Financial Aid Freakonomics: In Search of the Tipping Point Kevin Fudge American Student Assistance February 7, 2014
Financial Aid Freakonomics: In Search of the Tipping Point
Kevin Fudge
American Student Assistance
February 7, 2014
About ASA
• Private nonprofit • Public purpose mission = empower students
and alumni to successfully manage and repay their college loan debt
• Provides student loan education • Develops financial competencies through
innovative web-based tools and trusted, neutral advice
• All free of charge to students and alumni.
What Is Freakonomics?
• A novel way of looking, of discerning, of measuring
• Understanding how things aren’t quite what they seem
• Asking questions that lead to nothing – or something…
Something or Nothing?
• What’s in a name?
– Governor Dummer Academy
– Beaver College
– Case Western Reserve University
• Does it matter where you went to college?
YES!
Source: Brewer, Eide and Ehrenberg, 1999
NO! (if you can read hieroglyphics)
“Students who attended more selective colleges do not earn more than other students who were accepted and rejected by comparable schools but attended less selective colleges.”
Source: Dale and Kruger, 1999
About The Tipping Point
• We have trouble estimating dramatic, exponential change
• People can radically transform their behavior or beliefs in the face of the right kind of impetus
• We can shape the course of social epidemics
The Tipping Point
• Change happens not gradually but at one dramatic moment
• This will not be a gradual decline – it will not taper off or gently decelerate.
• IT WILL FALL OFF THE CLIFF.
The Answers Are In The Questions
Today’s Questions
• What is being measured?
• How is it being measured?
• What is not being measured?
• What will be the tipping point for higher education?
Trends In Student Aid
About Those PLUS Loans…
For Example, UMass-Amherst
2003
Tuition Fees Room Board Total
$1,714 $4,768 $3,080 $2,393 $11,955
2013
Tuition Fees Room Board Total
$1,714 $11,544 $5,846 $4,593 $23,697
Percent Increase in Total Cost? 98.2 Source: University of Massachusetts Amherst Office of Institutional Research
Interesting Juxtaposition
Source: The Buffalo News – August 22, 2013
What’s In A Number?
Outstanding!
• 2.13 = Award Winning!
• 330 = Award
Winning!
• 98.6 = Ideal!
Um, Not So Much
• 2.13 = Does Not Meet Criteria!
• 330 = Is Not
Included!
• 98.6 = Ideal in AZ!
How Does 98.6 Degrees Feel?
Source: National Oceanic and Atmospheric Association
Interesting Juxtaposition
Source: Chicago Sun Times – September 10, 2013
How Does $20,000 Feel?
How Does $20,000 Feel?
Source: Fry, 2012
How Does Zero Degrees Feel?
Source: National Oceanic and Atmospheric Association
What Will Be The Tipping Point?
• $75,000 private school tuition?
• $40,000 public school tuition?
• New alternatives for credentialing/signaling?
• Student revolts in the quad? (Occupy Campus)
What’s Being Done To Avoid The Tipping Point?
Actions
• Re-evaluating Financial Aid Policies
• Wellesley Quick College Cost Estimator
• Carolina Covenant
• Access UVA
Are They Working?
• 75 schools adopted no loan policies for low-income students
• 1 school adopted reduction in loans to low-income students
• 2 schools ended no-loans policies
“We shouldn’t give poorer students an advantage wealthy students don’t have. They all graduate with the same degree.” – William Goodwin, VP of Board of Visitors, UVA
Sources: http://www.finaid.org, The Washington Post – August 9, 2013
Nothing To See Here!
Tipping Point – Higher Ed Alternatives
Is Graduate Enrollment Up?
Source: USA TODAY (9/13/13)
Is Graduate Enrollment Down? • Loss of master’s
degree pay bump
• LSAT down 11%
• Law school applications off 12% - third year in a row of decline
• Open Letter to Interim Dean George D. Brown
Sources: Milwaukee Journal-Sentinel (9/1/2012) and Pittsburgh Post-Gazette (11/26/13)