College Uncovered, Season 2, Episode 2

Colleges make it hard to even understand what they will cost, with confusing financial aid offers full of indecipherable jargon. But that’s not where the trouble ends.

In a kind of bait and switch, for instance, students typically get less institutional financial aid if they return as sophomores, since colleges figure they already have them on the hook, a surprise for which they haven’t budgeted. Another cruel surprise: When students earn hard-won scholarships from the likes of local Rotary clubs and chambers of commerce, universities reduce their already-promised institutional financial aid by the same amount, resulting in a zero net gain — often without warning or explanation.

In this episode of College Uncovered, The Hechinger Report and GBH reveal these tricks. But there’s some good news, too. Though they represent a fraction of the nation’s more than 4,000 colleges and universities, more than 350 institutions agreed last year to simplify and standardize financial aid offers. And families might not know it, but they can negotiate for more financial aid, especially from the many universities and colleges that are having trouble filling seats these days.

Listen to the whole series

Jon: Interpreting financial aid offers from colleges and universities is confusing and difficult. And then there’s what happened to Emily Meyer, a parent from Saint Paul, Minnesota, who we met in our previous episode. She was sending her second kid to college when the financial aid process went completely off the rails. The school offered $3,000 in financial aid. Meyer did the math and figured that getting $12,000 over four years would be enough for her family to afford the school, so her daughter enrolled.

Kirk: Let the pursuit of higher learning begin, right?

Jon: Well, not exactly.

Emily Meyer: They came back the next year and said that that was a mistake. And that it shouldn’t have ever happened. And then we kind of argued back and forth about how, you know, part of our decision in agreeing to commit to this school was after we had negotiated the financials.

Jon: That’s right. The college offered the money, then took it away. She wouldn’t tell us which college it was, but as you can imagine, Meyer didn’t take this sitting down. This was money she was counting on.

Emily Meyer: And they said, sorry, it was a mistake. We’ll give you half of it for this year, but you’ll get no more going forward.

[College Uncovered theme music]

Kirk: This is College Uncovered from GBH News and The Hechinger Report — a podcast pulling back the Ivy to reveal how colleges really work. I’m Kirk Carapezza with GBH.

Jon: And I’m Jon Marcus at The Hechinger Report.

Kirk: Colleges don’t want you to know how they operate. So GBH, …

Jon: … in collaboration with The Hechinger Report, is here to show you.

In our first season, we helped you navigate the college admissions process. Now we’re back to guide you through the even more confusing territory of paying for college. On the way, we’ll expose a lot of secrets that you really need to know, and some of the shady ways colleges make their prices seem much lower than they actually are. And before we’re done, we’ll tell you what you need to know to put the power back in your hands and get the best deal.

Today on the show: ‘Bait and Switch.’

Last time, we told you about misleading financial aid offers. Deciphering those is hard enough. Then you have the worst-case scenarios, like Meyer’s, in which the grant you counted on just disappears. And I should add that her family ended up having to take out more loans after the college rescinded the financial aid it promised her.

The whole process has become so frustrating for people that there have been few attempts to fix it.

Kirk: That’s right. But don’t hold your breath. The Department of Education urged colleges to adopt a single, simple, standardized financial aid offer. That was 11 years ago. And it was also voluntary. So fewer than half of colleges actually agreed to use it. Two years ago, the Government Accountability Office found that half of all financial aid offers from colleges made the total price seem lower than it actually was, and almost half did not include the price at all. That got Congress sniffing around and threatening to make colleges fix this.

To hold off the regulators, about 500 schools got together this year to create something called the College Cost Transparency Initiative. It’s supposed to make the financial aid forms more understandable and comparable from one college to another. If you step back and think about it, that’s pretty much admitting that they weren’t doing this all along. Which is kind of incredible.

Terry Hartle: Colleges and universities haven’t always done as much as they could to ensure that families had access to clear, accurate, comparable, consumer friendly information. And it’s clear to many of us in higher education that we needed to do a better job.

Jon: That’s Terry Hartle. For many years, he was higher education’s top lobbyist at the American Council on Education. Now he’s working with colleges to clean up these forms.

Terry Hartle: Obviously, to some institutions, a financial aid award letter is part of an effort to attract a student to enroll at that institution. So they can look more like a marketing document than a consumer information about how you’re going to pay for college.

Jon: Do you think colleges are signing on to this because it’s better than waiting for someone else to make them?

Terry Hartle: That was certainly part of the thinking that motivated us to sit down and say, ‘We need to do a better job.’ It was also, frankly, a thinking that, yeah, there’s some truth to the GAO report. We’re not doing as good a job as we can, and we owe it to consumers to do a better job.

Kirk: Some advocates for students are waiting to see if this new form really improves things. This is the first admission season colleges are using it. Plus, only about one in eight of them have signed on. Rachel Fishman works on this issue at the think tank New America. She believes Congress should require that financial aid offer letters be standardized, just as it regulates the people who sell you a mortgage.

Rachel Fishman: At the end of the day, they still format their own offers. They still make them all look their own way. You still can’t compare those offers readily or easily, and it’s still very complicated.

Kirk: That causes so much confusion that some students end up dropping out because they underestimated what college would actually cost, or they give up and never even set foot on a campus. This especially affects low-income students. About one in five students who are accepted in the spring never show up for college in the fall.

Jon: And, Kirk, even if they do enroll, the tricks that colleges pull with financial aid don’t stop there. There are a lot of rules around financial aid that families don’t always notice, even after their students are already on the campus.

Mark Salisbury: For example, to say you’ve qualified for $120,000 in scholarship money, and then the small print is over four years, and then the smaller print is, if you remain a full time student, pass 15 credits for a semester and maintain a 3.8 GPA.

Jon: That’s Mark Salisbury. He’s a former admissions counselor. And he says that’s only some of the fine print. We’ll tell you about more in a moment.

Salisbury says this is such a big problem that he co-founded a company called Tuition Fit, which uses crowdsourcing to help families find out the real amount of financial aid they’re likely to get. Basic access for families is free, and they can pay 49 bucks for more detailed information. Salisbury says it’s another potential solution to not getting the information that you need.

Mark Salisbury: And then it goes into our big data sets so that the family can come to TuitionFit and see which colleges are going to fit my price range. ‘Here’s my financial situation, here’s my student’s GPA, and we don’t want to spend more than $20,000 on college per year.’ Okay, here’s the schools that are offering a price in that price range. It’s all about balancing this marketplace so that the consumer has enough power in that space to be more likely to get the price that they need.

Kirk: Salisbury says colleges are playing on families’ emotions.

Mark Salisbury: There’s this notion that students have to shoot for the most prestigious place they can possibly get into, and that’s somehow their ticket to life as a successful adult. That’s a myth that’s absolutely been fostered by institutions, by the whole college marketing machine. And so from a parent’s standpoint, you start to think, ‘If I don’t make that happen for my student, then I’m a failure as a parent.’

Jon: But it’s really all about the money. I mean, colleges are businesses and they try to get their customers to pay as much as possible.

Kirk: Okay, so let’s recap here. Understand that financial aid may be contingent on keeping a certain GPA or remaining a full-time student, and scholarships and grants may be used to benefit the college’s bottom line instead of yours. Sadly, these are not the only dirty little secrets about financial aid that students and their parents need to know.

Jon: That’s right. So let’s talk about some of the other roadblocks families encounter. One of the most surprising to a lot of people is that the amount of financial aid they get will probably go down once a college has them on the hook. This is known as ‘front-loading’ or ‘bait and switch.’ What it means is that the amount of financial aid students get as freshmen typically goes down when they come back as sophomores. That leaves a lot of students in a bind. Do they take out more loans, transfer somewhere else, drop out?

Kirk: But wait! There’s more! Colleges often cut back on the financial aid they give students if the students also get private scholarships from the Rotary Club or the Garden Club or the Chamber of Commerce. After all the hard work you did to get those scholarships, about half of colleges reduce the financial aid they already promised you by the equivalent amount. This is known as scholarship displacement.

We talked to Kalwis Lo about this. He’s director of strategic partnerships at Scholarship America, which represents those private scholarship providers.

Kalwis Lo: The amount that is reduced is typically equal to the dollar amount of a student’s scholarship award. So it leaves them with a zero net benefit for the hard work that they put in.

Kirk: This usually comes as another nasty surprise to families and students, and it’s so angers parents and policymakers that several states have banned scholarship displacement.

Kalwis Lo: Oftentimes, students will either get a bill in their student account or the numbers don’t add up. And when they go to find out from the financial aid office, they learn that the institutional grant or some form of grant was reduced because of their scholarship award.

Jon: And once again, it’s worst for the poorest families.

Kalwis Lo: College is not affordable at the moment for students who come from low-income families. And so rather than borrowing loans or working several jobs out there in college, students pursue scholarship awards. They have to submit essays, they have to seek letters of recommendation. And when all that effort is put into a scholarship application and they get awarded a scholarship, and they see other financial aid being reduced to zero at an equivalent amount of their private scholarship, then they feel that their hard work was wasted.

Jon: So that means people who think they’ll get financial aid throughout their student’s time in college might have an unpleasant surprise coming.

Kirk: Yesenia Bedolla is a student in California, and she also found her financial aid reduced in her sophomore year.

Yesenia Bedolla: I mean, to get an outside scholarship, I put in a lot of prior work to that, and that’s the case for basically every student that receives an outside scholarship. They put a lot of time and effort into the process alone. So it is very discouraging to sort of, in a way, be punished for the, work that we did.

Jon: Did you go back to them and ask if they could give you more?

Yesenia Bedolla: I actually wasn’t aware that we could do that. Is that something? Okay.

Kirk: Yes! It is something! Students and their families can negotiate for more financial aid.

Jon: Right. So, finally, some good news — and important advice. That’s what we’re going to leave you with today.

A lot of colleges have an incentive to be more generous. That’s due to demographics. Enrollments are in decline. And the college-age population in the U.S. is shrinking. Understanding that can help you get leverage in this process. We’ll tell you in our next episode about exactly how generous and how much financial aid and discounts colleges are shoveling out to fill seats. But a lot of parents don’t know that they can ask the financial aid office to increase their offer. So in addition to being on the lookout for all of these tricks in the process, and knowing to read the offers very carefully and ask what things mean, families can negotiate for more financial aid.

Here’s Debbie Schwartz, who counsels families about financial aid. She says not to be shy about asking for more.

Debbie Schwartz: You know, I say, why not? What’s the worst answer you’re going to get? No? So you’ll be in the same position you are today, even if you got a few thousand dollars, a few thousand dollars every year, you know, could add up to another $6,000 to $8,000 and more. So I say, why not ask?

Kirk: Mark Salisbury offers similar advice. He says you should approach the process in the same way as you might buy a house.

Mark Salisbury: The very first exchange with the other side of the transaction is a first offer. You go back to the school and ask for a better price, and you ask genuinely, respectfully, kindly, and you begin to make the case that this cost is a substantial challenge for us as a family. And we would like to make it work. But we need your help to get there.

Jon: Especially at colleges that are hurting for enrollment, which is a lot of colleges these days.

Mark Salisbury: Then you have a lot of leverage. You really get to take advantage of the buyer’s market. The only time that that’s not true is if the only schools you’re applying to are the schools that everybody else would give their left hand to go to. But if I’m not one of those handful of schools and I’m scrambling to fill my class every year, then I’m much more willing to negotiate.

Jon: Debbie Schwartz makes the point that we often make on this podcast that higher education is a business. She says she came to that realization after going through the process herself.

Debbie Schwartz: And I had this awe of the ivory tower, you know, the academic campus. And so I myself didn’t think of them as a business until I had to go through the admissions process with my daughter. And that’s when I realized that this is a business, which is okay. And you need to understand you’re the consumer and you need to approach it as any other consumer purchase that you will make.

Kirk: And since information is power, we have some links on our landing page with advice about how to be the best consumer of a college education.

This is College Uncovered. I’m Kirk Carapezza from GBH.

Jon: And I’m Jon Marcus from The Hechinger Report. Be sure to keep listening to future episodes to hear more about what colleges and universities don’t teach you.

Kirk: We’d love to hear from you. Send us an email to gbhnewsconnect@wgbh.org and tell us what you want to know about how colleges really operate. And if you’re with a college or university, tell us what you think the public should know about higher ed.

Jon: This episode was produced and written by Kirk Carapezza …

Kirk: … and Jon Marcus, and it was edited by Jeff Keating. Meg Woolhouse is supervising editor. Ellen London is the executive editor.

Mixing and sound design by David Goodman and Gary Mott.

We had production assistants from Diane Adame.

All of our music is by college bands. Our theme song is by Left Roman out of MIT. Mei He is our project manager and head of GBH podcasts is Devin Maverick Robins.

College Uncovered is a production of GBH News and The Hechinger Report and distributed by PRX. It’s made possible by Lumina Foundation.

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