Each year, a new batch of innocents enter the market for a bachelor’s degree. Soon they receive training in some unwritten rules.
Families often do not pay the quoted rate. Schools offer website calculators that estimate what families may have to pay, but they make no guarantees. Help seekers can’t get a real quote until they’ve applied and been accepted.
And if a student is considering a school like Manhattanville College in Purchase, NY, something strange can happen when the student both searches for the estimated cost and gets the real one after being accepted: The university will quote the prices of five competitors, even though the student didn’t ask for it. Those citations can also all be higher than Manhattanville’s.
These estimates come with a big disclaimer: they could be wrong. As you can imagine, some of these other schools are not happy with this turn of events. So why would an institution that offers education in mathematics and economics publish suspicious figures?
That question — and its elusive answers — lie at the root of a fundamental problem that crops up every admissions season: College applicants and their families are seriously information-deprived, and many of the people who could do something about it are in no great hurry. to make things less complicated.
Since 2011, the federal government has required all colleges to post something called a net price calculator on their websites. College buyers input a ton of financial information and it comes out with an estimate of what the university can charge an admitted student to pay.
Net price calculators are much better than nothing. At their best, they prove that a university’s list price is something of a fiction for many, if not most, students.
However, the calculators are often confusing. Detailed studies have revealed their shortcomings.
The problems with the calculators are nobody’s fault, but everybody’s fault. The government doesn’t set strict enough guidelines, confused families enter incorrect grades, and colleges use substandard calculators or don’t regularly update the tool’s formulas. Additionally, while the calculators predict financial need based on your income and relevant assets, they may not try to estimate the so-called merit aid, which is based more on what a high school student has done inside or outside the classroom.
When William E. Staib, a technology and financial services veteran with six kids, including a foster daughter, first explored this mess as a parent, he thought—like other parents I wrote about two weeks ago—that he had a could build a better tool. Today, more than 250 schools have licensed his net price calculators, and his company, College Raptor, provides rankings and other information on a consumer website.
And those competitor price comparisons? College Raptor also generates those for client schools.
Here’s how that equation works. When it compares a client school to a competitor who also happens to be a client, it pulls estimated prices from that other school’s net price calculator – the one running College Raptor.
If the competing school is not a client, College Raptor uses federal data and other proprietary mechanisms. Then, according to the marketing material, “advanced AI” takes over. Customers are presented with a list of similar schools and can choose which – the more expensive ones, it seems – are shown to prospective students. They can reveal those competitor prices on the results page of their net price calculator and on the so-called reward letters they send to admitted students.
Three of the five comparison schools in Manhattanville — Marist and Mercy Colleges in New York and Drew University in New Jersey — declined to comment or criticize a competitor’s tactics. The other two had some objections.
“These tactics make it harder for students and families to make accurately 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 to expect in financial aid from another institution.”
Shannon Zottola, vice president of enrollment management at the University of Scranton in Pennsylvania, said she was concerned that posting competitors’ prices could discourage people from further shopping.
“It would be a shame for a family to write off a school that might just be the right fit,” she said.
The “note” that College Raptor includes with comparisons it provides for schools like Manhattanville offers a few caveats, and they’re not in a small font either. “These figures are only net price estimates based on available information from College Raptor, have not been verified by Manhattanville College, and may be inaccurate,” it reads. “We encourage you to consider the results of each school’s net price calculator and/or your actual financial aid offers and costs at schools you are considering before finalizing your college decision.”
Elsewhere on one of its websites, the company gets a little more specific. “In general, our models are able to provide costs accurate to within 10-20% of the costs provided by actual financial aid reports or as estimated by college net price calculators,” it says.
These revelations are good and clear. But if competitors’ quotes may be inaccurate, why encourage client schools to use them in the first place?
“It doesn’t bother me that our answers aren’t perfect,” said Mr. Steve in an interview. “They’re better than anything else out there.”
He also said that any school that disagreed with how a competitor quoted its prices could contact College Raptor and offer data to improve those quotes. When I suggested that this might sound like he was giving the school two bad choices — provide data to a third party helping competitors or College Raptor will continue to use the inaccurate numbers — he disagreed.
“It comes back to the question of what is the purpose of a net price estimate 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 with the problem of them being held back from applying for the best opportunity because they’re put off by the sticker price. ”
Indeed, it is entirely possible for a family to see the comparison and discover that a competing institution it is considering is much cheaper than the family thought. It is also possible that an estimated price higher than that of the original school a family wanted to research may prevent the family from asking further questions about that competitor.
College Raptor doesn’t see this as a likely outcome, and I urge anyone reading this column to prove it right. But I worry about people who might not read it or be new to the process of trying to pay for higher education. Nearly half of Manhattanville’s students are the first in their families to attend college, and I hope someone warned them to read every disclaimer they encounter anywhere in their lives.
Meanwhile, if higher prices from competing schools show up on an actual award letter, a family might conclude that the school offering admission is a leader with a low price. That family may not be inclined to appeal the aid offer and ask for a better price. This could cost the family five figures in four years — and save a school a whole lot more for a whole new class.
So who benefits the 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 competitor.
Manhattanville’s vice president of enrollment and marketing, Troy L. Cogburn, said he was just trying to help. “College Raptor is a trusted resource,” he said. “We try to give a prospective student as much information as possible.”
He wasn’t fond of my use of the term “competitors,” saying that the other schools Manhattanville mentioned were there because they were similar, not necessarily because they had a lot of overlap in their applicant pools.
Manhattanville’s tactic – and it’s far from the only one – should serve as a reminder that this can be a sharp-elbowed marketplace where the stakes are high. If you’re looking for an undergraduate degree that might cost you five times as much as a car, spend that much more time questioning the diploma dealers selling their four years of experience.
The College Raptor story has a neat ending. Last year, Citizens Financial Group, a major education lending firm, acquired the company for an undisclosed price. College Raptor would, the bank said, “reinforce our commitment to financial empowerment.”
