Playing Your Cards Right When Selecting a School Can Save You Money

If colleges are so worried about their place in those ballyhooed national rankings--and crave the best students possible to improve their standing--how can applicants use that to their advantage? When is the advertised tuition only a “sticker price” no more real than the list price of autos? And what schools won’t play “let’s make a deal”?

Few people are more expert in college admissions and financial aid than two men who began studying higher education as economists and now help run leading institutions: Michael S. McPherson as president of Macalester College in Minnesota and Morton Owen Schapiro as dean of the College of Letters, Arts and Sciences at USC. The coauthors of a recently published book, “The Student Aid Game,” they talked turkey on a range of subjects with Times education writer Kenneth R. Weiss and education editor Paul Lieberman. They began by noting how public colleges, not the “privates,” often get the richer students.

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Question: Is it true that the students attending UCLA come from wealthier families than those attending USC?

Schapiro: I’ve never actually seen that data. But there has been sort of a national trend, in states like Florida and Minnesota, a whole bunch of them . . .

McPherson: Oregon and Pennsylvania . . .

Schapiro: Right. People are more affluent on average at the publics versus the privates. I think that’s in part because of the days when states started offering operating subsidies for the publics--before [funds] started getting siphoned off for infrastructure and prisons and all that. They spent quite a lot on educating undergraduates and they basically give it away for free. It was one heck of a good deal. Increasingly, the differential with the privates grew.

At the same time, the publics became anxious to prove to the state legislatures that they were doing a good job. The irony of higher education is that you prove this not by your output, but by your input. The way you prove that you’re doing a good job is that you attract better high school students. They wanted to keep the valedictorians home. The state of Connecticut started trying to make sure explicitly that the top students were staying home. It was not only free tuition--it included some graduate tuition. They actively started to recruit high SAT, high GPA [grade-point average] students--who were disproportionately rich.

You have a lot of kids whose parents could afford to pay a much higher percentage of the costs of educating them. But for political and other reasons, the states continue to keep tuitions down.

Q: But state funding of colleges did not continue to soar. Isn’t that a dangerous combination?

Schapiro: State operating subsidies have really swung--have really gotten hammered over the last decade. So these schools have become increasingly tuition-dependent. But they don’t generate enough tuition revenue to make up for the shortfall in the state subsidies. Which means [a reduced] percentage of courses taught by real faculty, rather than graduate students.

McPherson: The thing that’s really going to hit the fan in states like California is you’ve got huge increases on the way in the number of students who have to be served. [Yet] you have great reluctance to spend more on higher education and these powerful political pressures to keep tuition low. That equation doesn’t add up. There’s no magic--they’ve got to figure something out.

Schapiro: One of the themes in the book is that students from low-income families increasingly cannot afford four-year public education. When things started getting tough, they started increasing tuition. Unfortunately, at the same time they switched from need-based more to merit-based aid. That was unlike in the private sector, where there was always this understanding that you hold needy students harmless--if you raise tuition, you make sure [with scholarships] that everybody can afford it. But most states didn’t have that ability.

Q: A thrust in California, articulated by Richard Atkinson, head of the UC system, is to raise tuition and use a portion--maybe a third--for need-based scholarships.

Schapiro: They should do that.

McPherson: I think it’s helpful in California to think back to the [higher education] Master Plan. You know, in the vision of the ‘60s that created this three-tier system. The state had so much money, it could make a high-quality public education accessible essentially free to everybody in the state. They would just be channeled into whichever piece of the system was appropriate for them [UC, Cal State or community colleges]. There’s nothing wrong with that vision as long as the state does have the resources. What’s happened in the last decade, at first kind of covertly and now much more explicitly, is that the state is trying to come to grips with the fact that the political system is not willing or able to generate the revenues to make that vision a reality.

The question becomes: Of that commitment to high-quality education essentially free for everybody, which one are you going to let go? Are you going to give up the quality? Are you going to give up being free? Or are you going to give up the everybody?

Q: In the switch to merit scholarships, are the rich getting richer?

McPherson: Yeah, particularly if you think about a state switching its goal from providing access and opportunity to people of all economic backgrounds to the goal of keeping the highest-achieving students in state, which is pretty explicitly what states like Georgia are now doing. On average those are going to be much more affluent students.

Q: Then how do the private schools respond?

McPherson: For the publics, it’s really the Legislature they have their eye on. For the privates, it’s really the admissions market that they have their eye on.

Schapiro: The bottom line is that if you’re a good student, and you come from an affluent background, the opportunities you have are so much better now than when I graduated high school in 1971. I mean, many privates are need-aware now, which means that if you can afford to pay the tuition, you have a better chance of getting in. There’s the increased concentration on average SATs and all the selectivity criteria that give you a U.S. News & World Report ranking. Not only in the public sector, but in the private sector as well, you have a much better opportunity now to get into really good schools. Usually if you’re smart and you’re rich.

Q: Let’s say a student has high SATs. If they consider schools where they’re better than most of the other students, they’d be more likely to get a good deal, right? Are they now trying to “shop down” instead of hoping to get into a place where they barely qualify?

McPherson: We certainly see it in Minnesota. There are students who would not be admissible to Macalester who are merit scholars at other Midwestern institutions. Those schools are looking at a student who is better than the average of what they’re able to recruit, even though that student’s well below the average of who we’re able to recruit.

Q: So should students apply to some schools that may be one notch lower and say, “What can you do for me?”

Schapiro: It isn’t a bad idea. If you’re willing to go to a school that previously would have been your safety school, there quite often are enormous discounts.

McPherson: That presents a difficult choice for a family. They are going to be trading away, on the one hand, prestige. And maybe quality. . . . It’s not always the right choice to go for the big merit aid.

Schapiro: What makes more sense now is to apply to a wider range of institutions because you know there are going to be some that could be very good and where you can go at a significant discount.

McPherson: There’s a university in the Twin Cities that has a thing called Write Your Own Scholarship. They will give you a table that says, based on your ACT score, which is like the SAT, and your high school grades--bingo, this is what your scholarship is. No questions asked.

Schapiro: There are big privates that do exactly the same thing. You can look in their catalogs. It says these are the charges--but if your SATs are [above] 1,200 . . . cut $5,000. There’s a lot more shopping around. But as more and more students apply to schools [for] early decision, they’re doing the opposite. Rather than be able to shop around, under early decision you can only apply to that one school. . . . A number of elite privates are admitting anywhere from a third to more than half of their freshmen that way. These colleges and universities behave strategically. They don’t want you to apply to a lot of other ones. They don’t want you to get merit aid offers.

Q: So if economics is as important as prestige for a family, would you advise them not to apply early decision?

Schapiro: It depends on the individual circumstances. You do lose a lot of information and a lot of possibilities. But if there’s a school that really fits . . . and you’re going to go there anyway, then what are you giving up? It does increase the probability of getting in if you go early decision. The schools deny it, but it does.

McPherson: It [also] depends on where you’re plugging in. If you’re a credible candidate at the very most selective places--like if you’re thinking of the top 10 schools--they generally are not into “let’s make a deal.”

Q: How do schools react if someone they accept sends them a letter saying, “Listen, I’m really wavering between you and two others. Make me an offer”?

Schapiro: Families increasingly do that. One expert, a prominent financial guy, said that the period from March 15 to May 1 is now “let’s make a deal.”

McPherson: Schools will react in very different ways. Our approach [at Macalester] is, we will review the file and see if we missed something. You could have a family, say, that has just started a business and had a substantial loss, which only appears on page three of their tax form. If we screwed up, we’ll fix it, but we won’t match others’ [offers]. We’re in a strong enough position. Other schools will react differently.

Q: Are people honest when they apply for aid--or do they fudge?

McPherson: This essentially is an honor system--that people report honestly what they earn and what their economic situation is. But with this atmosphere of “let’s make a deal” . . . I mean, if your car dealer asked you to fill out a form with your income and assets, you probably wouldn’t be entirely forthcoming.

Q: You spoke about the very top schools not wanting to deal. But you can bargain with the schools just below, right? Don’t some literally need to fill beds?

Schapiro: Absolutely. The additional cost of educating another student--if you have empty dorm rooms and empty seats in the classroom--is very small. Those are the schools that have been most aggressive in matching financial aid offers [from other schools] or bettering them.

McPherson: There are hundreds of schools where virtually no students, fewer than 5%, pay the posted price.

Schapiro: The sticker price is just a complete fiction.

McPherson: That’s why some of these schools are thinking about just plain lowering the sticker price. Muskingum College in Ohio got a tremendous amount of publicity by announcing a big price cut. They got a huge increase in enrollment . . .

Schapiro: This big survey was done of parents whose children only applied to the local public, yet had very high SATs, 1250 and above. The kids went right to the University of Iowa, didn’t apply anywhere else. They never knew what kind of offers they’d get at a private. The parents answered, “We couldn’t afford the private.” They were scared away by the fact that these privates were charging, in today’s dollars, $20,000 to $22,000 tuition. They didn’t realize they’d be eligible for, say, $8,000 to $10,000 in grant aid.

Q: Is the shift to merit aid creating more competition in high schools so students can qualify?

Schapiro: There already is so much selectivity in higher education that to have the extra pressure probably isn’t all that needed. Already the prize to get into Williams, to get into Harvard or to get into Yale is so great. It’s sort of like Japan--if you get in the top universities in Japan you have it made.

McPherson: Their parents are spending hundreds of dollars to send them to SAT prep sessions and stuff like that. But then you’ve got another segment of students who are below--for that group conceivably the prospect of meriting making a difference could be an incentive.

Q: What about the trend to downplay measures like SATs?

McPherson: There’s a lot of room for cynicism on this stuff. When schools announce that they no longer require the SAT, they’re maybe partly interested in opening their doors to more students. They may be also partly interested in getting more unqualified applicants whom they can reject so they improve their selectivity ratio. When you publish your average SATs, it gives students a signal about whether it’s reasonable to apply. If you suppress that information, then you bring in some more people who really aren’t going to make it.

I think there is too much focus on testing. In some ways, colleges have set themselves up for getting hammered on this affirmative action because we have created a sense that there are these two legitimate [criteria] for admissions: SATs and high school grades, that’s all that should count--which if you step back and think about it is pretty stupid. We’ve helped foster that atmosphere and now it’s come back to bite us . . .

Schapiro: We thought long and hard before we called the book “The Student Aid Game,” because it obviously implies that there’s a game there, not befitting higher education and all that. But then we decided there really is increasingly a game and part of that game is trying to look more selective than you probably are--or trying to look like you have higher SATs than you actually have. And that’s a real negative side of this sort of unbridled competition that’s developed. Hopefully more institutions are trying to provide better undergraduate educations now because of the increased competition. That’s the good side.

Q: How else can money make a difference?

Schapiro: The wait list. If you’re high-need, you’re just not going to get off the wait list. [If you] have two students, they both have 1,300 SATs, and one of them needs a big scholarship, [colleges] consistently take the one who doesn’t need it. Or even worse, they take the one with 1,250 who doesn’t need it.

Q: Rhetoric aside, to the degree you’re a business and have a choice between paying and nonpaying customers . . .

Schapiro: That’s exactly it. [Colleges] can argue that they can’t be budget-blind. And they want to serve their students well--they have to have enough money so they can provide the quality education. On the other hand, they should be completely honest about it: You have to not only bring in a lot of students who fit your mission and you can serve very well, but you have to bring in a lot of students to apply--whom you can reject. Otherwise you’re not going to be selective--and you can’t get that first group. So increasingly there’s a duplicity in admissions financial aid practices that we think is incredibly unfortunate.

We went to a high school in Los Angeles and we have found this incredible guidance counselor. He had a file of admissions and financial aid letters going back 30 years. You go back not even 20 years and it says, OK, you were admitted to this school you know what you’re going to pay. [But] starting around 1985, it looks like a lot of the financial aid letters are written by the marketing people rather than the financial aid people. We’re saying, “What’s the bottom line?” They’re so confusing. [You] don’t realize that in there is a big loan, there’s a work study commitment, there’s a summer commitment . . .

Q: Have you noticed a growing sense among families that they deserve financial help?

McPherson: Yeah, I really notice this sense that people have of inequity. It comes out most clearly in regard to the way savings get treated in the financial aid system. If you’re fairly well off, but still qualify for some need-based aid, typically at private institutions, and you have diligently saved over the years for college--you’re going to get quite a bit less aid than somebody who has been profligate who has had the same income profile.

Q: So parents can get hurt by diligently saving for college?

McPherson: It can happen.

Q: I’m told there are arguments that break out every spring on a campus like UCLA when parents come into financial aid officers waving aid rejection letters. Are these legitimate gripes?

McPherson: I’ve seen some of those [rejection] letters. And you look into these things and you know usually there’s a few facts left out: the extensive real estate holdings. Or the guy’s got a military pension . . . and his wife has a job making $70,000. . . . If your income is above the middle of the American population and you feel you shouldn’t be paying for this, who exactly do you think should be paying for it?

Q: Steven Spielberg?