The Price You Pay for College

Introduction

In today's world, choosing to go to college is one of the most significant decisions a young person can make. It's not just about deciding whether to pursue higher education; it's about navigating a complex landscape of choices that can have far-reaching consequences for one's future. Ron Lieber's book, "The Price You Pay for College," serves as an invaluable guide for students and parents alike, helping them make sense of the often confusing and overwhelming process of selecting and financing a college education.

This book summary will explore the key ideas presented in Lieber's work, offering insights into the true cost of college, the intricacies of financial aid, the importance of teaching quality, and strategies for saving and planning for this significant investment. By breaking down complex concepts and providing actionable advice, Lieber empowers readers to approach the college decision-making process with confidence and clarity.

The True Cost of College

List Price vs. Actual Price

One of the first things Lieber addresses is the sticker shock that many families experience when looking at college prices. It's not uncommon to see figures ranging from $100,000 for four years at a state university to a staggering $300,000 for an elite private college. These numbers can be intimidating, especially for families with multiple children.

However, Lieber reveals an important truth: most students don't actually pay the full list price. In fact, during the 2019-2020 academic year, the average full-time, first-year student at a public university received a discount of 52.6% off the list price of tuition. After discounts, families paid an average of $15,400 for full-time, in-state students, including tuition, room, and board. For private schools, the average cost was higher at $27,400, but still significantly less than the list price.

Understanding Price Determinants

So what factors into the actual price a student pays? Lieber breaks it down into two main categories:

1. Need-based financial aid: These are grants and price reductions provided by colleges and the government to less well-off families. This type of aid doesn't take academic abilities into account.

2. Merit aid: This form of aid is designed to make a school's offer more enticing. It's used to attract talented students who might otherwise choose more prestigious institutions and to make college more affordable for families who find the list price too high.

Understanding these components is crucial for families as they navigate the college selection process. It's important not to be discouraged by high list prices and to explore all available options for reducing the overall cost.

Navigating Financial Aid

The FAFSA and CSS Profile

Lieber dedicates significant attention to the process of applying for financial aid, starting with the Free Application for Federal Student Aid (FAFSA). This form is essential for accessing federal financial aid, including Pell Grants, work-study campus jobs, and subsidized student loans.

However, Lieber cautions readers not to expect too much from the FAFSA. The government uses this form to calculate an Expected Family Contribution (EFC), which often turns out to be higher than what families can actually afford. As a result, the aid offered is frequently less than what families need.

In addition to the FAFSA, some schools require the CSS Profile form for non-federal financial aid. This form can sometimes lead to more generous aid packages, but it's not guaranteed. Lieber advises families to fill out these forms but to keep their expectations realistic.

Merit Aid

Lieber also delves into the world of merit aid, which can be a significant factor in reducing college costs. He explains that schools offer merit aid for two primary reasons:

1. To attract talented students who might otherwise choose more prestigious institutions.
2. To make their programs more affordable for families who find the list price too high.

Understanding how merit aid works and which schools are more likely to offer it can be a game-changer for many families in their college search.

The Importance of Teaching Quality

Research vs. Teaching

One of the most eye-opening sections of Lieber's book focuses on the quality of education students receive. He points out a concerning trend in higher education: the increased emphasis on research at the expense of teaching.

Many professors are incentivized to focus on research because it's what leads to promotions, tenure, and prestige for the institution. However, this shift has resulted in a decline in the quality of undergraduate teaching. Increasingly, the task of teaching undergraduates falls to adjuncts and graduate students, who may not have the experience or resources to provide the best education.

The Value of Mentorship

Lieber emphasizes the importance of mentorship in shaping students' lives and careers. He cites a 2018 Gallup study that found having a mentor is one of the most crucial factors in determining young adults' life satisfaction.

To find schools that prioritize teaching and mentorship, Lieber suggests:

1. Examining department websites to see the proportion of professors who regularly teach undergraduate courses.
2. Inquiring about mentorship programs.
3. Looking for schools that encourage professor-student interactions, such as those that fund professor-student dinners.

Assessing College Value

Future Earnings and Graduation Rates

Lieber approaches the college decision as an investment decision. He encourages readers to consider how different schools might affect future earnings and to assess the risk of not graduating.

To help with this assessment, he points readers to the College Scorecard, a resource published by the US Department of Education. This tool provides valuable information such as:

1. Graduation and retention rates
2. Median salaries of graduates
3. Field-specific salary data

While Lieber acknowledges that this data isn't perfect (for example, salary data only includes graduates who received federal aid), it provides a useful starting point for comparing different schools and programs.

Evaluating Lesser-Known Colleges

For less familiar colleges, Lieber offers several strategies to assess their value:

1. Review the president or chancellor's page on the school website to understand their vision and values.
2. Look for the school's strategic plan, which often provides an honest assessment of the institution's strengths and weaknesses.
3. Examine the financial aid page for information on merit aid requirements.
4. Seek out the school's Common Data Set (CDS) for detailed information on financial aid distribution and student demographics.

These resources can provide valuable insights into a school's priorities, financial health, and commitment to student success.

Saving for College

The 25% Goal

One of the most practical aspects of Lieber's book is his advice on saving for college. Recognizing that the total cost can be overwhelming, he suggests aiming to save about 25% of the expected total.

Lieber presents financial planner Kevin McKinley's approach of dividing college costs into quarters:

1. 25% from savings
2. 25% from student loans
3. 25% from parent loans
4. 25% from current income and student earnings

This breakdown makes the savings goal feel more achievable and provides a clear strategy for financing education.

Making Saving Manageable

To illustrate how achievable saving for college can be, Lieber breaks down the numbers. For a total college cost of $100,000, the savings goal would be $25,000. If a family starts saving when their child is born and earns a 5% annual return, they would only need to save $75 per month to reach this goal.

Lieber encourages readers to think about this in terms of small, manageable changes to their spending habits. For many families, $75 a month might be equivalent to giving up a daily coffee purchase.

Strategies for Success

Researching Schools

Throughout the book, Lieber emphasizes the importance of thorough research when selecting a college. He encourages readers to:

1. Look beyond rankings and reputation to examine factors like teaching quality and mentorship opportunities.
2. Use resources like the College Scorecard and Common Data Set to gather objective information about schools.
3. Consider lesser-known colleges that might offer excellent value and education.

Understanding Financial Aid

Lieber provides several strategies for navigating the financial aid process:

1. Fill out the FAFSA and CSS Profile (if required) early and accurately.
2. Don't assume you won't qualify for aid – even high-income families may be eligible, especially with multiple children in college.
3. Research merit aid opportunities and understand how your academic profile might qualify you for these awards.

Balancing Cost and Value

Throughout the book, Lieber encourages readers to think critically about the value proposition of different colleges. He suggests:

1. Considering how a school's programs align with your career goals.
2. Evaluating the potential return on investment by looking at graduate earnings data.
3. Weighing the benefits of more expensive, prestigious schools against more affordable options.

Planning for the Future

Lieber's advice on saving for college is practical and actionable:

1. Start saving early, even if it's just a small amount each month.
2. Consider using tax-advantaged savings vehicles like 529 plans.
3. Involve children in the process by encouraging them to contribute through part-time jobs or summer work.

Final Thoughts

"The Price You Pay for College" is an invaluable resource for anyone navigating the complex world of higher education. Ron Lieber's comprehensive approach covers not just the financial aspects of college but also the importance of finding the right fit in terms of academic quality, mentorship, and future prospects.

Key takeaways from the book include:

1. Don't be discouraged by high list prices – most students pay significantly less.
2. Look beyond prestige to find schools that prioritize teaching and mentorship.
3. Use available data to assess the potential value and return on investment of different colleges.
4. Start saving early, even if it's just a small amount each month.
5. Approach the college decision as an informed consumer, weighing costs against potential benefits.

By following Lieber's advice, families can approach the college decision-making process with confidence, armed with the knowledge and strategies needed to make the best choice for their unique circumstances. While the process may still be challenging, this book provides a roadmap for navigating the complexities of college selection and financing, helping readers make this life-changing decision with clarity and purpose.