We just moved our youngest daughter back into school for her sophomore year and I am now on a plane headed to a client’s campus for our annual leadership retreat to talk about the future. I think a great deal about the “value of education”. I define this as Price x Outcomes. As a first-generation graduate, I know the value of education from my personal experience, but let’s face it, the outcomes have not kept pace with the price and now that demand is declining, pure economics are at play. When demand declines, prices go down. I tell my clients that the only way they will not compete solely based on price is if they have outcomes that meet or exceed family expectations. Those outcomes are defined more and more as career connected.
Our education story
As a parent of 3 current and recent college students, I have a lot of opinions about this myself. In fact, our youngest daughter just started her sophomore year at a highly selective institution in Washington, D.C., where I feel like they treat us as though they are doing us a favor by letting our daughter attend.
In July, we received our updated financial aid and discovered that we lost all of our scholarships because of a one-time jump in income and combined with their price increase, our bill is about $40,000 more, almost $90,000 (This is one of the 30 most expensive institutions in the country). This feels like bait & switch. She is our third child in college, so we have limited resources or borrowing ability to get her through the next 3 years.
An appeal resulted in a $3,000 award with a note that ended with “Above all, I do desire for everything to work out well for you – even if that means at a different institution.” For 2 years now, I feel like they treated us as if they are doing us a favor by allowing our daughter to attend. This note is a good example of why I feel this way. Apparently, they do not know that there is a perfect storm resulting from (1) a questioning of the value of education, (2) demographic decline, and (3) international decline, which is likely to wreak havoc on their enrollment, despite their highly selective status. In fact, their IPEDS data shows a decline in the highest income bracket of students during this same 5-year period, while at the same time, that is the only bracket to increase across the country. The result, they have posted losses of $75-90 Million over the prior 2 years! Perhaps their price is being questioned by families like mine? Maybe they should treat us like they value us rather than doing us a favor?
My daughter and I sat down and using the data provided by Accountability Under the CCRA: An Analysis | Committee on Education & the Workforce, we looked at the price compared to the value added earnings for all schools that offer her major across the country to ask whether this price increase if worth it. What we discovered is that while the value-added earnings (150% of poverty level) were high for this institution, when we compared their price of other institutions, the ROI was not as large. In fact, they also have one of the highest price to earnings ratios for the major in the country. This tells me their value (price x outcomes) is not as high as other less expensive institutions.
So, we have applied to transfer to other institutions at a lower price for the spring semester. While not ideal, we were left with little choice since most transfer application deadlines were July 1.
I have been surprised at how much my 2 youngest daughters have been aware/price sensitive. All of our children are expected to pay something toward their education based on a cap we set for our contribution as parents. Perhaps this is why they look at the loans and question whether they will be able to pay them back.
My daughter was sharing that as she walked around campus yesterday, she noticed many things that the university was doing that cost money and did not add value, like the large chalk logo of the university in the quad, or some of the free giveaways at move in. Her comment was, “maybe they should stop doing these things, so they don’t need to charge me $90,000 to attend”.
Photo by Susan Q Yin on Unsplash