Why you should care
Because national student loan debt is a whopping $1.3 trillion.
The author is the co-founder of College Abacus and vice president of Innovation & Product Management at ECMC Group.
School’s out for the summer, but for college-bound students, the next chapter beckons in all its glory: choosing a major, making new friends and, of course, forking over that first tuition installment. And so what should be an exciting time, full of promise, can become one of high anxiety — especially given growing student loan debt and increasingly prohibitive tuition prices.
To make matters worse, and more anxiety-ridden, college costs remain opaque, difficult to calculate in advance. Tuition prices rarely present the full picture, which includes need-based grants and scholarships. While U.S. colleges have been required, since 2008, to publish online net price calculators (NPCs), comparison shopping is shockingly cumbersome: Families wishing to compare prices have had to visit each college’s NPC and re-enter tax information on multiple websites in a painstakingly time-consuming process.
We still have miles to go to ensure students and families have access to the pricing information they need.
That’s why in 2012 I created College Abacus, a free online tool offered by nonprofit education entity ECMC. It’s what I like to call “the Kayak.com of college financial aid” — it generates results from the NPCs of thousands of U.S. colleges so families can calculate bottom-line tuition costs in one place and compare results in an apples-to-apples format. Some 4,500 schools now participate, and by September, we expect 1,500 more to join.
But a much-needed larger effort to make college costs less opaque will require buy-in from all parties, including colleges themselves. Fewer than 10 percent of all colleges now block College Abacus from accessing their pricing information, and we’re advocating that these schools help us avoid creating yet another barrier to students and families making informed decisions in the college selection process, and join us in taking a meaningful step toward greater cost transparency.
Some colleges have expressed concern that College Abacus elevates cost over other important factors and could cause students to eliminate certain schools from their college search based on price alone. But as the thousands of colleges that participate know, price is only one among a variety of considerations that students weigh in selecting a school, and expanding access to cost information hasn’t stopped them from attracting students. As with the purchase of a home, a car or a plane ticket, consumers researching the relative cost of different options do not necessarily default to selecting the least expensive one; informed consumers consider both quality and cost, along with other aspects. Cost transparency will enable families to plan appropriately for college, which could mean saving for a more expensive option that best fits a student’s overall needs and objectives.
Recognizing the continued need to promote transparency in college costs, the U.S. Department of Education will begin publishing new college ratings in the 2015 academic year that will include measures of affordability such as average net price and loan default rates. But the stakes are too high to stop there. At a time when Americans collectively owe more than $1.3 trillion in student loan debt, ratings should extend beyond averages to include and emphasize price transparency and the availability of personalized cost estimates.
College Abacus is only one of many efforts aimed at increasing college cost transparency. We still have miles to go to ensure students and families have access to the pricing information they need to navigate the college selection process with confidence. While Congress and the administration have marked the path in their efforts to help students and families make informed choices, a comprehensive solution requires all Title IV-eligible colleges to come to the table. College Abacus will continue to advocate the benefits of price transparency to postsecondary institutions and provide a measure of immediate cost transparency to empower today’s students and families in making good decisions. With the college class of 2020 beginning their search now, we don’t have time to waste.