I appreciate that Charlie wanted to open a conversation on this topic; however, there are a number of factual errors – some serious, some disappointing — that really need to be corrected.

I’d like to start with the big picture, if I may. Between 2002-03 and 2009-10, cost of attendance rose 40.0%; institutional aid (gift, scholarship, and grant aid provided by NYU) increased by 94.8%. We gave Charlie information for two five-year periods – the one he was using (2002-03 to 2006-07) and the most recent (2005-06 to 2009-10) – and, in each, it showed that the percentage increase in institutional aid exceeded the percentage increase in tuition.

I would have thought this might have been highlighted as the key issue. Or the fact that NYU is providing some $160 million in institutional aid – far more than most other universities.

I did, in fact, include the data Beckman supplied that showed need-based aid has increased substantially over the last five years. But my major points were: 1) that a larger share of the money is being directed to the neediest and 2) that NYU still hasn’t proven that they are trying to make the school more affordable for everyone. I did not mention NYU’s large amount of aggregate aid because I think per capita numbers are the only ones that really matter (as Beckman also points out when people note NYU’s large endowment).

As I mentioned, there were some important errors in Charlie’s post that need to be addressed. Let me outline them.

With regard to paragraph four – on a per student basis, NYU’s endowment is not 148th out of the 522 private universities with the largest endowments, we are 184th. Let me illustrate the importance of being that far down the list: the total cost of attendance at Princeton is about $50,000; the total cost of attendance at NYU is about $54,000. According to the 2008 NACUBO endowment student, NYU’s endowment per student was about $70,398; Princeton’s was approximately $2.26 million per student. The rule of thumb is that – on average – endowments will yield about five percent per year. In Princeton’s case, that’s about $113,000/year; in NYU’s case, that’s about $3,500/year. Although we don’t know exactly how much of the Princeton endowment supports financial aid, this conveys a fairly clear sense that they – and similarly situated schools – have substantially more resources in hand for that purpose.

I fully acknowledge that NYU has a difficult time meeting full need. I explicitly stated that the administration has good arguments on their side and then, in the very next sentence, wrote, “NYU has a huge student population and therefore a small endowment per capita, which makes meeting full financial need impossible.”

In regards to NYU being 184th, not 148th, that was a transcription error. Sorry, it’s fixed.

With regard to the two charts – there is a fundamental flaw and a labeling error. The fundamental flaw with the two charts (which Charlie notes): they use only data for full-time, first-time degree/certificate-seeking freshmen. Our financial aid program serves ALL undergraduates, not just freshmen, so looking at the charts does not really tell the whole story. And there’s another important error: the chart titles do not match up to the data Charlie describes — these charts incorrectly claim to represent aid to “4-year undergraduates.”

There are number of reasons I used the data I did. The first is that they are the publicly available data from the Department of Education. (That is also the reason the charts only go up until 2006-2007. The latest data are not available.) This was the only way I could include Columbia as a comparison. When Beckman told me that the numbers only included first-time, four-year freshman, I considered scrapping the charts. But the numbers still describe the general experience of most students coming from high school and allow for a comparison.

If I had full access to all financial aid data, I would love to create similar charts using the full undergraduate picture. As it is now, it’s comparing apples to oranges. I think there is value both in what I presented and Beckman’s numbers, which I also presented.

The labeling error was caused by my creating the charts before realizing the IPEDS data did not apply to all undergrads. I didn’t catch the mistake on my rewrite. I did, however, specify what the charts represented in the text of the article. The chart titles are fixed.

With regard to paragraph 13 – Charlie is wrong in stating that the increase in institutional aid to those with need began in 2005; I wish he had thought to ask us. During the years on which he is focused – 2002-03 to 2006-07 – the percentage of total institutional aid that went to students with need increased from 84.1% to 87.7%

This is becoming somewhat of an overly technical argument, I think. It is possible that there was a 15% drop in the number of students receiving aid (from 2002-2006) due solely to some students no longer receiving merit aid (though there’s no way to know), but it doesn’t really change my main arguments. I do think it is good (as I wrote yesterday) that NYU is giving more need-based aid in lieu of merit-based aid.

I still think the fact that first-time, four-year undergraduates saw costs significantly outpace aid during the five years I pointed out is concerning. Why are other undergraduates seeing more of the financial aid money?

With regard to paragraph 17 – two errors in this one. 1) Adjusting for inflation would change the percentage figures, but it wouldn’t change the fact that institutional financial aid increased at a faster rate than cost of attendance. However, in response, here are inflation adjusted figures: between 2002-03 and 2006-07: the total cost of attendance increased by 12.6%; total institutional aid increased by 19.0%; institutional aid to students with need increased by 24.1%. 2) Charlie didn’t ask us for the “average institutional aid increase” (by which I assume he means the average institutional aid grant). Had he asked, I would have told him that average institutional aid grant increased from $7,780 in 2002-03 to $9,811 in 2006-07 (for students with need, it increased from $8,338 to $10,416 over that period) (NB: the figures in part 2 are not inflation adjusted)

1) This is good news. Now we have apples to apples. Again I wonder, why are rising high school seniors seeing less so much less of an increase in aid when compared to the full pool of undergrads?

2) I went ahead and adjusted the numbers for inflation. The average institutional aid grant increased 11.2 12.6% from 02-03 to 06-07. The cost of tuition increased 12.8%. This basically confirms my tuition vs. financial aid analysis. The cost of attendance (which includes room and board, books, etc.), however, only increased 8.6%.

With regard to paragraph 23 – Charlie says “average aid packages increased this year by almost $1500. (That is not institutional aid, that is overall aid, which includes student loans. I imagine the large bulk of that increase is in loans, particularly considering this year’s recession.)” That’s incorrect — that increase was in institutional aid. I pointed this out to Charlie already, and he indicated he would be correcting that, but I wanted to make sure that this was clear.

Indeed, I corrected this yesterday. I got this wrong because the WSN article called them “aid packages,” which refers to grants, work study, suggested student loans, etc., and not “institutional grants.”

Having highlighted Charlie’s key specific errors (some of which he will probably correct, but it is important to get them on the record), I’d like to speak generally again for a moment.

NYU is not among the relatively small set of institutions that “meet full need” – meaning that our financial aid resources are not sufficient to fill the gap between the expected family contribution (as determined by FAFSA) and the cost of tuition for all our students. We know that because of this, many students take on debt to attend NYU because they really want to be here. That places a real responsibility on NYU — one we feel keenly and constantly strive to meet – to strike a balance within the resources we have: to make NYU as affordable as possible to as many as possible and at the same time to give our students an education that is manifestly and recognizably excellent, to give them a chance to learn from faculty who are at the forefront of adding knowledge to their disciplines, to create supports that help them succeed academically, to provide them with opportunities that are truly distinctive (such as through our connections to NYC and our extensive international network), and to prepare them well for their lives after they receive an NYU degree, whether that be grad school, professional school, or the workforce.

That’s what we work at every day. That’s why we added extra funds to financial aid this year, that’s why we slowed the rate of increase in cost of attendance to its lowest level in 20 years this year, that’s why non-union employees received no salary increase this year (saving $23 million), that’s why we have been cutting administrative costs (a savings of $53 million annually by the end of this year), that’s why we didn’t look to cuts in academics (even when other major universities did), and that’s why we do fundraising.

– John Beckman, NYU Public Affairs

Certainly I give credit (and I did yesterday) to the things NYU does well. I’m very encouraged by their recent financial aid increases that far outpace tuition increases. I write about this because I think we should all be thinking critically about what exactly NYU is doing to make school “as affordable as possible” and to give us the excellent education we come here to receive. I do think NYU has their intentions in the right place, but there are still big questions about affordability that haven’t yet been resolved.

When you dig down into statistics like John and I have been the last couple of weeks, it is easy to see the same numbers and draw different conclusions. We can both slice and dice numbers to fit our positions. It is important that we don’t get caught up arguing about the numbers when the big picture is far more important.

If NYU feels comfortable with students going into deep debt in order to attend, then so be it. It seems to me that the University would be wiser (and better) if they eased up on the breakneck pace of enrollment and expansion, taking care to lower costs. No doubt, the University has made great strides over the past decade, but this is a better time than ever to slow down, think about the economic fundamentals, and plan accordingly.

2:19  - Corrected inflation calculation discrepancies.

6:45 – Corrected percentage change math error and edited for clarity.

It is easy to bash on NYU for its stingy financial aid department. Everyone has heard about the University topping the list of schools with “Students Dissatisfied with Financial Aid.” You may also recall that, last semester, the school began calling students with a large gap between their need and their financial aid award to make sure they really, truly could afford to come to NYU.

But something has been missing in all the yelling about how expensive it is: actual evidence (particularly since administrators have some good arguments on their side).

NYU has a huge student population and therefore a small endowment per capita, which makes meeting full financial need impossible. University Spokesman John Beckman writes me, “NYU is not among the relatively small set of institutions that ‘meet full need’ – meaning that our financial aid resources are not sufficient to fill the ‘gap’ between the expected family contribution (as determined by FAFSA) and the cost of tuition. That’s largely a reflection of our per student endowment,” which was 148th 184th in the country in 2008.

Beckman also frequently points out that we have one of the highest percentages of Pell Grant-eligible students among major research universities. (Since Pell Grants are generally awarded to low-income, very needy families, the previous statistic is often used as a proxy for economic diversity on campus).

But that last point raises a big question: why does NYU attract so many needy, low-income students if its financial aid is so bad?

It is useful to compare NYU to another school for this analysis. I chose Columbia because it has a nearly identical percentage of students receiving federal grant money (mostly Pell Grants). Take a look at these charts of the most recent and available public data:

The first shows the percentage of first-time, four-year freshman receiving either federal, state, or “institutional” (college) grant money. The second shows what percentage of those students is receiving money from the school.

Pretty striking trends, no? A smaller percentage of NYU students are receiving financial aid and a lot fewer are getting any help from the school itself (compared to NYU in the past). Columbia’s trends are both upwards.

So what can we infer from this? It’s hard to say, really, without knowing a lot more about the internals of the financial aid department. At first glance, it would be easy to conclude that the student body is getting richer, since fewer students receive aid.

Beckman disputes that idea. He writes, “…we have been reducing the percentage of aid that is ‘merit’ – or non-need – based; we reduced it by 26% between 2005-06 and 2009-10. This was entirely intentional: given that students’ need is greater than our resources, we concluded this is the right thing to do.”

He concludes that the decline in students receiving aid is due to fewer students receiving merit aid.

However, if you look back at the charts, you’ll see significant percentage drops well before 2005, when Beckman cites the beginning of the reduction in merit aid. (Don’t get me wrong: it’s a good idea to move more money into need-based aid and I applaud NYU for its decision). (Ed. note: See Beckman’s response for an update on this point).

Here’s the rub: the percentage of students receiving federal aid hardly budged during the same time frame displayed on the charts. It dropped only 2 percent from 2001 to 2006, from 17 to 15 percent. This suggests NYU’s “economic diversity” is staying relatively constant.

Now look at this:

You can see how much less money we receive in comparison to Columbia, but that can be chalked up to small endowment per capita. However, this cannot: from 2002-2006 (adjusted for inflation), NYU tuition rose 12.7%. Yet, across the same time period, average institutional aid for first-time, four-year freshmen only increased 7.0%. At Columbia, tuition went up 10.5% and average institutional aid went up 15.3%.*

Beckman again takes issue. He notes that the Department of Education data I used for these charts does not include all undergraduates, only first-time, four-year freshman (the typical out of high school student joining NYU). He writes (emphasis added), “Indeed, when we look at financial aid spending and cost of attendance for all undergrads over the period you examined – 2002-03 to 2006-07 – we find that cost of attendance increased by 21.7% and institutional aid increased by 28.6%.”

Unfortunately, Beckman doesn’t provide the average institutional aid increase, which I used. Nor are the numbers adjusted for inflation, rendering them meaningless. Indeed, if you don’t account for inflation, it appears as if average institutional aid increased nearly 19.9% while tuition increased 26.4%. Still not a good story for NYU, but not nearly as telling as the inflation-adjusted numbers above.

So, where are we? We can see that NYU has become quantifiably more unaffordable and yet it still attracts the same percentage of highly needy students. I think Occam’s Razor suggests that a higher percentage of financial aid dollars are flowing to the school’s neediest students, making it harder for “middle-class,” but needy students to attend and driving down the number of students receiving aid.

If indeed this is the case, it could be because NYU knows that highly qualified but highly needy students will be offered great financial aid from other top universities, so they seek to match their offers. It could be because they have found they can maximize enrollment by asking less needy students to take on more debt than the neediest. It may just be that they think it’s the fairest allocation of the funds available.

What makes this more interesting is parsing John Sexton’s emails. He wrote back in May that one of the University’s major goals is to:

Enhance financial aid for our neediest undergraduate students and improve the quality of student life and wellness.

Not all of our students, just our neediest.

Now I should give credit where it’s due: NYU increased financial aid 7.8% this year – twice the tuition increase. And Beckman notes, “Using FAFSA’s criteria,…need-based aid at NYU has increased 64 percent over the last five years (2005-06 through 2009-10), while (as noted above) undergraduate tuition and fees increased by 22.3%.” This is encouraging (though I would like to see these numbers adjusted for inflation).

But then we read that this is NYU’s biggest enrollment ever – how can they expect to offer decent financial aid if they keep increasing the pool of students who need money?

John Beckman is quoted heavily in a piece in WSN that was published today that attempts to rebut this question (see correction) that addresses this question. There are some good defenses, read the piece, but think critically about Beckman’s arguments there, particularly that average aid packages increased this year by almost $1500. (That is not institutional aid, that is overall aid, which includes student loans. I imagine the large bulk of that increase is in loans, particularly considering this year’s recession). Beckman writes that this is wrong – the average grant increased $1500 this year. The WSN article says “financial aid package,” which refers to grants, work study, recommended student loans, etc. I should have fact-checked this myself – sorry for the confusion.

He wrote to me on the topic as well, saying, “Additional [enrolled] students do mean additional students who need aid; however, it also means additional tuition from those who do not require aid, some of which is used for financial aid for needier students.” Good point, but Beckman is missing the big picture.

If we continue to expand the student body, NYU will never significantly grow its per capita endowment, which is what really makes meeting need possible, according to Beckman himself.

The real issue is that financial aid is a zero-sum game. If you give more money to the neediest students, it comes directly out of the awards to needy students who still have to take out loans. So if NYU is serious about affordability for all of its students, they will limit enrollment and continue to increase financial aid more than tuition.

Beckman writes that the University wants “to make NYU as affordable as possible to as many as possible, and to make the education as excellent as possible.” Yet the average indebtedness of an NYU student at graduation is $34,850, over 33% higher than the national average. Does that statistic reflect NYU making NYU as “affordable as possible to as many as possible?”

New research found that it doesn’t matter where you go to college – you make the same amount of money regardless. That knowledge is bound to hurt good universities like NYU that just aren’t offering good value.

And now we’re back to what I wrote about last month: NYU’s exploding tuition costs and rising student debt levels. It just can’t last. If you continue to leave students with insufficient financial aid, they’re going to stop enrolling. And it will be ugly when that happens.

John Beckman responds, and I respond to him, here.

*

Data from the Department of Education, Columbia’s Institutional Research website, NYU’s Institutional Research website, and the NYU Archive. Photo courtesy of Flickr user AMagill (CC).

4:15 – Updated for clarity.

4:25 – Updated to reflect that the WSN article wasn’t written to “rebut” the question I raised. The article does, however, contain arguments that address that question, as I note above. The two articles are not related, other than that they cover similar material.

4:50 – Facts corrected regarding grant money increase from last year to this year.

10:50 – Chart titles corrected. Minor edits for clarity.

* 10/22 6:45 – Basic math error fixed. To calculate percentage, I was dividing (b-a)/b when I should have done (b-a)/a. The mistake does not change the point, only the numbers. The original sentence sentence read: “from 2002-2006 (adjusted for inflation), NYU tuition rose 12.3%. Yet, across the same time period, average institutional aid for first-time, four-year freshmen only increased 6.6%. At Columbia, tuition went up 9.5% and average institutional aid went up 13.3%.”

Colleges note that “the inevitable result is that needier students will be shifted down to the less expensive and less prestigious institutions.”

It’s unclear whether or not NYU will attempt to pull in more full-paying students – it was not exactly notorious for doling out the financial aid even before the stock market crashed. But, if I had to guess, based on the falling endowment and cost-cutting plans, we’ll likely see an increase in the number of international students admitted to the class of 2013.

Photo courtesy of Flickr user Steve Wampler.

Here is a highlight from the speech:

Well, the time for finger-pointing is over. The time for holding ourselves accountable is here. What’s required is not simply new investments, but new reforms. It is time to expect more from our students. It is time to start rewarding good teachers and stop making excuses for bad ones. It is time to demand results from government at every level. It is time to prepare every child, everywhere in America, to out-compete any worker, anywhere in the world. It is time to give all Americans a complete and competitive education from the cradle up through a career. We have accepted failure for too long. Enough. America’s entire education system must once more be the envy of the world.

Policy specifics after the jump.

I was going to try to cull a list of reforms from Obama’s speech but I found a really good one on The American Prospect. Here’s their take:

• Charters: In the biggest concession to reformers, Obama said he supported every state lifting caps on the number of charter schools allowed to open in a year, provided that states also have accountability guidelines for assessing charters and closing down ineffective schools. To put this in perspective, just two years ago, Randi Weingarten, now the president of the American Federation of Teachers, was aggressively lobbying in Albany to prevent New York from raising its charter school cap.

• Curriculum: National standards are emerging as a consensus point between teachers’ unions and free market education reformers. Obama also supported higher standards today, saying, “Our curriculum for eighth graders is two full years behind top performing countries. That is a prescription for economic decline.” But his agenda stops short of pursuing national curriculum guidelines or tests, promising only “to promote efforts to enhance the rigor of state-level curriculum.”

• Teacher pay: Obama promised a federal investment in developing “performance pay” plans in 150 school districts. The language here is key. “Performance pay” is supported by teachers’ unions, and awards salary bonuses to teachers based on a variety of factors, including classroom observations, teaching in hard-to-staff subjects and schools, and improving student achievement. “Merit pay,” on the other hand, is understood as directly aligning teacher salaries to student test scores.

• Higher-ed: Obama promised to cut out middle-men in federal student lending, simplify the FAFSA form, and invest in community college efforts to better prepare students for the job market.

• Early childhood: Obama’s budget will include “incentive grants” for states to develop uniform quality standards and target care and education to the most disadvantaged children.

This is so promising. His proposed “performance pay” is a big step forward for secondary education – it will attract and retain good teachers, even in poorer, more rundown schools. This, on its own, will help to curb dropout rates in high school as students get motivated by their great teachers.

I wrote a couple weeks ago about his great idea to cut banks out of the student loan process by instead having the government directly lend to students. This will both save money and allow for more loan availability, a crucial policy during the current recession.

His plans include both ideas favored (performance rather than merit pay) and opposed (charter schools) by unions, which should boost their bipartisan appeal. Whether or not any education legislation will be able to work its way through Congress anytime soon remains to be seen (particularly with the economy in its current state), but this is a really great start.

Photo courtesy of Flickr user LizMarie – used under CC license.

A number of reports out today paint a bleak picture of college affordability both now and in the future. The National Center for Public Policy and Higher Education released a study that showed that college tuition and fees (including housing) has increased 439 percent from 1982 to 2007 (adjusted for inflation). Compare that to a median family income increase of only 147 percent. When directly compared, a four-year private university (like NYU) costs 78 percent of median family income. And that number is calculated after subtracting out financial aid from the cost.

Additionally, as seen above, 49 states failed the college affordability test, which looks at the cost of community colleges, public and private universities, and the availability of need-based scholarships.

On top of all this, Harvard announced today that their endowment lost $8 billion (22%) in four months. Of course, NYU doesn’t have the kind of endowment Harvard does, but it makes you wonder how much our university has lost. Those 2031 plans might have to get put on hold.

A friend of mine went to the NYU financial aid office, looking for a way to increase his amount of aid or help obtaining a loan (which his parents aren’t willing to co-sign). The woman at the desk handed him a pamphlet with a list of possible loans and said, “Here are the loans you can apply for.” My friend tried to explain that the problem was that he was unable to even obtain a loan. She just repeated herself and brushed off his other questions.

So much for John Sexton’s pledge from his email about the economy: “There are limits to our resources, but the University will do whatever it can to help you finance your education and give you our candid counsel.”

Graphic courtesy of the Measuring Up 2008 report from the National Center for Public Policy and Higher Education.