Preferential packaging – college financial aid as a recruiting tool

Preferential packaging of financial aid is commonly used by private colleges and universities.  Because schools are not transparent about this strategy, many families are ignorant of how it works.  Muhlenberg College is unusually open about explaining this practice.

Preferential packaging means, simply, that the students a college would most like to enroll will receive the most advantageous financial aid packages.

There are three basic types of financial aid (FA):  grants, loans, and work.

A preferential financial aid package includes a far greater percentage of grant aid than self-help (loans and work). Because they have discretion over how much grant aid they choose to award a student, a college can award a bigger grant to a student they would really like to enroll….

Willamette University also is exceptionally forthright about its preferential packaging.

For students with demonstrated financial need, the percentage of need that is met with “gift-aid” (scholarships and grants from all sources) will also reflect the students’ academic standing within our admitted applicant pool. In other words, the stronger the student, the greater the scholarship award is likely to be.

Let’s look at an example from a CollegeConfidential post.

In this case the college’s Cost of Attendance (COA) is $40,000, and two applicants have the same financial need but quite different academic credentials.

Student A ACT 33 GPA 4.0 EFC = $7k

Student B ACT 24 GPA 3.2 EFC = $7k

Student A is more attractive to the college because his stats would improve the school’s stats.  Perhaps Student A is also an Underrepresented Minority (URM), another desirable factor.  Both students will be offered $10,000 in FA, but Student A will receive a preferential package that does not include a loan.

Financial Aid Offered
Student A:  $8,000 grant; $2,000 work-study – Total = $10,000
Student B:  $3,000 grant; $5,000 loan; $2,000 work-study - Total = $10,000

Note that these awards are technically “need-based”, but in fact do take merit into consideration.  If it is the official policy of this college only to offer FA based on need and not on merit, another student with the highest of academic credentials but lacking any financial need (EFC = COA) would receive nothing.

What it means to applicants

• Students seeking to maximize financial aid should apply to schools where their statistics place them in the upper third of the applicant pool.
• Students with no financial need are shut out of many merit awards that include a need component.

Related:

• Psst – one of Duke’s so-called merit scholarships is actually need-based (Cost of College)
• Family income matters for ‘merit’ awards at the University of Rochester (Cost of College)

MOOCs may cut the price of a SUNY degree by one-third

The State University of New York’s new agreement to offer massive open online courses (MOOCs) opens the possibility of obtaining a SUNY degree at about one-third discount off full price.

SUNY announced Thursday that it signed an agreement to partner with Coursera, a website with 3.7 million users that is a leader in offering what are called “massive open online courses.” Universities worldwide, including private schools in New York like the University of Rochester, upload video lectures and course materials onto the website in an effort to enhance educational access.

Starting with a course from Stony Brook University in the fall, SUNY is planning to offer some courses through the site, although how many is unclear.

Exact details are still to be worked out, but students could be granted prior learning assessment credits for MOOC courses taken through a SUNY campus or even elsewhere.  These “would essentially act as transfer credits” that would require a fee, but not a tuition charge for each course.  Presumably the credit transfer fees would be minimal, well below tuition costs.

A student might be able to get his SUNY degree at about two-thirds the cost of a traditional program.

SUNY allows only one-third of the coursework for a degree to be transferred.

“There would be a limit,” SUNY spokesman David Doyle said. “It’s not like you could get a free degree.”

This strikes me as not very different from the Advanced Placement program, which allows college students credit for up to one year ‘s worth of college courses.

Related:

• ‘SUNY to boost online offerings, push early graduation’ (Cost of College)
• Kiplinger’s best values in public colleges (Cost of College)

‘Rich’ families get a sweet financial aid deal at the most selective universities

For students who win the college admissions lottery and get in to the most selective universities, high income may not be a barrier to receiving financial aid.  Here are some examples.

HARVARD

2011-12 School Year:  About 240 families earning $180,000-200,00 received financial aid.

Beginning with the Class of 2016, families with incomes between $65,000 and $150,000 will contribute from zero to ten percent of income, and those with incomes above $150,000 will be asked to pay proportionately more than 10%, based on their individual circumstances. Families at all income levels who have significant assets will continue to pay more than those in less fortunate circumstances.

PRINCETON

2011-12 School Year:  99% of families earning $180,000-200,000 who applied for financial aid received grants that averaged $23,600.

Applicants receive aid based on their families’ financial need. We do not use income cutoffs when determining whether to award aid.  Any student whose family feels unable to afford the full cost of attendance is encouraged to apply for aid.

YALE

2011-12 School Year:  99% of families earning $150-200,00 who applied for financial aid were approved.  Grants for those 505 families averaged $26,500 each.

• Families whose total gross income is less than $65,000 are not expected to make any financial contribution towards their child’s Yale education. 100% of the student’s total cost of attendance will be financed with a Yale Financial Aid Award.
• Families earning between $65,000 and $200,000 (with typical assets) annually contribute a percentage of their yearly income towards their child’s Yale education, on a sliding scale that begins at 1% just above $65,000 and moves toward 20% at the $200,000 level.
• There is no strict income cutoff for financial aid awards. Many families with over $200,000 in annual income receive need-based aid from Yale.

UNIVERSITY OF CHICAGO

2012-13 School Year:  59% of families with incomes above $120,000 who applied received financial aid.

The average University of Chicago aid applicant receives $37,500 in scholarships each year.

$160,000 income puts you in the top 10% of families in the United States.

Related:

• Can rich families qualify for college financial aid? (Cost of College)
• Berkeley will offer financial aid to ‘middle-class’ families (Cost of College)

Kiplinger’s best values in public colleges

Kiplinger’s recently released its list of best values in public colleges.  Here are the top ten for in-state (IS) and for out-of-state(OOS) students.

California students seeking a bargain are still paying relatively hefty costs approaching $30,000 per year, assuming they can get in to the more selective state schools.

New York stands out in offering a good value for OOS students.  Geneseo seems to attracs very few OOS students, perhaps due to its isolated rural setting.  On the other hand, Binghamton’s higher percentage of OOS students has been the target of complaints that state residents are being crowded out.  Unlike California and Virginia, New York has no formal rules on limiting OOS students.

Percentage OOS Students – School
 02% – SUNY Geneseo
18% – Univ. North Carolina Chapel Hill
12% – Binghamton University (SUNY)
27% – University of Virginia
06% – College of New Jersey
32% – College of William and Mary
07% – Univ. of California, Los Angeles
11% – Univ. of California, Berkeley
08% – Stony Brook University (SUNY)
23% – Univ. of Maryland, College Park

Kiplinger’s uses measures of “academic quality and affordability” to compile these lists.  The entire list of 100 colleges can be found here.

Colleges with highest percentages of students receiving merit aid

Top 10 merit aid colleges for the 2011-12 school year as compiled by US News & World Report

… Merit aid may be awarded for outstanding academic achievement or for other reasons not tied to academics….

On average, 13 percent of students who had no financial need received some amount of merit grants or scholarships for the 2011-2012 school year, according to data reported by 1,084 colleges to U.S. News in the 2012 annual survey.

The top ten list of schools includes some highly ranked institutions.  Unfortunately, Cooper Union may soon end its free tuition policy due to a “dire budgetary situation“.  Rhodes College in Memphis is one of the Colleges That Change Lives.

The entire list of “colleges that report the highest percentage of their students in the 2011-2012 academic year who “had no financial need and who were awarded institutional non-need-based scholarship or grant aid” excluding athletic awards and tuition benefits” can be found on the US News website.  You may want to check it out, especially if you do not expect to qualify for need-based aid.  Be sure to check details like criteria used in selecting recipients and average merit award amounts.

Related:  

• College merit aid is unfair according to some critics (costofcollege.wordpress.com)

Carnegie Mellon University – an example of transparency in financial aid policies

Carnegie Mellon University is unusually transparent in sharing information on how financial aid is awarded.  First, it is clear that awards always incorporate a financial need component.

Carnegie Mellon provides qualified students with need-based institutional grants and scholarships to help fund the expenses of college. Grants and scholarships are considered to be ‘gift aid,’ meaning that neither amount has to be paid back.

Additional details

Grants
… Grants are awarded to students who demonstrate financial need….

Scholarships
Carnegie Mellon offers the Carnegie Scholarship which is a joint need- and merit-based scholarship….

Basic principles

Carnegie Mellon’s financial assistance program is designed to meet our dual goal of helping prospective students who have demonstrated financial need afford the cost of education and rewarding those students who have outstanding talents and abilities. Need-based financial assistance is used to enroll high-quality students. Highest quality students will receive the most favorable financial assistance packages.

CMU is open about their policy of reviewing offers from competing schools and their use of statistical modeling.

We have been open about our willingness to review financial aid awards to compete with certain private institutions for students admitted under the regular decision plan. Unlike most institutions, the university states these principles openly to those offered first-year admission under the regular decision plan. While early decision students are not eligible to participate in this aid review process, we will meet their full demonstrated need as calculated by the university.

We use statistical modeling as an aid in the distribution of limited financial aid dollars. It is a strategic tool that helps us pursue our goal of increasing the quality of the student body while using our resources as effectively as possible. This modeling takes into account a student’s intended college major, academic and artistic talents, non-academic talents and abilities, as well as financial need. This approach to awarding financial aid is unique to Carnegie Mellon and has not been developed with the aid of any outside consultants.

Here are some of frequently asked questions about financial aid.

• How are students considered for the Carnegie Scholarship?
• Is there a way to get an idea of what it will cost to attend Carnegie Mellon?
• Carnegie Mellon is expensive – how will I know if it’s going to be affordable for my family?
• Can I request an estimate of my financial aid eligibility before applying to Carnegie Mellon?
• If I apply for financial aid, will it hurt my chance of getting accepted?
• Is financial assistance available for international students?
• What effect will receiving an outside scholarship have my financial aid package

The answer to the last question makes it clear that students are allowed to “stack” outside scholarships on top of financial aid awarded by CMU.

Related:  Maximizing college revenue through financial aid allocation (Cost of College)

A warning to petroleum engineering students

In the wake of a one-year jump of 55% in the number of U.S. petroleum engineering freshman students, it was reported that Texas A&M sent a letter to incoming students advising them to be realistic about future job growth.

Dear Admitted Aggie PETE Applicant,

The Harold Vance Department of Petroleum Engineering, Texas A&M University, is pleased that you applied and were admitted to our top ranked petroleum engineering program. If you pursue a degree in petroleum engineering, our program is committed to providing the highest quality education available.

Recent data suggests that some concern about the sustainability of the entry level job market during a time of explosive growth in the number of students studying petroleum engineering in U.S. universities may be prudent.

Our advice is that you become aware of graduation projections and petroleum industry employment outlook for people with petroleum engineering degrees. For example, between fall 2011 and fall 2012, the number of freshmen in petroleum engineering programs in the U.S. increased from 1,388 to 2,153, a 55% jump in one year. Based on the many inquiries and applications TAMU is receiving for the petroleum engineering major, the number of U.S. students in petroleum engineering will probably continue a strong upward trend, as long as the employment market remains stable. These days, a very large number of people are already studying in petroleum engineering programs (see attachment, showing data made available through the Society of Petroleum Engineers, SPE), at a time when: the number of recent graduates, who began their studies several years ago, is already at about historical highs and growing rapidly (see attachment); our program’s board of industry advisors are recommending that we “do not grow” our undergraduate program at this time; and oil and natural gas price projections and expectations of U.S. governmental policy influences are viewed as not particularly encouraging by the U.S. petroleum industry.

We are not trying to discourage you from a career that we think is among the most fascinating, dynamic, challenging careers that exist. However, we also want you to know that the Aggie PETE program is doing the right thing by providing you with information that could end up being important to your future.

Sincerely,
Xxxxxxxxx

According to the Bureau of Labor Statistics, the 2010 annual median pay for a petroleum engineer was $114,080, while the number of jobs in the ten-year period ending 2020 is expected to grow 17%.

Rig count numbers track oil well activity and serve as an indication of petroleum industry jobs.

I graduated with a degree in geology in 1977, which turned out to be accidentally fortuitous timing.  And it’s no surprise that I left the business around 1986, as did many geologists, petroleum engineers, and other industry workers.

Related:  Don’t pick a college major based on today’s hot jobs (Cost of College)

University of Wisconsin to offer lower-cost online bachelor’s degrees

University of Wisconsin to Offer a Bachelor’s to Students Who Take Online Competency Tests About What They Know

No class time will be required for most degrees as Wisconsin begins “decoupling the learning part of education from student assessment and degree-granting”.

Wisconsin officials tout the UW Flexible Option as the first to offer multiple, competency-based bachelor’s degrees from a public university system. Officials encourage students to complete their education independently through online courses, which have grown in popularity through efforts by companies such as Coursera, edX and Udacity.

No classroom time is required under the Wisconsin program except for clinical or practicum work for certain degrees.

Competency tests will determine if course credit will be given.

Under the Flexible Option, assessment tests and related online courses are being written by faculty who normally teach the related subject-area classes, Mr. Reilly said.

Officials plan to launch the full program this fall, with bachelor’s degrees in subjects including information technology and diagnostic imaging, plus master’s and bachelor’s degrees for registered nurses. Faculty are working on writing those tests now.

A way to lower college costs

The charges for the tests and related online courses haven’t been set. But university officials said the Flexible Option should be “significantly less expensive” than full-time resident tuition, which averages about $6,900 a year at Wisconsin’s four-year campuses.

There is concern that programs will be “watered down” versions of traditional degrees.  I think they’re making a mistake by not requiring proctored testing.

Based on the examples given in the article, this new degree option will mainly attract older students.

Beth Calvert, a 35-year-old registered nurse at a Milwaukee hospital, hopes to enroll in the program to earn her bachelor’s in nursing. Between working overnight shifts and caring for her 3-year-old daughter, Ms. Calvert said she has little time to move beyond her associate degree but knows that it increasingly is important to her employer, which she said offers a pay raise to nurses with higher degrees.

‘SUNY to boost online offerings, push early graduation’

The State University of New York (SUNY) is taking a leadership position regarding online education.

For the first time, SUNY students will be able to complete a bachelor’s degree online, Zimpher announced. Three degrees in high-demand fields like information technology and health care will launch this fall, and seven more will be available in fall 2014. SUNY will be a leader in online education.

Additionally, students will be able to take online courses from any other SUNY college while earning credit and paying tuition to their home campuses.

“No institution in America – not even the for-profits – will be able to match the number of offerings and the quality of instruction,” Zimpher said. “In three years, we will enroll 100,000 degree-seeking students in Open SUNY, making us the largest public online provider of education in the nation.”

Credit for MOOCs

As part of SUNY’s online efforts, top professors will begin to provide “massive open online courses.” Many of the country’s most prestigious universities present such courses, which are online for free with the aim of extending access to education. Generally, these courses are not credit bearing.

The system will develop a system of assessing higher-learning experiences, so students who’ve taken some courses, such as free courses online from accredited institutions, can get credit for their work.

Credit for internships

SUNY will also focus on providing experiential education to students — even those enrolled only in online courses — helping them to secure internships, research or volunteer opportunities during their studies. These experiences will be recorded on an extracurricular transcript and be designated on their diplomas.

Encouraging early graduation as a way for students to save money

“We are committed to the idea that students should have the choice to graduate in three years,” she said during the speech. “We believe that by 2015, 25 percent of SUNY students will be able to do this.”…

“It allows students to reduce their student loans. It reduces their tuition because they’re only paying three years of tuition instead of four,” Stenger said. “The students can stay and get their master’s degree in an accelerated fashion and have a little extra value at the same time.”

Even assuming that online courses will cost the same as classroom courses, online students should be able to save money on transportation, housing, and other costs.

My future online scholar?
Even though she’s never taken an online course*, my high school daughter has lately mentioned that she might be interested in attending an online college.  I’m not completely sure why she’s interested and I’m not sold on the idea, but it looks as if SUNY might soon be able to accommodate her.

In related news, a hip hop music video promoting the SUNY system will be released to the public next month.

* I was recently told that our local high school expressly forbids students from taking any online course for credit, a rule that also applies to staff.  At a state level, New York does allow schools to grant credit for online courses.

If you want a job at an elite firm . . .

Last year the Chronicle of Higher Education gave us the lowdown on the specific circumstances where it can be extremely important to attend a particular name brand elite college.

If you want to get a job at the very best law firm, investment bank, or consultancy, here’s what you do:

1. Go to Harvard, Yale, Princeton, or (maybe) Stanford. If you’re a business student, attending the Wharton School at the University of Pennsylvania will work, too, but don’t show up with a diploma from Dartmouth or MIT. No one cares about those places.

2. Don’t work your rear off for a 4.0. Better to graduate with 3.7 and a bunch of really awesome extracurriculars. And by “really awesome” I mean literally climbing Everest or winning an Olympic medal. Playing intramurals doesn’t cut it.

This comes from a study where Lauren Rivera of Northwestern University interviewed insiders at these elite firms.

Keep in mind this study focused on very specific career paths.  If a student is truly interested in a high-powered investment banking career or something similar, then paying for that gold-plated college degree might be worth it.  But how many 18-year-olds really know they want the lifestyle entailed in working for a white-shoe firm?  For those who are committed to this particular plan, Bryan Caplan offered a summary of the winnowing process that is conducted in the human resources offices of these employers.

1. Most applications practically go straight in the trash…

2. Evaluators have a lot of slack…

3. Super-elite credentials matter much more than your academic record…

4. Super-elite schools matter because they’re strong signals, not because they’re better at building human capital…

5. At least in this elite sample, I’m totally wrong to think that extracurriculars don’t matter. … But they have to be the right kind of extracurriculars.  You have to signal that you’re not signaling!…

6. Grades do matter somewhat, but mostly as a cut-off.  They’re a signal of work ethic more than IQ…

The credentialing game starts young.

Robert Teitelman pointed out that the process ensures these top firms will be staffed only with individuals who had the good fortune to be able to play the credentialing game that begins at a relatively young age, and essentially culminates at age 18 in the college admissions process.

On the face of it, there’s a quality to Rivera’s conclusions that seems pretty obvious. Anyone who’s been around Wall Street and consulting — or anyone with a teenager suffering through college admissions — knows the pressure that exists to get students into “elite” schools, however defined, in order to slot them onto a transmission belt to high-paying jobs, mostly at what Rivera calls the elite professional-services firms. This is the core of the myth that drives so much of upper-middle-class child rearing: the necessity of getting the tyro into Harvard or other elite universities, not for any educational attainments (so impractical), but for the effect it supposedly has on future prospects. Rivera is essentially putting flesh on those ghostly bones; she’s arguing that decisions made in college admissions — good, bad or indifferent — play a determinative role in where you go to work and how much money you make. She is not only offering empirical backing to the mania for, say, elite kindergartens and endless tutors, but she’s significantly raising the stakes: only the “top” matters. This is remarkable if only for the fact that college admissions, for all its importance, is about as scientific as necromancy.

The system is ”terrible for organizations”.

It’s a bit frightening to realize that employment among these firms essentially relies on the signaling granted by admissions to these elite schools.  As Megan McCardle explained, this system is ‘a convenient shorthand for a group of people who are really busy” and is “terrible for organizations”.

The Ivy League is full of smart, interesting people.  But it is not full of all of the smart, interesting people in the country, or even a majority of them.  And given the resumes required to get there, it produces a group of people who are narrow in certain predictable ways….

This requirement to get the “right” degree from the “right” college to enable you to get the “right” job also exists in other fields.  Here’s an example from the world of music.

In my subfield of music, we have a version of the above phenomenon which determines who gets jobs. There is a short list of maybe half a dozen cronies who basically run the profession, and if you manage to get into their grad programs, you will get whatever top jobs are out there in a given hiring season. Jobs are filled with a phone call.

As someone else mentioned, the current market conditions don’t help things. If a committee has to weed people out of a stack of 200 applications, the pedigree is a quick (and dirty) method of winnowing the list without bothering to look at other aspects of the applications.

Choose your graduate program carefully and with full knowledge that you will be sealing your own fate before you even hit the campus.

A broader lesson for those in the college search and selection process:  Consider how important the particular school and/or department is in the trajectory of your desired career.  In some cases it might be a determining factor, but in most cases it is not so consequential.