Metric Braden J Hosch PhD Asst Vice President for Institutional Research Planning amp Effectiveness Association for Institutional Research Annual Forum Denver CO May 29 2015 Except for institutions with very few commuters net price is not a valid measure of affordability becaus ID: 802693
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How Living Costs Undermine Net Price As An Affordability MetricBraden J. Hosch, Ph.D.Asst. Vice President for Institutional Research, Planning & Effectiveness Association for Institutional Research Annual ForumDenver, COMay 29, 2015
Slide2Except for institutions with very few commuters, net price is not a valid measure of affordability because cost of living budgets are determined without sufficient standards and consistencyResearch partners through Wisconsin HOPE Lab:Robert Kelchen, Seton Hall UniversitySara Goldrick-Rab, Univ. of Wisconsin-MadisonOverview
Slide3* based on living arrangementsNet Price and Cost of Attendance CalculationsCost of Attendance
- Grant Aid
Net Price
Tuition
Required Fees
Books
Room & Board*
+ Other Costs
Cost of Attendance
Slide4Set in a manner “determined by the institution”(SEC. 472. 20 U.S.C. 1087)Sparse guidance in FSA Handbook:periodic surveys of student population,assessing local housing costs or other pertinent data
otherwise reasonable methods
NASFAA Monograph
How Living Costs ARE Determined
Slide5Living Costs As Share of COA
Slide6Grant aid is generally appliedFirst to offset direct costs (tuition and req. fees)Then to offset books, supplies, living expensesResidual net price after application of aid weights cost of living components even more as share of total COAApplication of Grant Aid To
Costs
Tuition & Required Fees
Living Expenses
Books
Grant Aid
Net Price
Cost of Attendance
Slide7Federal Uses: HEOA Watch Lists College NavigatorWhite House Score Card Rating System (?)Selected Ranking Publications: Washington MonthlyU.S. News Best Value CollegesKiplinger’s Best Value CollegesSelected Rankings Using Net Price
Slide8Generate county-level estimates of cost-of-livingCompare campus-reported costs for living expenses off-campus, not with family to county-level estimatesResults analyzed by sector and geospatiallyMethodology
Slide9Model approach on the MIT Living Wage Calculator (Glasmeier & Arete, 2014), using data available when 2013-14 COA numbers were developedAdjusted for regional differences using 2013 County Cost of Living Index when neededRoom and board:Housing: HUD median rents by county for efficiency apartment without roommates (FY 2012)Food: USDA low-cost food plan (June 2012)
REGIONAL ADJUSTMENT APPROACH (1)
Slide10“Other expenses”:Transportation: BLS Consumer Expenditure Survey for individuals under 25 years old (2012)Health care: Average premium by state from the Kaiser Family Foundation—national average used if missing data (2010)Miscellaneous: BLS Consumer Expenditure Survey for individuals under 25 years old (2012)Regional Adjustment Approach (2)
Slide11Primary source: IPEDS IC 2013-14Selection criteria:Values reported both for Room & board, off-campus not with familyOther expenses, off-campus not with familyReporting status differencesAcademic year reporter values treated a 9 monthsProgram reporters normalized to 9 months
Excluded institutions from U.S. Territories
Institutional Data
Slide12Costs are not uniform within countiesUrban areas: Gasoline/rent costs vary within small areasRural areas: Transportation costs vary by distance to collegeDoes not reflect variation in needs within students that can be captured by professional judgmentsLimitations
Slide13Higher cost estimates in urban/rural countiesHalf of institutions in most expensive quartile of countiesHuge institutional variation at county level:56.4% of institutions within $3,000 of estimate10.8% of institutions $3,000+ above estimate32.8% of institutions $3,000+ below estimate
Overarching Findings
Slide14County-Level Estimates, 9 Months
Room & Board Costs
Other Costs
Total
Housing
Food
Total
Transp.
Health Care
Misc.
Total
Min
2,862
1,665
4,572
2,061
1,224
621
4,077
9,126
25th pctile
3,969
1,872
5,877
2,331
1,809
702
4,860
10,863
50th pctile
4,662
1,944
6,606
2,421
1,890
7295,04011,67875th pctile5,6232,0687,7112,5652,0257745,37112,940Max12,0513,69015,4894,5903,9331,3869,18924,426 Mean5,0402,0037,0392,4901,9907535,23312,272SD1,5722141,719266457806822,213
Source: Kelchen, Hosch & Goldrick-Rab (2014). Table 3.
Slide15County-Level Estimates, 9 MonthsSource: Kelchen, Hosch & Goldrick-Rab (2014). Table 3.
Slide16Estimated Living Costs by RegionSource: Kelchen, Hosch & Goldrick-Rab (2014). Table 2.
Slide17Reported Vs. Estimated Living CostsSource: Kelchen, Hosch & Goldrick-Rab (2014). Table 4.
Slide18Milwaukee County
Slide19Living Costs, 9 Months, Denver CountyDenver County Estimate: $13,878
Slide20Milwaukee County
Slide21Living Costs, 9 Months Philadelphia (Detail) Philadelphia Co Estimate: $16,020
Slide22Milwaukee County
Slide23Living Costs, 9 Months, Milwaukee CoMilwaukee Co. Estimate: $12,753
Slide24Washington, DC* No reported data
Slide25Living Costs Washington, DCDistrict Estimate: $20,394
Slide26Cost variation is not limited to urban areas (but easier to observe)Rural Example: Sumter, SC
Slide27Living Costs, Sumter Co., SC
Sumter County, SC Estimate: $11,889
Scale: 2 miles
Slide28Net price statistics for institutions with sizeable commuter populations are not necessarily valid across groupsNet price should not be used for accountability within broad groups of institutions without correction for living costsBenchmarking activities should examine variation in COA budgets prior to examination of net priceImplications
Slide29Manipulation of net price to game accountabilitySubverts transparency agendaArtificial lowering of living costsIncentives to lower living cost budgets may stress students who qualify for less aidUnintended Consequences
Slide30On-Campus Living Costs by Year
Slide31OFF-Campus Living Costs by Year
Slide32Determine living costs at federal level with regional (county) adjustmentsFailing federal determination, authorize ED to establish rigorous methodology for cost of living budgetsDo not include net price in ratings system or 3rd party rankings, unless statistically adjustedRecommendations (1)
Slide33Failing adoption of #1-3, for the purposes of net price calculations, consider using (nearest) campus living costs for off-campus costsConduct more research on living expenses at different geographic scales, esp. health careResearch community should take more active role in examining reliability and validity of prominent educational statisticsRecommendations (2)
Slide34Kelchen, R., Hosch, B., Goldrick-Rab, S. The Costs of College Attendance: Trends, Variation, and Accuracy in Institutional Living Cost Allowances. Association of Public Policy and Management (2014). http://wihopelab.com/publications/. http://www.stonybrook.edu/commcms/irpe/reports/ Braden.Hosch@stonybrook.edu Resources & Contact Info
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