Clueless about college costs

ACE research reveals a huge gap between what the public knows about higher education costs and financial aid and what Americans need to know to make sensible choices and set sound public policy.

It's no secret that the public greatly overestimates the cost of a college education and underestimates the amount of financial aid that is available to help pay the bills. This tendency undoubtedly makes the prospect of paying for college seem like an insurmountable barrier.

Beyond its lack of knowledge about price and financial aid, what does the public know about the cost of going to college? The answer, it turns out, is very little. Based on an American Council on Education (ACE) study of the public's knowledge and attitudes about financing higher education, which included 16 focus groups with parents in eight cities and a survey of 2,000 adults between the ages of 21 and 65, the evidence suggests that the public knows far less about higher education than college oFficials ever imagined. Even parents with children already in college or about to go to college are woefully uninformed.

While the public values higher education and the opportunities it provides, Americans do not know what it costs to attend, do not understand how or where to get financial aid, and believe college officials are indifferent to their fears about affording higher education.

A single example illustrates the public's lack of knowledge. At the first focus group, middle-income parents of children between the ages of 12 and 17 were asked if it was possible to identify the "best" college diploma from among a stack placed on the table. One participant quickly chose the MIT diploma, because, she said, "at MIT they teach you skills that will be useful in the job market, like auto repair." She was serious. Even worse, no one disagreed.

Misperceptions are common. Subsequent focus groups revealed that many people do not understand the distinction between public and private colleges. Nor does the public always know the difference between two- and four-year colleges. "A two-year college," one participant said confidently, "is where you go to get four years of education in two years." A substantial majority of the public thinks that colleges are profitmaking businesses. They believe that colleges don't care what they charge and they think that costs can be brought down without affecting academic quality.

There is some good news. For example, the survey shows that the public places an extraordinarily high value on higher education, believes it is a "good value" relative to other purchases for the money, thinks the quality is generally high, and is confident they will be able to afford it for their own families.

Despite the positive news, it's hard to take comfort from the overall results. No enterprise can feel comfortable upon learning that while the public admires and desires its product, they have no idea what it costs or why its prices increase, think they cannot afford it, believe the producers are indifferent to their worries, and do not know where to get good, reliable information to address their concerns.

Key Findings

The focus groups and the survey revealed six major findings.

First, the public believes that higher education is vitally important, wants it for their children, and despite the high cost, thinks it represents a "good value. " The public is convinced that higher education is essential for success. All racial-ethnic groups and all income groups share this perspective.

The public values higher education for a single reason: It will lead to a good job. When the focus group moderator asked for other reasons for going to college, some of the participants cited personal development factors such as "maturity," "responsibility," and "a sense of accomplishment." The participants almost never volunteered the reasons educators would emphasize, such as becoming well-read, learning to communicate effectively, becoming technologically literate, or being exposed to new ideas and different groups of people. When the focus group moderator mentioned these possible goals, the participants readily agreed. But they did not think of them without prompting.

A clear majority of Americans believe that college is so important that they will send their children regardless of what it costs. Fifty-eight percent agreed that "a college education is so important that, regardless of how much it costs, I am going to make sure that my children go to college." Thirty-two percent agreed that "a college education is important, but if it costs too much, my family may have to reconsider whether we send our children to college." Only 3 percent said "a college education is not that important and I doubt whether my children will go to college."

One troubling finding that emerged throughout the survey (and the focus groups) was that those with high income and those who had been exposed to college (either they or a family member had attended college) were the most likely to express unqualified commitment for a college education regardless of the cost. Respondents who had not been to college, minorities, and low-income individuals were far more likely to believe that high costs could force a reconsideration of college plans.

Some good news: The public thinks that college, despite the high price tag, is worth the cost. Sixty percent said a college education is "usually" worth the price. When asked to rank the "value for the money," a four-year college education finished ahead of food at the grocery store, medical care at a hospital, nursing home care, and an American automobile. Only a home computer is seen as being an equally good value. Parents and those who have had some college themselves are even more likely to see college as a good value. For example, 71 percent of adults who are currently enrolled in college said a four-year education is usually worth the price.

Second, the public worries a great deal about the costs of college, believes that college is too expensive, and thinks that costs can be brought down without affecting academic quality. The survey asked if respondents worried more about their children using illegal drugs, being the victim of a crime, having adequate health care, paying for college, or the quality of elementary and secondary schools. Paying for college was the second biggest concern, finishing behind the use of illegal drugs. People are as worried about the cost of college as they are about their children becoming victims of crime.

The public does not think college is affordable. Seventy-one percent said that "a four-year college education is not affordable for most Americans." Only 26 percent thought college is affordable for most people. African Americans (83 percent) and Hispanics (79 percent) were more likely than whites to believe that college is not affordable. Still, more than two-thirds (69 percent) of the white respondents said college is not affordable for all.

But there is a paradox in their views about the affordability of higher education. At the same time that the public believes college is not affordable for most people, they are extremely confident about their own ability to afford it: Eighty-five percent of the respondents said it is somewhat or very likely that they will be able to afford a four-year public education for their children, and 70 percent thought it likely that they will be able to meet the cost of a four-year private college. All income and education levels are optimistic: Eighty percent of high school graduates and 93 percent of college graduates think it likely that they will be able to send their children to college. Similarly, all races think they can afford college for their own children.

The public believes that college costs can be slashed without affecting academic quality. Seventy-seven percent of the respondents agreed that colleges and universities can cut tuition without lowering academic quality. Only 16 percent thought cutting tuition would affect quality. Exposure to higher education has no impact on this issue: Among college graduates, for example, 75 percent said colleges can offer a less expensive, but equally highquality product.

Third, while the public believes they have a good knowledge about the cost of college, they do not think about the topic very often and they greatly overestimate costs. Fifty-six percent of the survey respondents said they know a lot or a good amount about the average cost of attending higher education. A smaller but still sizable percentage (40 percent) said they know a lot or a good amount about where and how to get financial aid for college. Not surprisingly, parents with children in college are most likely to think they know a good deal about it. But the public admits that they do not think about financing higher education very often. Fortyseven percent said they rarely think about college costs and 16 percent admitted that they never do. Roughly one-third (37 percent) said they think about the financing of higher education "one or two times a week." Parents with children are somewhat more likely to think more frequently about what it costs to go to college, but not much.

The lack of attention shows: The public greatly overestimates the cost of a college education. Unlike previous surveys, this one asked respondents to estimate both the cost of tuition alone and the cost "if you include all other costs associated with college, for example, room and board, books, and other college fees." In both cases, the estimates given were far higher than the actual averages.

Put another way, the respondents overestimated the average cost of tuition at four-year public colleges by 240 percent and misjudged the total cost of attendance by 146 percent. For four-year private colleges, the respondents came closerthe overestimates are 46 percent for tuition alone and 62 percent for total costs. Still, it's difficult to think that the public has a good grip on the issue when the average guess of private college prices was off by $5,500 for tuition and by $11,000 for the total costs.

Parents with children under age 12 are the most likely to admit they do not have a good handle on what it costs to go to college. They're right. These individuals are the most likely to overestimate both tuition and the total cost of attendance. Nevertheless, they also are the most likely to believe that they will be able to afford to send their children to a four-year public or private college.

Not surprisingly, parents with children in college believe that they are most knowledgeable about this issue. Indeed, their estimates fall closer to the actual cost than any other subgroup, but they still miss by a wide margin. They overestimate the tuition and fees at four-year public institutions by $6,000 and $8,000, respectively.

Fourth, the public has no idea why the price of college goes up. When asked an open-ended question about the reasons behind college price increases, many respondents (26 percent) did not attempt an answer. Even 25 percent of parents with children in college admitted they are clueless.

Among those who ventured an opinion, the largest number (26 percent) placed the blame on the shoulders of "high-priced faculties and professors." Surprisingly, college graduates and those with children in college were more likely than the general public to think that faculty are to blame for the high cost of college.

Several other answers were given with some regularity. For example, "colleges know they have a monopoly" was suggested by 15 percent of the respondents, while "high-salaried administrators" and "technology" each were mentioned by 7 percent.

The focus groups showed somewhat different results. Participants were more likely to point to administrators and somewhat less likely to cite faculty. They also were more likely to volunteer that college athletic programs were to blame. That issue did not come up in the survey.

Of particular interest are the things that the public did not mention in the survey. College officials and ACE usually point out that several factors are behind the steady growth in college costs-the exponential growth of scientific knowledge, the costs of keeping up with technology, state budget cuts, increased spending on institutional student aid, and the costs of complying with government regulations. The respondents did not mention any of these issues save "technology," which was cited by just 7 percent. In the focus groups, the participants recognized-when prompted by the moderator-that these factors play a role. But the public does not think of them without encouragement.

Fifth, the public does not realize how much financial aid is available to help pay college bills. Nor do they know where to get such aid. Perhaps the most interesting insights in this area emerged from the focus groups. When asked where they got information about student aid and other ways to pay for college, participants most frequently answered "high school guidance counselors." When asked who made financial aid available for college, the first answer was usually "businesses" or "corporations," followed by "the colleges themselves." Eventually, a participant would suggest "government." When the respondent was asked "federal or state government?," the usual answer was "both."

When the focus group moderator asked participants to estimate how much financial aid is available, the most common answer was "several billion dollars." The actual answer-roughly $50 billion a yearfloored the participants. Indeed, many participants were simply unwilling to believe it. Equally surprising was the idea that the federal government alone makes $40 billion available every year.

The survey tried to address this issue through a true-false question: Is it true or false that there is $40 billion available from the federal government to help students and their families pay for college? Forty-three percent thought the statement was true; 38 percent said it was false. A full 20 percent admitted they had no idea.

The public is of two minds about whether there is enough financial aid available. Sixty-seven percent of the respondents agreed that "there is not enough financial aid available for all the qualified students who deserve the chance to get a college education," with 45 percent expressing "strong" agreement. However, when read a variety of statements about the amount of financial aid available, respondents seemed to contradict themselves: Fully half (50 percent) agreed that state governments make a lot of aid available; twothirds (67 percent) believed that the federal government makes a lot of financial aid available; 60 percent thought that "a lot of student aid is available to help families like mine afford a college education"; and 65 percent acknowledged that colleges make a lot of financial aid available.

Sixth, the public thinks colleges are indifferent to their concerns about the cost of attending college. The reasoning seems to be as follows: "Colleges know their product is essential and that we have to buy it if we want our children to succeed. Therefore, they can charge whatever they want." Some-especially low-income and minority parents-believe that high costs and the failure to provide information about student aid are part of a deliberate effort to prevent their children from going to college.

Focus group participants were quite willing to believe the Time and Newsweek cover stories citing high college costs at Ivy League institutions. But they were not willing to accept information that suggested not everyone faces such high costs. When survey respondents were asked if the average student at a four-year college pays less than $4,000 a year in tuition, 60 percent said no. While African Americans and Hispanics were somewhat more likely to agree with this statement, no subgroup was willing to accept it. Even 62 percent of those with children in college rejected it.

Two other survey questions sought to assess whether the public thinks that colleges try to maintain affordability. One survey question was "Do you think most colleges try to keep the amount they charge at an affordable level for families like yours or not?" Only 40 percent said yes; 60 percent said no. A slightly different question was "Do you think most colleges charge a fair price for a college education or not?" Just 37 percent said yes; 63 percent said no. Nor do different groups vary significantly on this issue. College graduates are the most likely to believe that colleges try to keep prices affordable, and are somewhat more likely to think that most colleges charge a fair price. Nonetheless, a majority of college graduates think colleges could do more in both areas.

Exacerbating the perception that colleges are not worried about this issue is the fact that 80 percent think colleges and universities make a profit. While the belief that colleges make a profit declines with increasing education attainment levels, more than 72 percent of college graduates think it to be true.

Most colleges try to help families afford college by charging all students a price that is lower than the actual cost of providing the education, and by offering discounts to some students. Focus group participants were asked whether they understood the difference between such common ideas as cost, price, subsidy, and discounting. Sadly, they had no idea what these concepts mean. When the meaning was explained, they indicated that they couldn't care less. The only thing that matters to them, they repeatedly told the moderator, is the bottom line: "How much do I have to pay?"

The fact is that, as the National Commission on the Cost of Higher Education noted, higher education is not "fiscally transparent." Institutions do not make it easy for customers or other outsiders to understand what college costs or how they can finance an education. This is evident in the public's belief that institutions are indifferent to their fears about something they regard as essential.

Does It Matter?

Should college and university officials be concerned about the public's anxiety and lack of knowledge about these issues? After all, more students enroll at institutions every year, and the survey makes it clear that individuals are-despite everything-confident about their personal ability to afford higher education. Why be concerned?

First, regardless of how they assess their personal ability to afford higher education for themselves or their children, large numbers of the public feel a general anxiety about college costs. It is this concern that is being transmitted to (and interpreted by) the media and politicians, and that leads to serious public relations problems. Until the public and elected officials have a better understanding about the cost of college, the availability of financial aid, and the steps that are being taken to restrain the growth of college tuition, the media criticism and political attention probably will continue.

The perception that college leaders are indifferent to the prices charged will have a terribly corrosive impact on public perceptions of higher education over the long term. Appearing indifferent to public concerns is dangerous. This is especially true for an enterprise so vital to the nation's future and so dependent on the public trust.

The fact is that college and university leaders are deeply concerned about the price of higher education. A recent ACE survey of its member presidents asked them to prioritize issues. In response to this question, a solid majority (66 percent) chose "college costs" as a high priority. What needs to be done, in part, is to make certain that the public and their elected officials are aware that college officials are focused on this issue.

Second, the public's lack of knowledge matters a great deal because the absence of good and accurate information often leads to bad choices. Those who greatly overestimate the price of college, or who seriously underestimate the amount of financial aid available, may fail to consider opportunities that are available to them, and from which they would benefit considerably. When this happens, the nation, the institutions, and the individuals all lose.

Finally, the public's lack of knowledge on these matters presents a serious moral problem. Low-income individuals, minorities, and those with modest levels of education are the least knowledgeable about the cost of higher education and the availability of financial aid. They are the most likely to think that they cannot afford college. They worry about the cost of college more often. And, they are the most likely to think that college officials are indifferent to their fears.

Through teaching, scholarship, research, and service to society, higher education finds itself at the center of the new information age. We shape the culture and provide the nation's best hope for longterm economic growth and social progress. For individuals, college is seen as the essential passport to the middle class; to the "good life." If citizens feel that this passport is inaccessible, the nation risks losing an enormous reservoir of human talent.

Opening the doors of higher education to all Americans, regardless of their economic status-"ensuring access"-has been a central goal of colleges and policymakers for three decades. While colleges clearly have made significant progress, the findings reported here suggest that we must pay far greater attention to better educating the public and the media about the facts and opportunities that are available. And we must be clear about our commitment to keeping access to higher education affordable.

We err if we believe that this is only a public relations problem that results from inaccurate information. The public neither believes that college officials care about these issues nor thinks that serious steps are being taken to streamline and restructure institutions. Many colleges and universities have taken serious and substantial steps to contain and reduce costs, and these are certain to continue in the years ahead. Taking action and making certain the public is aware of these steps is vitally important if we are to sustain the confidence and support of the public.

TERRY W. HARTLE is senior vice president for government and public affairs at the American Council on Education.

Copyright American Council on Education Spring 1998
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