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Posted on Monday, Apr. 23, 2007 — 11:22 AM
(Media note: Vanderbilt has a campus broadcast facility with a dedicated fiber optic line for TV interviews and an ISDN line for high quality radio interviews. A high resolution picture of Malcolm Getz can be found at www.vanderbilt.edu/news.)
College is clearly an investment in a person’s future. But how do you pick the right school for you and which school will give students and parents the best return on their investment?
Vanderbilt Professor of Economics, Malcolm Getz, found that when a family is trying to choose a college, more expensive doesn’t necessarily mean a better education. “Some consumers see high price as a sign of high quality. But, just as often, what high price really buys is prestige,” said Getz.
Getz’s research found that the price of tuition is not clearly associated with quality of services because public schools receive financial support from state governments, in addition to tuition, and private institutions often have large endowments that underwrite student costs.
Getz’s research found that less than 5 percent of the population can afford to pay full tuition prices at the most elite colleges. But Getz said tuition “sticker shock” should not scare students and parents away. Getz found that the most selective colleges, with the highest tuitions, offer the most financial help. Also, some private universities offer “need-blind” admission, which means, a school admits a student without looking at his or her ability to pay. The school then promises to help meet the financial need of every student they admit.
Getz found some seemingly expensive schools may end up being more affordable than schools with lower tuition because of grants, scholarships, tax breaks and subsidized loans. Getz’s research found 32 percent of undergraduates received federal Pell grants in 2003-2004 and a much larger percentage received state grants.
Getz also said it’s important to compare financial aid offers. He found that some schools are willing to negotiate their financial aid package if a student is offered a better package from a competing school.
Getz said it’s also important to estimate how much each school spends per student. For example, Getz said public colleges in Iowa spend more than twice as much on each student as public colleges in Florida.
But Getz insisted that tuition alone should not lead your decision. “States with higher in-state tuition actually turn out to be better bargains for low-income students,” said Getz. “And states with low in-state tuition are better bargains for higher-income students because states with low tuition tend to provide subsidies to all students, regardless of income.”
What about college rankings? Getz said rankings should be used as a tool toward deeper research into a school. “A family must first understand the rankings and then they must establish some psychological distance from them.”
Getz found that national rankings usually look at the university as a whole, so prospective students should research the independent departments they’re interested in. He said students and parents should ask about class size and teaching methods instead of the statistics included in rankings, such as student to teacher ratios. Getz said while some professors spend the majority of their time teaching, others may focus primarily on research.
If a student doesn’t get into his or her dream school, don’t be concerned. Getz found that 60 percent of all undergraduates attend more than one college before graduating and 35 percent of those students will go to a school in a different state than the first one.
Getz has analyzed decades of research on tuition, rankings and admissions. He also examined data on different careers to determine the role education played in each. He put the results in a newly released book called Investing in College: A Guide for the Perplexed.
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