More Than Tuition: Trends in Cost Estimates Over Time

Earlier this week we explored how colleges in the same geographic area often produce wildly different cost estimates for off-campus housing when calculating their COA. The wide disparities in these estimates suggest that some schools might be manipulating these figures, while other schools are struggling to accurately predict their students needs.

Another way to examine the extent to which colleges could be manipulating the cost estimates they make for students’ living expenses is to examine the relationship between COA and tuition at different schools over the last few years.

Generally speaking, we would expect COA estimates to rise over time, both to keep pace with inflation and to incorporate rising tuition at many U.S. colleges and universities. To test this, New America analyzed school-reported data on the various components of COA from 3,168 schools offering Bachelor’s and Associate’s degrees in the U.S. (Schools that primarily off short-term certificates report tuition and fees on a program-basis, and are not comparable to academic year programs. These schools were excluded from this analysis.) The following interactive chart shows the total change in published tuition and fees for in-state students between 2011-12 and 2014-15 on the horizontal axis, and the total change in COA for off-campus students over the same time period on the vertical axis.

Because tuition is a core component of COA, we would generally expect these two numbers to move in tandem. And that’s exactly what we see. The vast majority of schools have seen both tuition and COA increase over the last four years while few schools have been able to cut both. On average, a dollar increase in tuition expenses for in-state students is associated with a $1.17 increase in the published COA. Because COA includes tuition expenses this should not be surprising, and it would seem that in the aggregate most schools are creating these estimates in good faith. However, pricing does not comport with those expectations at about 11 percent of the colleges we analyzed. These institutions, which can be seen in the bottom right quadrant of the graph, raised tuition while simultaneously lowering their total COA for students living off campus over the three years studied.This means that those schools are lowering their estimates for the other components of COA by more than their tuition increases. Additionally, since these numbers are not inflation-adjusted, these estimates don’t capture institutions where COA has failed to keep pace with rising everyday costs.

While there may be some reasons why lower cost of living allowances make sense over time, these extreme cases certainly raise red flags about the integrity of the COA estimates in question. At the same time, we found the opposite pattern at about two percent of the schools analyzed. For these institutions, tuition actually fell, while their COA estimates rose. Robert Kelchen, an associate professor at Seton Hall University, has highlighted these strange COA trends as well. While examining COA data, Kelchen found that 27 schools reduced their room and board allocation for off-campus students by at least $3,000 between the 2013-14 and 2014-15 school years. As Kelchen notes, while some of these changes appear reasonable, others do not:

Many others are unlikely to meet any standard of reasonableness. For example, Emory & Henry College in Virginia reduced its allowance from $11,800 for nine months to just $3,000, while the College of DuPage in Illinois cut its allowance from $8,257 to $2,462.

We can’t say for sure whether these dramatic drops in COA estimates accurately reflect changes in living costs, but they certainly raise suspicion as to whether these reductions are leaving students with sufficient resources to cover their living costs. Because the reported data is based on institutional estimates of student costs, not actual expenses of students, we can use these numbers to identify trends in how institutional projections of student costs change over time, but not to determine the accuracy of the methodology a particular school uses. As we noted earlier, institutions face incentives unrelated to student expenses that might induce them to manipulate COA estimates. Additionally, looking at what a year of study actually costs involves highly subjective calculations, and there are few best practices for institutions looking to help students understand their costs, nor does the federal government regulate on how to construct these estimates.

While the living cost estimates for certain universities raise concern, it should be noted that these anomalies are more common at certain types of institutions than others. In percentage terms, for-profits and community colleges are the most likely to have raised tuition and cut total COA, with public four-year schools not far behind. About 11 percent of for-profits, 13 percent of community colleges, and 10 percent of public four year institutions did so between 2012 and 2015 for either on- or off-campus students. This is likely because such schools had lower tuition increases in dollar terms.

On the other hand, private nonprofit institutions were the least likely to follow this peculiar pattern. However, when these institutions cut COA while simultaneously raising tuition, their students tend to experience more extreme shifts. On average these schools raised tuition by nearly $1,700 while reducing off campus-COA estimates by as much as $2,400. In comparison, public four-year institutions in this category raised tuition by $600 on average and cut off-campus COA by about $1500. Since tuition is included in COA, these cuts come in spite of the increase in tuition charged.

Why would colleges that raise their tuition also lower their overall COA? It’s possible that these schools received new information that led them to reassess living expenses in a way that is both more accurate and saves students money - a win-win situation. Alternatively, these schools may have overestimated COA in the past, either intentionally or otherwise, and are now correcting course. But it’s also possible that some schools cut living costs in order to appear more affordable while they raised tuition in order to improve their bottom line. With little transparency, regulation or oversight in how institutions set COA, it is nearly impossible to know what’s happening within a given school, or what it means for students."