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A research project investigating financial, workforce, and geospatial behavior of young adults with student debt
2020-2021

How Schools Lie: The Deceptive Financial Aid System at America's Colleges


Overview

JFI’s How Schools Lie report, the seventh installment in the ongoing Millennial Student Debt project, provides a view into how colleges mislead students about the true cost of college, which exacerbates delays in completion, drop outs, and debt. By understating the non-tuition  and by obscuring the fact that financial aid quantity tends to drop after the first year, colleges effectively deceive students about the true financial implications of their education. This deception leads to increased dropouts, hurting low-income students the most. 

Using IPEDS data sourced from 2- and 4-year Title IV schools, JFI’s report provides the most in-depth scrutiny of this pattern over the last decade and how it has become more common and more severe over that time across the full spectrum of higher education institutions.

Key findings from this report include:

  • Colleges are increasingly practicing “front-loading,” awarding first-time students generous grants or scholarships in their first year which greatly diminish in the second year and beyond. During the academic year (AY) 2017-2018, 83% of higher ed institutions engaged in front-loading practices. 
  • The data show increasing numbers of first-time full-time (FF) students experiencing negative impacts from front-loading schemes, with low-income students the worst off. These patterns are present across institution type and level, and reduce rates of college completion. 
  • There are far fewer Pell grantees and smaller grant sizes among students in later years of college versus first-time students, signifying that low-income students are those most impacted by front-loading. Most recent data shows FF students receiving, on average, over $3,000 more in free aid than all other undergraduates.
  • Federal borrowing maximums increase as a student progresses through college, meaning that students must make up for reductions in financial aid with unanticipated borrowing. 
  • More expensive public schools enrolled an equal share of first-time students as less expensive public schools, yet show enrollment of a substantially smaller share of the undergraduate and transfer student body. Affordability in terms of price is an overwhelming factor for undergraduate students.
  • 69% of institutions underestimate off-campus ancillary costs like transportation, clothing, and furnishings. Of those institutions, over half underestimate ancillary costs by more than 25%, a shortcoming of more than $1,380 dollars per academic year at nearly 2500 colleges.
  • 41% of schools underestimate housing costs; the median discrepancy in room and board costs was $1,488 for public colleges and $2,045 for private colleges.

View the full post on the Phenomenal World here.

View the press release here.

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