prove that a college’s list price is something of a fiction for many, or even most, students.
However, the calculators are often confusing. Detailed studies have revealed their shortcomings.
No one is to blame for the problems with the calculators, but also everyone. The government doesn’t set strict enough guidelines, confused families enter wrong numbers, and colleges use underperforming calculators or don’t update the tool’s formulas regularly. While the calculators will predict financial need based on your income and relevant assets, they may not attempt to estimate so-called achievement aid, which is more based on what a student has been doing in or out of the classroom.
When William E. Staib, a technology and financial services industry veteran with six children, including a foster daughter, first considered this mess as a parent, he thought—like other parents I wrote about two weeks ago—that he needed a better one could build tools. Today, over 250 schools license his net rate calculators, and his company, College Raptor, offers rankings and other information on a consumer-facing website.
And these price comparisons of the competitors? College Raptor also generates these for customer schools.
This is how this comparison works. When it compares a customer school to a competitor who also happens to be a customer, it pulls estimated prices from that other school’s net price calculator – the one that College Raptor operates.
If the competing school is not a customer, College Raptor uses federal data and other proprietary mechanisms. Then, according to its marketing materials, “advanced AI” takes over. Customers are given a list of comparable schools and can choose which – apparently the more expensive – potential students are shown. You can disclose these competitor prices on the result page of your net price calculator and on the so-called award letters that you send to admitted students.
Three of the five Manhattanville compared schools — Marist and Mercy Colleges in New York and Drew University in New Jersey — declined to comment or would not criticize a competitor’s tactics. The other two had some objections.
“These tactics make it difficult for students and families to make informed decisions,” Drew Aromando, vice president of enrollment management at Rider University in Lawrence Township, NJ, said in an email. “There are too many unique variables in the financial aid process for a college to estimate for a student/family what they can expect from another financial aid institution.”
Shannon Zottola, vice president of enrollment management at the University of Scranton in Pennsylvania, said she’s concerned that publishing competitors’ prices could discourage people from continuing to shop.
“It would be a shame if a family wrote off a school that might suit them,” she said.
The “Note” that College Raptor accompanies the comparisons it provides for schools like Manhattanville offers some caveats, and they’re not in a tiny font either. “These numbers are net price estimates only, based on available College Raptor information, have not been verified by Manhattanville College and may be inaccurate,” it said. “We encourage you to consider the net tuition calculator results of each school and/or your actual financial aid offerings and costs at schools you are considering before finalizing your college decision.”
Elsewhere on one of its websites, the company gets a bit more specific. “In general, our models are able to provide costs that are accurate to within 10-20% of the costs reported in actual grant reports or estimated by college net pricing calculators,” it says.
These disclosures are good and clear. But if competitor pricing can be inaccurate, why encourage customer schools to use it at all?
“I don’t lose any sleep over the fact that our answers aren’t perfect,” said Mr. Staib in an interview. “You’re better than anything else out there.”
He also said that any school that doesn’t like the way a competitor advertises its prices can contact College Raptor and offer data to improve those offerings. When I suggested that this might sound like he was giving the school two bad choices – either give up dates to help a third party helping competitors, or College Raptor will continue using the inaccurate numbers – he disagreed.
“It comes back to the question of what the purpose of a net price estimate is in the first place,” he said. “It’s a good faith estimate of what a student will pay for a school where we don’t end up having the issue of him being put off applying for the best opportunity because he’s put off by the sticker price.” . ”
In fact, it’s entirely possible for a family to see the comparison and learn that a competitive facility they’re considering is a lot cheaper than the family thought. It’s also possible that an estimated price higher than the original school a family wanted to research discourages the family from asking further questions about that competitor.
College Raptor does not see this as a likely outcome, and I urge anyone reading this column to prove it correct. But I worry about people who may not read it or who are new in the process of trying to pay for higher education. Almost half of Manhattanville’s college students are the first in their families to go to college, and I hope someone warned them to read every disclaimer they encounter throughout their lives.
However, if higher prices from competing schools appear on an actual award letter, a family might conclude that the school offering admission is a low-price leader. This family may not be inclined to contest the offer of help and ask for a better price. This could cost the family five figures over four years – and save a school even more with an entire entry class.
So who benefits most from the comparisons? “The school,” said Paula Bishop, an accountant and financial aid consultant in Kirkland, Washington, who sent me the quotes from Manhattanville’s competitors.
Manhattanville’s vice president of enrollment and marketing, Troy L. Cogburn, said he’s just trying to help. “College Raptor is a trusted resource,” he said. “We try to provide as much information as possible to a potential student.”
He didn’t like my use of the term “competitor” and said the other schools Manhattanville lists are there because they are similar, not necessarily because they have a lot of overlap in their applicant pools.
Manhattanville’s tactics — and they’re far from the only ones — should serve as a reminder that this can be a hard-edged marketplace with the stakes high. If you’re looking for basic training that could cost you five times as much as a car, spend a lot more time interviewing the degree dealers who sell their four years of experience.
The College Raptor story has a neat ending. Last year, Citizens Financial Group, which runs a big student loan business, acquired the company for an undisclosed price. College Raptor would, according to the bank, “bolster our commitment to financial empowerment.”