March 29, 2021 • 51 mins
This is a must listen if you know someone preparing to go to college, or if you happen to be in that boat yourself! Our guest today is Ron Lieber who has been the Your Money columnist for the New York Times since 2008 and is a three-time winner of the Gerald Loeb Award which is financial and business journalism’s highest honor. He is the author of multiple books including the recently released “The Price You Pay for College” which is already a definitive guide to help parents and students think through important decisions when it comes to higher education. We talk through how college actually doesn’t cost quite as much as you think it does, how you can get more financial aid from the colleges you’re interested in, some of the best ways to bring down the cost overall, as well as plenty more on the topic of higher education.
During this episode we enjoyed a Austerkopf by Sceptre Brewing Arts! And as we’ve kicked things off with a bang in 2021, we could really use your help to spread the word- let friends and family know about How to Money! Hit the share button, subscribe if you’re not already a regular, and give us a quick review in Apple Podcasts or wherever you get your podcasts. Help us to spread the word to get more people doing smart things with their money in these difficult times!
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Episode Transcript
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Speaker 1 (00:00):
Welcome to How the Money. I'm Joel and I and
Matt and today we're talking a college cost cutting roadmap
with Ron Lieber. Yeah. Ron Lieber has been the Your
(00:27):
Money columnist for The New York Times since two thousand
and eight and is a three time winner of the
Gerald Lobe Award, which is financial and business journalism's highest honor.
He is the author of multiple books, including the recently
released The Price You Pay for College, which is already
a definitive guide to help parents and students think through
important decisions when it comes to higher education. Uh. He
(00:49):
lives in Brooklyn with his wife, who is also a
New York Times journalist, and his two daughters. And Ron,
thank you so much for joining us today on the podcast. Oh,
it's so exciting to finally make my debut here. We
we've been waiting for this, Ron, and you know, the
publication this book was the perfect time to bring you
on for sure. And uh yeah, the first question that
we ask anybody who comes on the show though, Um,
(01:10):
you know, Matt and I we like craft beer. That's
one of the things we splurge on in here now
while we're saving and investing for the future. But we
want to know, like, what's your splurge, what's your craftier equivalent? Yeah,
so beer hurts my belly turns out. Yeah, in my
advancing age, it's it's not really agreeing with me, which
is sort of unfortunate because right, yeah, I used to
(01:32):
agree with it. So, you know, in general, and this
is a non pandemic splurge. In general, I tend to
splurge on live music experiences to the extent that it's possible.
I do not really spare much expense or think much
about what it costs. And well, I don't generally enjoy
(01:52):
the process of embracing the you know, sort of ticket
scalping economy. Gosh, ticketmasters. The word, um well ticketmaster, you know,
on its own is a deeply problematic, problematic institution. Um,
but you know, the markups on StubHub or whatever. You know,
I would so much rather the artists get those, um
(02:13):
extra dollars. But in any of it, right, Um, do
you remember the last show you went to see before
everything shut down? The last show I went to see
Versus and then Versus the last splurge um that was required.
You know, I think there was a whole steady show
somewhere in there, close to the end. Um. I'm a
(02:33):
huge fan of the whole study. Those tend not to
be splurged tickets, you know. I I will splurge on Broadway,
I will splurge on Springsteen. Those are generally the big splurges. Nice. Yeah,
I get runs there at like the three Nights on
a Row kind a show. He's like third Row every night. Well, yeah,
(02:54):
I mean back in the day when when touring was possible,
you know, I would go to you know, three dead shows.
I've dead shows, two fish shows, right, you know, I'm
I'm definitely a repeat customer for any rock and roll
or related organization that does not repeat the set list
from night. I love that. That's so good. Well, let's
(03:14):
let's dive into your book. You know, we wanted to
ask you, like what led you to write this book
in the first place. You know, like you've written about money,
but then specifically you know the price of college and
student loans for years now. But you know, we were
wondering as part of the you know, the impetus was
having daughters and trying to figure this stuff out for yourself.
Is that the case? Yeah, I'd say some of that's true.
I mean, the art begins with the personal, but it
(03:36):
sort of ends with the professional. Right. So I have
my first kid in two thousand five. I've got two
daughters now. One of them is fifteen high school freshman. Uh.
The other one is five and and just started kindergarten,
So you know, the ninth grader is kind of creeping
up on this stuff. So when she was born in
two thousand five, I was at the Wall Street Journal
and began, naturally, as one does, to write a little
bit more about how to save for college five nine plan.
(04:00):
And they weren't so good at the time. There was
a lot of mediocrity there, and so I spilled a
little innk on that um two thousand and eight, two
thousand nine, I've moved over to the New York Times.
During that recession, a lot of people washed out of
some pretty expensive undergraduate institutions with six figures of undergraduate
student loan debt that they had not needed a cosigner
(04:21):
for um. Things have changed a lot on the mechanics
of how that happens or doesn't happen at this point, right,
But there are a whole bunch of us who all
of a sudden got radicalized around the you know, sort
of ever growing um nationwide student loan balance. And for
at least ten years now, I've written about student loans
off and on, you know, to this day. But what
(04:42):
happened to two thousand fifteen that really had nothing to
do with me and everything to do with readers, is
that my email inbox and my voicemail started to fill
up an ever higher volume each spring with parents who
are having three related problems. There were the parents who
had just assumed they were going to get a bunch
of financial aid or their kid and did not realize
until the very end that they were not going to
(05:03):
be eligible. And they had made a bunch of promises
to their kids, um that they weren't sure they were
gonna be able to keep anymore. So that was a problem.
Second kind of parent, UM, they had been offered with
their first or their only kid, this thing known as
merit aid in the financial aid award letter, and they
hadn't even realized they'd applied for this, didn't know what
it was, college counselor hadn't explained it to them. And
(05:26):
so they come to me and they're like, Ron, what
what's this Merit aid stuff and can I get some
more of it? Right? And you know, it's April twelve.
I can't really do much for them at that point.
So that troubled me. But what really put me over
the edge was that I started to get calls from
slightly more sophisticated parents, right, parents who had figured out
the system. They had, they had, you know, sort of
understood it and and known to do the research, but
(05:48):
they were having a different set of challenges. Um. You know,
imagine a New York State resident. Uh, the kid gets
into Binghamton, which is you know, arguably the best or
the flagship state university. Uh, the kid gets into Kenyan
College in Ohio or Occidental College in Los Angeles, and
they're they're not being asked to pay the full price.
(06:08):
They get a Meritate package and so the school is
going to cost them two hundred thousand dollars over four years.
And then the kid manages to get into Cornell. You know,
it's got an Ivy League invitation, but no discount there.
That family earns let's call it, two hundred and fifty
seven thousand dollars a year. Cry them a river, right,
but they don't qualify for any need based state. So
they said to me, Ron, your newspaper hasn't shut up
(06:30):
about the fact that we live in the era of
big data. Right, So where is the big data set
that tells me how and why Cornell is a hundred
thousand dollars better than Kenyan and two hundred thousand dollars
better than Binghamton. And I had no idea, because the
big data set doesn't exist. There isn't even a small
data set on this stuff. And what I realized was
that these readers were asking questions about value and values ultimately,
(06:54):
because values are you know, part and parcel of how
we make the value decision. And so for all the
ink that I had build over how to save and
how to pay, I had not gotten gotten it through
my thick skull in the space of ten years. Right,
that the most important question of all was what to
pay for college. That's what these people were trying to
figure out. And I had failed them to that point.
(07:17):
And I realized that there was gonna be no way
to answer that question in a newspaper column or in
five or in ten and it was going to require
a book, yeah, something more like pages. Right. Uh, Hey, Ron,
we've We've all seen the chart that shows how the
cost of college has been soaring over the past forty years,
you know, talking about value, and everyone has been bending
(07:39):
over backwards to try to explain why. But in your
book you actually discuss how that stat is a little misleading.
The college costs haven't been rising at maybe the clip
that we we thought they've been rising at. Can you
kind of explain that? Sure? So, you know, it gets
complicated for many of my customers, right, I mean the readers,
but I also think of them as customers because they've
(08:00):
pay to subscribe to The New York Times and they
pay dollars at the list price for a hardcover nonfiction book. Um,
the demographics of those folks, you know, tend to be
upper middle class. And the farther you get into the
upper middle class, um, the less likely it is that
you're going to be offered any need based financial aid.
So many of those folks are anchored to the list
(08:22):
price of schools because they think that's what's they're what
they're going to pay. Now that's quite often not the case,
but right that that's sort of what people anchor to,
at least in my customer base. So they're thinking, okay,
you know fifty most selective schools in America. I want
the best for my kid. That's gonna be three grand
right at the private um level. And you know, my
(08:43):
flagship state university probably gonna cost a hundred thousand dollars
by the time it's all over. What they do not
realize is that the average discount at private colleges is
over fifty and moreover or so of families are not
paying the full price. And that includes a whole bunch
of rich kids who are getting discounts anyway. Right, So
(09:05):
when you say that to people, they're like, huh, how
did that happen? And then you've got to spend like
a minimum of ten minutes slowly and deliberately peeling back
the layers of the ending. I mean, essentially, it's kind
of like the difference between the sticker price and the
actual costs that they pay, you know, so like, what's
going on with this? Essentially it's like a charade. You know,
(09:26):
why don't college is just like lower the actual tuition costs? Uh,
you know, in the in the price, you know, the
cost of education. In a more straightforward manner, like like
why is it that we have these you know this
this inflation kind of builds into the price of the
sticker price in the massive discount. Yeah, yeah, exactly. Yeah,
Well you sort of have to think about it like
a business person, which we're not used to, you know,
(09:47):
thinking of when we think of colleges, because we don't
think of them as the viciously competitive institutions that they
actually are. Right, there's a real competition to get the
heads in the beds and to make sure you've got
you know, the right net tuition revenue per per student
to to to to make your numbers and and to
make your budget. Um. So here's what's going on there.
First of all, there is a perceived value question UM.
(10:11):
That's kind of at the root of some of this. Um.
It's referred to in the industry as the Chivists regal effect,
and it goes like this, and this is a legend. Right.
I was not able to confirm it with Chivists because
they want to talk to me about it. But the
way estrangely right, like any legend that has to do
with a liquor, I'm I'm down for ye. Yeah, I
guess they did not want to pierce the bubble of
(10:33):
you know, whatever it was that they thought was over
and around their brand. But as the legend goes, one day,
many years ago, in a galaxy far far away, um,
someone at chivist Regal decided to you know, double the
price overnight to try and increase the brand sort of
perceived value on on the liquor store shelf. And sure enough, um,
(10:57):
the company's revenues you know, increased by like way more
than they expected it to, because all of a sudden,
people thought that Schivis Regal was better than it used
to be, even though nothing changed inside the bottle. Right.
And so the lesson that higher education professionals took from
(11:18):
this is that if you have a high list price,
people will think that you are worth something worth more. Right.
And then when you give them a discount, particularly when
they don't need the discount, right, particularly they can afford
to pay the full price, that family will feel like
they've gotten a bonus, maybe a gold star pat on
(11:38):
the head for having raised a Yeah. Right, you know,
this is marketing. This is marketing, and the other thing
is um. At any given institution, particularly the more selective
ones that still discount this way, they are always holding
out hope that some percentage of people will will turn
(12:00):
up each year who are in fact both willing and
able to pay the full price and not just able. Right,
And so what kind of family is that? Well, if
you are a super affluent family and you have no
idea that these discounts exist, and you don't really care
all that much about money, and you're not careful, you'll
just write the check, right, and you'll you'll never be
(12:22):
the wiser. Right. So schools like to take advantage of
families like that. Um, then there are the families who
are like writing this check against the bank of thank god. Right,
So you know, imagine yourself, Um, you know, just hoping
against hope that your your your kid will go to
two Lane University the same way that you did, right,
(12:42):
And you know that the place is much more selective
than it used to be. And maybe your kid has
had a rough go of you know, freshman sophomore year
in high school, but they've like totally turned it around.
Junior year. They managed to get you know, a seat
at an s a T test center and once you
know it, they scored a fifteen twenty and to Lane says,
you know what, we're going to take a shot on
on your kid, and we're gonna give you the benefit
(13:04):
of the the doubt. We believe in your family and you
know in its tradition of coming to school here, but
no discount for you. And you're like, wow, I can't
believe we pulled this off. Um, the kid's gonna go
to Tulane. We don't care what it costs, right, bank
of thank God. And then they're all of these families
from outside the United States, and you know, many of
them are kazillionaires, and they don't care much about the
(13:25):
price either. They just want a degree from a relatively
brain brand name institution or you know, just one that
says America on it. And if you can attract enough
of those folks, particularly now that there is someone in
the White House who is not as hostile um to
people showing up here from outside of the United States
in general, um, you have reason to hope. Right. So
(13:47):
those are all the reasons you keep the list price high. Ron,
Let's talk about college enrollment in COVID. Obviously we've seen
college enrollment fall because of the pandemic, and you actually
mentioned to study in your book that six professors and
administrators have said that their courses are worse in virtual era.
So how how do you think that college, Um, the
(14:07):
college value proposition has changed because of COVID. Well, so,
you know, we should stop and think about how we
define decline, right, because in different tiers of undergraduate education,
there's been different levels of decline. And at the you know,
let's call it two D most selective colleges and institutions
(14:28):
in America, the you know, the ones that have stayed
open more or less, um, you know, have not seen
huge declines, you know, sort of devastating revenue declines. And
the thing that's interesting about it is that you know,
people are showing up to pay the same price as
they paid last year for the most part. You know,
there's been a few discounts here and there, but but
not many. Right, And so I guess here's what I
(14:51):
have to say about that. Right, Um, what happened in
the spring of is that everybody got sent home and
all of a sudden, you know, the three main reasons
for going to college, right, the education, the kinship you know,
the friends you make in, the mentors you require, and
the credential. Two of those things were stripped away. As
(15:11):
you mentioned in the question, right, education got a lot worse.
Everybody acknowledges that kinship is like blown to smithereens because
you're not near your friends or your mentors anymore. Only
the credential is left. And you know it's some question, uh,
you know how much the credential matters? Right if you
are a food and beverage major at Cornell University, right
(15:32):
you're majoring in hotel management, you know, at Arizona State
or something like, how much is that credential going to
be worth right now? When those industries have been cut
to ribbons? So you know, the the value is not
what it once was, which makes it somewhat surprising, right
that all of these people came running back to campus
(15:54):
um in in August and September against all you know,
sort of public health reason, and you know thousands and
thousands and thousands of them got sick, right, So why
did they do this? Well, you know, because the education
had gotten worse, because the kinship was gone, and you know,
people were desperate to continue to persist with this experience. Now,
(16:14):
if I'm writing to check up to eighty thousand dollars
a year, I ain't doing it. It doesn't doesn't make
any sense to me right that this is this is
not a normal college experience. This is not what I
signed up for for my kids. And as somebody who
wrote a book about gap years back in, I already
think the college is wasted on most eighteen year old
(16:35):
So you know, my kid is my kid is sitting
this one out and and going to do something different
for a while. Ron. This has been a great start
to our conversation. We've got so much more when we
talk about with you. I mean, we want to talk
next about financial aid, you know, like how it is
that parents and students can get that fifty discount like you,
like you mentioned there earlier, And we're gonna get to
all of that right after the break. All right, we're back.
(17:04):
We're talking with Ron Lieber about how to get a
better deal when you're going to college. And uh, you know, Ron,
one of the things actually that that recently changed, um
it was surrounded financial aid was the expected family contribution
when you fill out the facts. Sadly that happened after
the publication of your book, but you wrote about it
(17:25):
in the New York Times. Um, since then, So what
effect is that change in the fast they're gonna have
on families? Sure. So let's start by, you know, framing
what we're talking about here. We are talking about the
need based financial aid system the facts that does not
have much of anything to do with merit aid. Um,
whole different way that meritate and those discounts are awarded. Right,
(17:49):
So what we're talking about here is need based aid
in order to get aid from the federal government. So
in order to you know, access the PEL grant or
the Federal student loan program or Federal Works Study funds
for jobs on campus, or a parent plus loan, you've
got to fill out one of these fafts of things.
And people hate the facts. The FAFTSA is arguably more
(18:11):
complicated than the ten forty income tax form, and you know,
the kid gets involved and the parents are involved. Some
parents refused to do it, and if you're a kid
who's strange from your parents or a parent, it gets
very complicated, you know, super super messy stuff. So, you
know the most important thing that's happened is that the
(18:32):
FAFTS is going to be simplified, which is a good thing. Right,
It's gonna be easier to fill this thing out. A
couple other things they are happening. Um, it's gonna be
easier for more people to get pell grants, and the
pell grants are going to get a little bit larger, right,
so people with lower incomes gonna have an easier time. Now,
there's some other things that are changing that have caused
(18:52):
you know, people in the you know, middle class and
upper middle class to wring their hands. One of the
provisions has to do with the fact that at if
you've got two kids in college at once, you're no
longer going to get the same break that you used to.
Now that's according to you know, the legislation, and the
federal law doesn't mean that private colleges are necessarily going
(19:14):
to do the same thing with their financial aid formulas.
So if you're thinking about applying to a school that
only relives on the fasts, you know, then you may
need to be thinking about that if you've got two
kids in their close in age. So much remains to
be seen and you know sort of exactly how that's
going to be interpreted, And there are a lot of
people already trying to petition, you know, the federal government
(19:35):
to uh to change that somehow, right, whether through legislation
or some other form. So um, you know, remains to
be seen. I think exactly how that one's going to
play out, but it's definitely one to watch. Doesn't go
into effect for another year and a half. Yeah, it's
certainly a work in progress. It's kind of a moving target.
I guess as you have kids, you know, approaching college age. Uh,
(19:57):
and so yeah, you're you're talking about need based aid
here and then earlier, you know, you detailed how the
financial aid system has changed in recent years, and you know,
let's talk about merit aid. Uh. So you know that
is kind of the it seems that that's the predominant
form of financial assistance these days. And so what is
it that led to that change? And how com parents
and students uh navigate getting more merit aid money? Sure? So, um,
(20:21):
you know, I like that you phrase that question by
pointing out the history because it gives an opportunity to
sort of tell the story of um, not how it
started exactly, but but how it spread and became so complicated.
So imagine yourself in the state of Ohio in the
early nineties, and there's a whole bunch of really good,
(20:43):
you know, small liberal arts colleges, so many in fact,
that they're really you know, beating the smithereens out of
one another. Uh, you know too in the competition for students,
and also a great public university system there. Right, So
imagine being you know, kind of near the bottom of
that food chain. You know, imagine being oh i oh
Wesleyan University. You've developed a well earned reputation for um,
(21:04):
you know, being a serious party school that is not
particularly serious about other things. Uh. You want to increase
your prestige because a lot of families just won't go
near you, um because you know they think their kids
will end up being alcoholics. Right, So you've got to
do something about this situation. Um, So what you do is,
you know, after this year's crop of kids take the
(21:26):
p s a t s. You start going out and
you buy the names of the kids who have better
p s a t scores and the kids you normally
attract into your applicant of pool, and you send them
a note saying, hey, we've got we've got our eye
on you. We know you're special. If you apply here,
and we'll let you apply here for free with no
application fee. If you apply over here, we'll give you
(21:46):
ten thousand dollars if you come off off the off
the list price. Right, no matter how much money your
family has, no matter how much money your family needs. Right,
So somebody starts going and throwing around, um, five figures
of money when nobody else is doing that, that's going
to have an impact. Right. It worked. It works so
well that competitors had to respond in kind because Dennison
(22:08):
did not like Ohio Wesley and stealing more than its
fair share of students, and Kenyan didn't like Dennison stealing kids,
and um, you know, Kenyan didn't like College of Worcester
doing the same thing either, And then Oberlin got really
annoyed that Kenyan started to do it, and pretty soon
everybody in the state of Ohio is doing this, and
it spreads not quickly but over time. So, right, you
flash forward twenty years or so, and all but the
(22:31):
fifty or sixty most selective colleges and universities, both public
and private. That works a little differently, public and private,
All but the fifty or sixty most selectives in the
country are offering at least some meritid Right, So you
take that enormous list of schools that are doing this,
and those two divide up into segments right, there are
the schools that only offer merit aid to a couple
(22:54):
of dozen people a year. Then their schools that only
offer it to a couple hundred of you know, new
entrants a year. Then it's you know, schools that offer
it to maybe half of the new people who come
in each year. And then there are schools now where
everybody gets a pony, right, where everybody gets a pat
on the head. And the challenge for families is to
(23:14):
figure out ahead of time which kind of school you're
dealing with, what sort of reasonable expectation they ought to have,
you know, for a discount offer, and how to sort
that out. And it is not easy. It's another five
or ten minutes of you know, verbiage to kind of
even begin to explain to people how to sort it out,
(23:36):
all right, So it does kind of beg the question,
how how can people find out what sort of merit
aid they're likely to receive from a college are interested in.
I don't, I don't want to, you know, make you
drawn on for ten minutes necessarily, but that is the
question that people are going to ask, Like, if I'm
interested in particular college, how do I know what sort
of you know, aid to expect. Yeah, so there are
(23:56):
a couple of things that people should know. UM. First
of all, the Net Price Calculator, which all schools are
required to have on their websites somewhere, is a way
to predict what kind, if any, of need based financial
aid you will be offered, so totally worth filling those out.
In some instances, the schools will allow you to input
(24:19):
your g p A and your test scores and will
attempt to predict what kind of merit aid offer you
might get as well. So it's worth checking the Net
Price Calculator to see if it is in fact a
merit aid prediction engine. In most instances it is not,
but sometimes it is, so you know, worth a shot.
So that's number one. Number two, by all means, check
the college's website UM to see if they say, you know,
(24:43):
what percentage of people got merit aid last year, what
sort of characteristics did they have? At some of the
more hard up schools, um Wabash College in Indiana, Lake
Forest in Illinois, the University of Alabama does this as well.
They just tell you straight up in like a grid chard,
you know, if you got a thirty four on your
A C. T. And a three point nine g p A. Um,
(25:04):
you know, this is how much of a discount you'll
be offered. And so that causes a lot of people
who really want to, you know, go to the University
of Alabama to take their S A T S six
times to you know, sort of try to get their
score high enough to get the better deal is you know,
so it has some unintended effects. Uh. Next step, and
this is not the last step, because why should this
be simple work at all? Um? The next step involves
(25:26):
looking for something called the Common Data Set, which most
but not all schools make available. The Common Data Set
contains all of the information that these schools pass on
to ranking organizations like US News and World Report. Um,
it's worth reading the entire Common Data Set if you
are even at all interested in any institution, no matter
(25:46):
how much you are able or willing to pay, because
there's all sorts of terrific data in there. But in
section H two A, H yes, yes, yeah right, it's like, um,
you just like go right to H two A, and
that will give you some information about how much meritide
is being offered to families who have no financial need whatsoever.
(26:08):
So that's a pretty good indicator of what's going on,
you know, is the school offering meridiate to everybody who
has no need or just like you know, ten percent
of the people who have no need? And what are
the characteristics of the people in the class in every
entering class who are are in the top um, you know,
what's their g p A, what's their test scores? That
(26:30):
is information you can get from the common data set.
And so from there you can begin to sort of guess, right,
what is going to happen. This is not the end.
There's at least two more steps, shall we yea, let's
do alright? Two more steps? All right? Um, because this
is so confusing because I have had to prattle on
for so long, not one, not to not three, but
(26:51):
four that I know of for profit entities have started
up just in the last couple of years to try
to provide some predictability um or match making around this.
Uh tuition fit dot com. That was the one that
seemed the most like the coolest idea from from what
I read in your book, like tuition fit seems awesome. Yeah,
(27:12):
so the big idea is like you send in your
you know, award letter to tuition fit it anonymizes everything,
puts it into a database, and then all of a sudden, Um,
you've got some context. Right, So you know, Dennison College
Dennison University in Ohio offers you, uh, you know, twenty
one dollars off and you've got a you know, thirty
(27:33):
two on your on your a C T. Uh. You
can go in there and see, oh, look there's a
there's a student with statistics like mine and and she
got twenty five thousand dollars off. And uh, I'm a boy, right,
so should I be more valuable because Dennison's like female
or like what's going on here? Right? You know the
fact that I play an oboe and and maybe she
(27:55):
doesn't like Z can a matter? It couldn't matter, right,
you know, you know it gives you a little bit
of anecdotal context. You know, it's not like scientifically, but
get yeah, you get to hear from people. It's sort
of like glass door, but for colleges. That's a really
good comparison. It's about like that. And then um, there's
(28:18):
a company called edmund E d M I T. There's
a new one called merit More. And Debbie Schwartz, who
runs the Pain for college one oh one Facebook group,
which is indispensable to my mind for anybody who wants
to geek out on this um. She's got her own
um hustle there where she u has some merit aid
prediction figures that she generates using common data sets and
(28:39):
other tools. Right, so there's like four startups in the area.
And then finally right, I want all of my readers
to act and behave as if we exist in the
world that we wanted to be, and not the world
as it is. So I'm encouraging everybody. I'm trying to
raise an army. Essentially. I think everybody should innocently, but
(28:59):
not so innocently, call these schools each September and say, hey,
I don't have any real way to predict what kind
of merit aid my kid might be offered here, And
you seem to think that I should be willing to
apply without having any idea what the price is. And
that doesn't really make a lot of sense to me.
Doesn't make sense to you, No, I didn't think it
made any sense. Can you give me just a you know,
(29:22):
non binding merit aid preread given my kids you know,
activities and s A T S and g p A
and if they won't do it, if they refused to,
then you might say, oh, that's so interesting because College
of Worcester has been doing that for years and Whitman
College just started doing it a year ago, and you
don't want to do that? Huh? Why? I love I
(29:45):
love that tip, Ron, because it's really it's taken things
into your own hands and saying and kind of asking
for the information when it's not readily available. I think
I think that's like wonderful advice. I mean, exactly, tell
them I sent you and if they won't um, and
if they won't cough up the information, come and tell
me at Ron Liebert dot com and I'll call them up.
(30:07):
I'll call them. I love that. The fifth point here
is is the Ron lieberway, which is this is uh
calling for more transparency when it comes to meritate and marketologies.
I love it. Uh. Well, you know, let's let's talk
about real quickly here, like getting what you pay for.
You know, you spend a lot of time in your
book writing about value. We're all about getting you know,
the most bang for your buck when it comes to
higher education. So like, what should students and parents be
(30:29):
looking for? In a college. And I know you cover
a lot of this in your book, so if you
want to pages dedicated to it, but if you wanted
to pict like a few of your favorites here, I'm
curious to to hear your thoughts here. Well, it starts
with the framing question. Right, Um, you can't have that
conversation before you have defined what college means to you.
And this is not some like existential philosophy one on
(30:50):
one exercise. It's actually a real non rhetorical question because
what I found repeatedly as I ran laps of the
country was that there were a whole bunch of people
out there or you know, flinging hundreds of thousands of
dollars around, that hadn't really stopped to ask themselves like
what is the definition of success here? And how much
is enough? Right? What is college for? Anyway? And it
(31:12):
turns out the colleges for three things we name checked
him before. Right, college is about the intellectual roller coaster ride,
It's about the learning. It's about having your brain broken
apart and then reassembled by an expert practitioner into like
a bigger, better version of what it used to be. Right, So,
college is about the education. Number one. Number two, College
(31:34):
is about the kinship. It's about finding the people you
never could have imagined existing in the world and making
them your best friends who will pick you up on
their shoulders and carry you through life. And it's about
finding the mentors um who will do the same thing.
But maybe they're like dragging you by the neck, you know,
into a bigger and better version of yourself. Right, So
that's number two. Number three is the credential. Maybe it's
(31:56):
a baseline credential that allows you to you know, grasp
hold of the middle class in a way that your
family has not been able to before. Or maybe you're
reaching way up high for like the super name brand
institution where the degree will mean something in an industry
that your family or your community has absolutely no hope
of ever accessing without that degree. Right, So you've got
(32:19):
to know what you're coming for and and once you do,
you can shop for that right Because if you could
care less about learning anything, then it doesn't matter whether
there are graduate students teaching all of the introductory level courses,
because that's not what you're there for. Right, Like, imagine
yourself as the you know, third generation child of a
casket owning manufacturer in Southern Indiana, right, and you're gonna
(32:44):
go to the right So you're gonna go Yeah, so
you're gonna go to the Did you know the Southern
Indianas like the world capital of casket manager. No, no, no,
no way, no way. Back when I was at Fast
Company Magazine in the nineties, I went to visit one
of the casket companies. It was awesome. Um, you can
put that story in the show notes of you will
(33:05):
so right. So, so, you're going to the Kelly School
of Business, flagship State School, Indiana University undergraduate and you
really care about the learning because you're gonna learn what
you need to know on the job right from your parents,
from your grandparents. Right, They're gonna teach you everything that
you need to know. What you really want out of
the Kelly School Business is not the credential, because the
credential doesn't mean much. You just want to build the
(33:27):
best possible network, right. You want a whole bunch of
people who are gonna know you, remember you, and when
they die or their parents die, they're gonna get your casket.
They're gonna call you up. You're going to offer them
the friends and family discount code, and your Family Casket
Company is going to be known because you were in
the most social sorority. You were in the most business
(33:49):
oriented fraternity. You are at the Kelly School of Business
for the kinship and the kinship alone. Right, So that's
a way to shop and I totally approve of that.
Do whatever you want, right, but don't go into the
process without having asked the fundamental question and answered it
about what college is for. I love that. All right, Hey, Ron,
we got a few more super practical questions about uh,
(34:12):
cutting college costs, and we'll get to those right after
this break. All Right, we are back. We're talking with
Ron Lieber and his most recent book, The Price You
Pay for College, And you know, Ron, before the break,
we're talking about financial aid, and now we're going to
(34:34):
kind of dive into some more practical advice to maybe
potentially get the price down on college and real quick.
You know, you mentioned in the first section there the
gap year. You said you mentioned you wrote a book
back in about the gap year. Do you feel that
that's a good idea? Is is a gap here a
good idea for folks to potentially save some money, to
not burn, not waste that first year in college and
(34:55):
then specifically to UH and you're like, now with COVID,
does it make even more sense you know, due to
the pandemic. Yes, yes, one thousand times yes. And if
we're gonna limit it just to you know, kind of
pushing that the answer through a financial prism, like, let
me try and do it that way. So you know,
first the obvious, right, if you can stay in your
(35:18):
house if it's safe to do so, you know, psychologically
and physically, and it's not for every every kid and
every family. Um, if your parents or parents are willing
to let you live there, hopefully rent free, maybe even
continue to provide the food. Right, you can go work
for twelve months and make twenty grand and you know,
put it away and that that's that's one five of
of the cost of college. You know, most flagship state universities.
(35:41):
That's a big deal, right, go do that if you
need the money. Um, you can work for nine months
and you know, save half the money and take the
other half and go have an adventure someplace. Um, these
are things that you can do, and so you know,
it's it's worthwhile for all all sorts of develop developmental
reasons which will leave aside for now. Um, but if
you believe in extracting the most value that you possibly
(36:06):
can from the classroom in particular, people who take gap
years get better grades than those who don't. This has
not been proven with like real PhDs connecting science on
the matter. Right, So, um, you know, if you want
to extract more value from the education, take a gap year,
go to college when you're nineteen, not when you're eighteen. Uh,
there still seems to be the possibility that, you know,
(36:28):
the private colleges and universities in particular will give you
a better deal on financial aid if they don't follow
the you know, the new federal formula if you have
um overlap. Right, So, if you've got a sibling and
you are three years older than your sibling, if you
take a gap year, you're essentially adding one more year
(36:50):
to the potential years of overlap where the two of
your in college. If your sibling does not take a
gap here, Um, so you want to think about that too,
you could literally, you know, create another five figure is
worth of need based aid eligibility for some families if
the privates continue to run their aid formulas the same way. So,
that's a lot of ifs, right, So they're assuming that
(37:10):
we're thinking about it, your younger brother or sister might
also go to the same school, and that's why they're
gonna offer you more money. So just in general, the
way the formula works now, um, and this is what
the facts that proposes to change. But the you know,
private universities may not follow it is that you know,
logic would dictate if you've got two kids in college
at once, you can afford to pay less than if
(37:32):
you only have one kid in college at once. Right,
So if you increase the number of years of overlap,
that increases the number of years that you have those
extra discounts, assuming both colleges are kind of operating with
similar formulas. Gotcha. Yeah, so Ron community college at least
for a couple of years of your college education has
(37:52):
always been a popular suggestion as a way for people
to save money. But you actually say that going that
route could cost you more than it saves. Why is that.
I am not trying to discourage people from going to
community college. I am only trying to make sure that
people are realistic about what actually happens. Right. So the
fact of the matter is that it's a pretty small
(38:14):
percentage of people who started community college with the intent
of getting to for year school, um, you know, and
and graduated a reasonable period of time. It's a small
pretendage to people who actually pull it off. So if
you're doing this as a hack right, as a way
to save money, I'm all for it. But you need
to go in with eyes wide open. And here's what
that means, right. You've got to show up with a
(38:34):
full head esteem. You've got to have an intended destination
in mind, preferably a a you know, major at that school. UM.
You've got to know at the very beginning what classes
you're going to need at the community college. You need
to be first in line to make sure you get
those classes. If you're going to be working for money
on the side, you need to have a job that
(38:55):
you know allows you to to put your your classes,
you know, priority one, right, So you get all your
classes and you're constantly in touch with an advisor at
the community college to make absolutely sure that these classes
are going to transfer to your intended destination. You have
a different advisor at the destination UM in the admissions office,
checking in with you three times a term. To make
(39:18):
sure that nothing's changed, everything's on track, you're gonna get
your credit um and then if you know that you
want to be a computer science major at the intended destination,
you've got to be certain that the chair of that
comp side department is absolutely positively going to improve it,
going to approve your prerequisites, because if you've got to
retake a bunch of stuff, then it takes longer, you're
(39:39):
spending more money and the savings is decreased. So you know,
it's not always simple. That's so smart. Yeah, it kind
of goes back to knowing your why. Like as long
as you can keep in mind what like why it
is that you are going to the community college, and
you keep that forefront of your mind, then yeah, it
could be a great hack. Like you said, uh right,
Is is there a good rule of thumb like for
how many school that families should visit or apply to
(40:03):
in order to make sure that you know they're getting
the getting the best price possible. Yeah, you know, I'm
struggling with this some personally because my daughters in ninth grade.
I don't take much stock in this notion that you're
gonna do damage to your children by talking to them
about college, you know, before their junior year, that it's
like too much, too soon, too much pressure. I mean,
these kids live in the world. They already understand that, um,
(40:26):
you know, college exists, and they're thinking about it and
excited about it. And so you know, I might take
our daughter to you know, see her first school sort
of informally in a couple of weeks actually, um, you know,
in the second half of her first year in high school.
So like yeah, right, Well, it's just you know, it's
it literally pays to to tour these places carefully and
(40:48):
not rush around on a tour in an information session
and in and out in three hours, right, And so
that takes time. Right, It takes money, and it takes
resources too if you're doing it in person, but it
certainly takes time. I'm to like really do the homework
on you know, a couple of dozen places to begin
to think like, huh, you know, big versus small. Maybe
(41:08):
I should go see some places, right, urban versus rural, right,
single sex, non single sex right, small lebal arts you know,
large enormous university, right, So you know, we can take
a year or two to kind of narrow that down
or begin to think about it, and then right, particularly
this year and last year to this was the case.
(41:28):
You know, there there there's a higher probability of like
outsize surprises financially because all the algorithms that the school's
normally use to you know, offer up discounts and you know,
sort people out. Um, they're having trouble predicting how people
are going to behave in the middle of a global pandemic.
No surprise there, right, And so schools that come up
(41:51):
real short in March and able to start to get worried,
you know, they're gonna throw a lot of money around
and they just might throw it at you. And so
you know, the more schools you've apply to, the better
chance you have of having some kind of awesome financial surprise. Nice. Uh,
and all, we got one more question for you, Iron
you talk about independent college counselors Towards the end of
(42:12):
the book, When does it make sense for a family
to hire someone to help them make these big decisions
because obviously your book is like pages long, um, and
it feels like one of these things for a lot
of families that's overwhelming. So yeah, should they be hiring
someone who's in their corner who knows more than they do.
I'm a big believer in pain for professional services UM
(42:34):
when the stakes are high, and the stakes are high. Here,
the thing that I have not solved for that pained
me greatly in the writing of the Price you Pay
for college is that it still doesn't feel to me
like there is a fail safe way to go looking
for an independent college counselor and know for sure just
(42:55):
how smart they are on UM need based ay and
merit aid. Because let's face it, right, you know, if
you're going to hang a shingle as an independent college counselor,
what you want to do is, you know, charges as
much money as you possibly can. But the people who
need financial aid or the people who you know feel
like they need merit aid, they can't afford to pay
(43:16):
you a ten retainer, right, And so it doesn't make
a lot of financial sense for an independent counselor to
focus much on that part of the market. And so
the question that becomes, well, how do I find the
practitioner who is an expert on a family like mind
that earns a hundred seventy two dollars a year is
(43:37):
going to have, you know, some financial need maybe a
private universities, but probably not a ton um but is
super interested in merit aid, Like where is my expert
that really understands that part of the market. And you
know the answer to that question is there aren't actually
all that many of them. Um, I wish there were more.
It's almost like there needs to be a tuition fit
for advisors, like like you know, I mean if there's
(43:59):
some sort of database or something like that where folks
could kind of give their feedback on, you know, with
their profiles as to how much money that they were
able to retain. Yes, exactly right, and so um, there
are four or five associations of independent college counselors, and
one of them has a subgroup of people who are
really interested in this stuff. But I can't even get
(44:20):
that association to make the names of those members public
anywhere on their you know, consumer search page. I tried, Right,
you would think that that like that would be a
resource worth making available and shining a light on, but
but it hasn't worked yet to my great frustration. Well, anyway,
(44:40):
if people want to email me, Um, you know, I
I know a handful of people who who I know
are good and I don't mind throwing some names out.
So you know, I met Ron Lieber dot com. I'm
easy to find, Ron, You're the best. And obviously people
can find you at Ron Lieber dot com. They can
find you in the New York Times, you know, on
on a weekly basis, and they can find your new book,
the price you pay for college, anything else you wanna
(45:02):
tell folks, tell our listeners about you. No, just that
I'm you know, glad to have this out there. I
am here to help. And um my feeling about this
after it was all said and done was hope more
than anything else. You know. I went to a lot
of schools, and I could imagine my daughter. I'm happy
and thriving. It's just about all of them. That's awesome. Yeah,
(45:22):
I'm glad to hear that that even through all of this. Yeah,
you were able to land on hope at the end
of it. So Ron, you rock. Thank you so much
for this, uh this conversation, and we appreciate it. Man,
I was great to be here. Thank you, all right,
Matt Ron Lieber just rocketed up the list my favorite
human beings. What a fun conversation and just enlightening. Um
(45:43):
just he brought so much passion, wisdom, and energy to
this conversation. I honestly wish like our oldest kids, like
my oldest daughter was older, like even older almost, so
I could put some of this to work, like immediately. Yes,
like some of what I learned I want to implement.
I think sometimes when you sit on knowledge like us,
is just like, well, this is good to know now
that like I wish I could put this to use,
you know, like I wantant to start saving myself money
(46:05):
now makes me want to adopt a fourteen year old
do it? Dude? I can implement it, but that would
you know, throw off some other family dynamics. But yeah,
I talked to your wife about that first before I
need one. Um. But yeah, what was your big takeaway
from our convo with Ron? Well? I liked at the
end he we you know, we asked about community college,
and he specifically, you know, made a point to say
(46:26):
that he wasn't against community college in order to save money,
but how a high percentage of folks who go to
community college don't actually end up transferring to a state
or private school. Uh. And he said that if that
is your approach, if that's what you're gonna do, you're
gonna go to your local community college to save some money,
get some of the pro acquisites, some of the base
classes out of the way. You need to make sure
that you have in mind your goal, your end goal.
(46:48):
You need to know your why. And specifically he said
how it's good to have a specific school in mind.
You know, like you're not just going to community college
to save money, so that you don't have to pay
that money to where to what school? You know, like,
have a have a school in mind, even have a
specific degree in mind. There's nothing worse than not having
credits to transfer when you're like, because this is totally
gonna work out, you're paying twice, uh and you're doing
(47:11):
twice to work twice the money. But my gosh, and
and he recommended to specifically be in touch with an
advisor at that target school, be in touch with some
checking within multiple times every semester. Make sure that the
classes you're taking, make sure that the classes you're you're
signing up for for next semester that those are all
going to apply to whatever degree that you're looking to
pursue at that specific school. It's going to give you
(47:31):
so much clarity. Uh. And you're on a path, you're
you're you're on a track, versus just kind of going
to community college and feeling like, all right, let's I'm
gonna lay in somewhere and not totally sure where. But
that has a ton of negative consequences down the road
because things may not line up, those credits may not count. Yeah. Well,
I think my big takeaway from our our conversation here,
let me hear it, was that the average discount at
(47:53):
a private school, it's like it's so big, that's huge, right,
And so I think like that the biggest thing, the
way that translates for or our listeners out there, is
if your kid is excited to go to a school,
don't necessarily let that sticker price make you think that
you can't afford it, because that sticker price doesn't reflect
what most people pay to go to that university. And
(48:14):
I think sometimes people can be like, man, that school
is really expensive, and it is. But um, at the
same time, there are all sorts of merit aid opportunities
for you to go to that school at a greatly
reduced price, and not only merit aid, but the need
based aid as well. But like, I think it's important
just to just to be aware of the fact that
there's a game that you're playing. You know, it's it's
sort of like, I mean, we don't recommend for folks
(48:34):
like everyone to go out there and buy a new car.
Like for some folks that make sense, not for everybody,
But if you go to a dealership, you you have
to know that you're you're playing a game. You know,
like there's a there's a process, there's a dance, and
there's a way to win, and then there's like an
uninformed way to lose exactly. And we do not want
folks to be uninformed and losing when it comes to
you know, what they're spending on their kids college, or
what students are out there, what loans they're taking out
(48:56):
in order to to go to that school. It's so
important and I'm glad that we were able to talk
about that today with Ron. I'm also glad that you
and I we got to share a different type of beer.
This is This isn't a style that we normally have
on the show, but I'm glad we were able to
switch it up. Man. Yeah, So this one was called
Austar cop By Scepter Brewing Arts, and this is a
brewer that's like right around the corner from us. I
haven't actually been to this brewer yet, but I figured
(49:17):
i'd i'd pick up a can at our local bottle shop.
And and this is a Southern oyster rouch beer. I'm
pretty sure rouch beers are smoked beers, and this one
definitely has like a smoked flavor going on. Yeah, what
were your thoughts on this beer? Yeah? So immediately, like
you can't deny the fact that there's smoke going on
in this beer. It's like it's almost like a combination
of Scotch, which certainly has smoky elements to it. Uh
(49:39):
in a in a beer. But these types of beers
are made with malts that is like dried over smoke,
like over an open flame, so it imparts some of
that flavor in the malts. Uh, and you certainly taste
that in this beer. Uh. And I don't know if
all like oyster beers are also rosh beers. I don't
think so. But like an oyster stout before, Uh, it
(50:00):
loved that, Yeah, I think like so traditionally oysters like
they lend themselves I think to like the clarifying process
of the beers. But now I think like literally there
are like oyster flavors that get imparted into the beer,
but it tastes a touch briny. I'm not gonna lie. Yeah. Well,
so the fact that this combines a rosch beer, which
is a like a smoke beer with oyster flavors, it
totally makes me feel like I'm just like slurping down
(50:21):
some oysters that were like roasted over like an open
wood fire. Uh. It definitely makes me think of my
favorite Scotch, which is Talisker, which has a super briny
note to it along with a smoke. This is like
the beer equivalent to Talisker, if there's any Scotch fans
out there who like that type of beer. But I
really enjoyed it. Man, this is not a style we
normally drink, but I'm glad that you and I got
(50:43):
to to share this one today. Yeah, what were your
thoughts on it? Though? Overall, it's definitely a funky style
and it's definitely one I think I've literally had one
other rotch beer before in my life, um, maybe two,
and so yeah, the smoked element of a beer is
is interesting because that's not what you're expecting going into it.
I think a lot of our listeners who are like
craft beer novices, they might not be into the speer. Yeah,
(51:03):
m it might be a little too out there for them,
but unless you really like barbecue. But it's kind of
that earthy, smokey, you brininess to it, and um, you know,
I thought it was like fascinating. It was kind of
funny to get to try something that was completely off
the beaten path on the show today. Absolutely. All right,
Well that's gonna do it for this episode. For folks
that want show notes for this episode, there's a lot
(51:25):
that we're gonna link to and that's up on our
website at how to money dot com. That's right, and Joel,
that's gonna be it for this episode until next time.
Best Friends Out, best Friends Out,
Welcome to How the Money. I'm Joel and I and
Matt and today we're talking a college cost cutting roadmap
with Ron Lieber. Yeah. Ron Lieber has been the Your
(00:27):
Money columnist for The New York Times since two thousand
and eight and is a three time winner of the
Gerald Lobe Award, which is financial and business journalism's highest honor.
He is the author of multiple books, including the recently
released The Price You Pay for College, which is already
a definitive guide to help parents and students think through
important decisions when it comes to higher education. Uh. He
(00:49):
lives in Brooklyn with his wife, who is also a
New York Times journalist, and his two daughters. And Ron,
thank you so much for joining us today on the podcast. Oh,
it's so exciting to finally make my debut here. We
we've been waiting for this, Ron, and you know, the
publication this book was the perfect time to bring you
on for sure. And uh yeah, the first question that
we ask anybody who comes on the show though, Um,
(01:10):
you know, Matt and I we like craft beer. That's
one of the things we splurge on in here now
while we're saving and investing for the future. But we
want to know, like, what's your splurge, what's your craftier equivalent? Yeah,
so beer hurts my belly turns out. Yeah, in my
advancing age, it's it's not really agreeing with me, which
is sort of unfortunate because right, yeah, I used to
(01:32):
agree with it. So, you know, in general, and this
is a non pandemic splurge. In general, I tend to
splurge on live music experiences to the extent that it's possible.
I do not really spare much expense or think much
about what it costs. And well, I don't generally enjoy
(01:52):
the process of embracing the you know, sort of ticket
scalping economy. Gosh, ticketmasters. The word, um well ticketmaster, you know,
on its own is a deeply problematic, problematic institution. Um,
but you know, the markups on StubHub or whatever. You know,
I would so much rather the artists get those, um
(02:13):
extra dollars. But in any of it, right, Um, do
you remember the last show you went to see before
everything shut down? The last show I went to see
Versus and then Versus the last splurge um that was required.
You know, I think there was a whole steady show
somewhere in there, close to the end. Um. I'm a
(02:33):
huge fan of the whole study. Those tend not to
be splurged tickets, you know. I I will splurge on Broadway,
I will splurge on Springsteen. Those are generally the big splurges. Nice. Yeah,
I get runs there at like the three Nights on
a Row kind a show. He's like third Row every night. Well, yeah,
(02:54):
I mean back in the day when when touring was possible,
you know, I would go to you know, three dead shows.
I've dead shows, two fish shows, right, you know, I'm
I'm definitely a repeat customer for any rock and roll
or related organization that does not repeat the set list
from night. I love that. That's so good. Well, let's
(03:14):
let's dive into your book. You know, we wanted to
ask you, like what led you to write this book
in the first place. You know, like you've written about money,
but then specifically you know the price of college and
student loans for years now. But you know, we were
wondering as part of the you know, the impetus was
having daughters and trying to figure this stuff out for yourself.
Is that the case? Yeah, I'd say some of that's true.
I mean, the art begins with the personal, but it
(03:36):
sort of ends with the professional. Right. So I have
my first kid in two thousand five. I've got two
daughters now. One of them is fifteen high school freshman. Uh.
The other one is five and and just started kindergarten,
So you know, the ninth grader is kind of creeping
up on this stuff. So when she was born in
two thousand five, I was at the Wall Street Journal
and began, naturally, as one does, to write a little
bit more about how to save for college five nine plan.
(04:00):
And they weren't so good at the time. There was
a lot of mediocrity there, and so I spilled a
little innk on that um two thousand and eight, two
thousand nine, I've moved over to the New York Times.
During that recession, a lot of people washed out of
some pretty expensive undergraduate institutions with six figures of undergraduate
student loan debt that they had not needed a cosigner
(04:21):
for um. Things have changed a lot on the mechanics
of how that happens or doesn't happen at this point, right,
But there are a whole bunch of us who all
of a sudden got radicalized around the you know, sort
of ever growing um nationwide student loan balance. And for
at least ten years now, I've written about student loans
off and on, you know, to this day. But what
(04:42):
happened to two thousand fifteen that really had nothing to
do with me and everything to do with readers, is
that my email inbox and my voicemail started to fill
up an ever higher volume each spring with parents who
are having three related problems. There were the parents who
had just assumed they were going to get a bunch
of financial aid or their kid and did not realize
until the very end that they were not going to
(05:03):
be eligible. And they had made a bunch of promises
to their kids, um that they weren't sure they were
gonna be able to keep anymore. So that was a problem.
Second kind of parent, UM, they had been offered with
their first or their only kid, this thing known as
merit aid in the financial aid award letter, and they
hadn't even realized they'd applied for this, didn't know what
it was, college counselor hadn't explained it to them. And
(05:26):
so they come to me and they're like, Ron, what
what's this Merit aid stuff and can I get some
more of it? Right? And you know, it's April twelve.
I can't really do much for them at that point.
So that troubled me. But what really put me over
the edge was that I started to get calls from
slightly more sophisticated parents, right, parents who had figured out
the system. They had, they had, you know, sort of
understood it and and known to do the research, but
(05:48):
they were having a different set of challenges. Um. You know,
imagine a New York State resident. Uh, the kid gets
into Binghamton, which is you know, arguably the best or
the flagship state university. Uh, the kid gets into Kenyan
College in Ohio or Occidental College in Los Angeles, and
they're they're not being asked to pay the full price.
(06:08):
They get a Meritate package and so the school is
going to cost them two hundred thousand dollars over four years.
And then the kid manages to get into Cornell. You know,
it's got an Ivy League invitation, but no discount there.
That family earns let's call it, two hundred and fifty
seven thousand dollars a year. Cry them a river, right,
but they don't qualify for any need based state. So
they said to me, Ron, your newspaper hasn't shut up
(06:30):
about the fact that we live in the era of
big data. Right, So where is the big data set
that tells me how and why Cornell is a hundred
thousand dollars better than Kenyan and two hundred thousand dollars
better than Binghamton. And I had no idea, because the
big data set doesn't exist. There isn't even a small
data set on this stuff. And what I realized was
that these readers were asking questions about value and values ultimately,
(06:54):
because values are you know, part and parcel of how
we make the value decision. And so for all the
ink that I had build over how to save and
how to pay, I had not gotten gotten it through
my thick skull in the space of ten years. Right,
that the most important question of all was what to
pay for college. That's what these people were trying to
figure out. And I had failed them to that point.
(07:17):
And I realized that there was gonna be no way
to answer that question in a newspaper column or in
five or in ten and it was going to require
a book, yeah, something more like pages. Right. Uh, Hey, Ron,
we've We've all seen the chart that shows how the
cost of college has been soaring over the past forty years,
you know, talking about value, and everyone has been bending
(07:39):
over backwards to try to explain why. But in your
book you actually discuss how that stat is a little misleading.
The college costs haven't been rising at maybe the clip
that we we thought they've been rising at. Can you
kind of explain that? Sure? So, you know, it gets
complicated for many of my customers, right, I mean the readers,
but I also think of them as customers because they've
(08:00):
pay to subscribe to The New York Times and they
pay dollars at the list price for a hardcover nonfiction book. Um,
the demographics of those folks, you know, tend to be
upper middle class. And the farther you get into the
upper middle class, um, the less likely it is that
you're going to be offered any need based financial aid.
So many of those folks are anchored to the list
(08:22):
price of schools because they think that's what's they're what
they're going to pay. Now that's quite often not the case,
but right that that's sort of what people anchor to,
at least in my customer base. So they're thinking, okay,
you know fifty most selective schools in America. I want
the best for my kid. That's gonna be three grand
right at the private um level. And you know, my
(08:43):
flagship state university probably gonna cost a hundred thousand dollars
by the time it's all over. What they do not
realize is that the average discount at private colleges is
over fifty and moreover or so of families are not
paying the full price. And that includes a whole bunch
of rich kids who are getting discounts anyway. Right, So
(09:05):
when you say that to people, they're like, huh, how
did that happen? And then you've got to spend like
a minimum of ten minutes slowly and deliberately peeling back
the layers of the ending. I mean, essentially, it's kind
of like the difference between the sticker price and the
actual costs that they pay, you know, so like, what's
going on with this? Essentially it's like a charade. You know,
(09:26):
why don't college is just like lower the actual tuition costs? Uh,
you know, in the in the price, you know, the
cost of education. In a more straightforward manner, like like
why is it that we have these you know this
this inflation kind of builds into the price of the
sticker price in the massive discount. Yeah, yeah, exactly. Yeah,
Well you sort of have to think about it like
a business person, which we're not used to, you know,
(09:47):
thinking of when we think of colleges, because we don't
think of them as the viciously competitive institutions that they
actually are. Right, there's a real competition to get the
heads in the beds and to make sure you've got
you know, the right net tuition revenue per per student
to to to to make your numbers and and to
make your budget. Um. So here's what's going on there.
First of all, there is a perceived value question UM.
(10:11):
That's kind of at the root of some of this. Um.
It's referred to in the industry as the Chivists regal effect,
and it goes like this, and this is a legend. Right.
I was not able to confirm it with Chivists because
they want to talk to me about it. But the
way estrangely right, like any legend that has to do
with a liquor, I'm I'm down for ye. Yeah, I
guess they did not want to pierce the bubble of
(10:33):
you know, whatever it was that they thought was over
and around their brand. But as the legend goes, one day,
many years ago, in a galaxy far far away, um,
someone at chivist Regal decided to you know, double the
price overnight to try and increase the brand sort of
perceived value on on the liquor store shelf. And sure enough, um,
(10:57):
the company's revenues you know, increased by like way more
than they expected it to, because all of a sudden,
people thought that Schivis Regal was better than it used
to be, even though nothing changed inside the bottle. Right.
And so the lesson that higher education professionals took from
(11:18):
this is that if you have a high list price,
people will think that you are worth something worth more. Right.
And then when you give them a discount, particularly when
they don't need the discount, right, particularly they can afford
to pay the full price, that family will feel like
they've gotten a bonus, maybe a gold star pat on
(11:38):
the head for having raised a Yeah. Right, you know,
this is marketing. This is marketing, and the other thing
is um. At any given institution, particularly the more selective
ones that still discount this way, they are always holding
out hope that some percentage of people will will turn
(12:00):
up each year who are in fact both willing and
able to pay the full price and not just able. Right,
And so what kind of family is that? Well, if
you are a super affluent family and you have no
idea that these discounts exist, and you don't really care
all that much about money, and you're not careful, you'll
just write the check, right, and you'll you'll never be
(12:22):
the wiser. Right. So schools like to take advantage of
families like that. Um, then there are the families who
are like writing this check against the bank of thank god. Right,
So you know, imagine yourself, Um, you know, just hoping
against hope that your your your kid will go to
two Lane University the same way that you did, right,
(12:42):
And you know that the place is much more selective
than it used to be. And maybe your kid has
had a rough go of you know, freshman sophomore year
in high school, but they've like totally turned it around.
Junior year. They managed to get you know, a seat
at an s a T test center and once you
know it, they scored a fifteen twenty and to Lane says,
you know what, we're going to take a shot on
on your kid, and we're gonna give you the benefit
(13:04):
of the the doubt. We believe in your family and you
know in its tradition of coming to school here, but
no discount for you. And you're like, wow, I can't
believe we pulled this off. Um, the kid's gonna go
to Tulane. We don't care what it costs, right, bank
of thank God. And then they're all of these families
from outside the United States, and you know, many of
them are kazillionaires, and they don't care much about the
(13:25):
price either. They just want a degree from a relatively
brain brand name institution or you know, just one that
says America on it. And if you can attract enough
of those folks, particularly now that there is someone in
the White House who is not as hostile um to
people showing up here from outside of the United States
in general, um, you have reason to hope. Right. So
(13:47):
those are all the reasons you keep the list price high. Ron,
Let's talk about college enrollment in COVID. Obviously we've seen
college enrollment fall because of the pandemic, and you actually
mentioned to study in your book that six professors and
administrators have said that their courses are worse in virtual era.
So how how do you think that college, Um, the
(14:07):
college value proposition has changed because of COVID. Well, so,
you know, we should stop and think about how we
define decline, right, because in different tiers of undergraduate education,
there's been different levels of decline. And at the you know,
let's call it two D most selective colleges and institutions
(14:28):
in America, the you know, the ones that have stayed
open more or less, um, you know, have not seen
huge declines, you know, sort of devastating revenue declines. And
the thing that's interesting about it is that you know,
people are showing up to pay the same price as
they paid last year for the most part. You know,
there's been a few discounts here and there, but but
not many. Right, And so I guess here's what I
(14:51):
have to say about that. Right, Um, what happened in
the spring of is that everybody got sent home and
all of a sudden, you know, the three main reasons
for going to college, right, the education, the kinship you know,
the friends you make in, the mentors you require, and
the credential. Two of those things were stripped away. As
(15:11):
you mentioned in the question, right, education got a lot worse.
Everybody acknowledges that kinship is like blown to smithereens because
you're not near your friends or your mentors anymore. Only
the credential is left. And you know it's some question, uh,
you know how much the credential matters? Right if you
are a food and beverage major at Cornell University, right
(15:32):
you're majoring in hotel management, you know, at Arizona State
or something like, how much is that credential going to
be worth right now? When those industries have been cut
to ribbons? So you know, the the value is not
what it once was, which makes it somewhat surprising, right
that all of these people came running back to campus
(15:54):
um in in August and September against all you know,
sort of public health reason, and you know thousands and
thousands and thousands of them got sick, right, So why
did they do this? Well, you know, because the education
had gotten worse, because the kinship was gone, and you know,
people were desperate to continue to persist with this experience. Now,
(16:14):
if I'm writing to check up to eighty thousand dollars
a year, I ain't doing it. It doesn't doesn't make
any sense to me right that this is this is
not a normal college experience. This is not what I
signed up for for my kids. And as somebody who
wrote a book about gap years back in, I already
think the college is wasted on most eighteen year old
(16:35):
So you know, my kid is my kid is sitting
this one out and and going to do something different
for a while. Ron. This has been a great start
to our conversation. We've got so much more when we
talk about with you. I mean, we want to talk
next about financial aid, you know, like how it is
that parents and students can get that fifty discount like you,
like you mentioned there earlier, And we're gonna get to
all of that right after the break. All right, we're back.
(17:04):
We're talking with Ron Lieber about how to get a
better deal when you're going to college. And uh, you know, Ron,
one of the things actually that that recently changed, um
it was surrounded financial aid was the expected family contribution
when you fill out the facts. Sadly that happened after
the publication of your book, but you wrote about it
(17:25):
in the New York Times. Um, since then, So what
effect is that change in the fast they're gonna have
on families? Sure. So let's start by, you know, framing
what we're talking about here. We are talking about the
need based financial aid system the facts that does not
have much of anything to do with merit aid. Um,
whole different way that meritate and those discounts are awarded. Right,
(17:49):
So what we're talking about here is need based aid
in order to get aid from the federal government. So
in order to you know, access the PEL grant or
the Federal student loan program or Federal Works Study funds
for jobs on campus, or a parent plus loan, you've
got to fill out one of these fafts of things.
And people hate the facts. The FAFTSA is arguably more
(18:11):
complicated than the ten forty income tax form, and you know,
the kid gets involved and the parents are involved. Some
parents refused to do it, and if you're a kid
who's strange from your parents or a parent, it gets
very complicated, you know, super super messy stuff. So, you
know the most important thing that's happened is that the
(18:32):
FAFTS is going to be simplified, which is a good thing. Right,
It's gonna be easier to fill this thing out. A
couple other things they are happening. Um, it's gonna be
easier for more people to get pell grants, and the
pell grants are going to get a little bit larger, right,
so people with lower incomes gonna have an easier time. Now,
there's some other things that are changing that have caused
(18:52):
you know, people in the you know, middle class and
upper middle class to wring their hands. One of the
provisions has to do with the fact that at if
you've got two kids in college at once, you're no
longer going to get the same break that you used to.
Now that's according to you know, the legislation, and the
federal law doesn't mean that private colleges are necessarily going
(19:14):
to do the same thing with their financial aid formulas.
So if you're thinking about applying to a school that
only relives on the fasts, you know, then you may
need to be thinking about that if you've got two
kids in their close in age. So much remains to
be seen and you know sort of exactly how that's
going to be interpreted, And there are a lot of
people already trying to petition, you know, the federal government
(19:35):
to uh to change that somehow, right, whether through legislation
or some other form. So um, you know, remains to
be seen. I think exactly how that one's going to
play out, but it's definitely one to watch. Doesn't go
into effect for another year and a half. Yeah, it's
certainly a work in progress. It's kind of a moving target.
I guess as you have kids, you know, approaching college age. Uh,
(19:57):
and so yeah, you're you're talking about need based aid
here and then earlier, you know, you detailed how the
financial aid system has changed in recent years, and you know,
let's talk about merit aid. Uh. So you know that
is kind of the it seems that that's the predominant
form of financial assistance these days. And so what is
it that led to that change? And how com parents
and students uh navigate getting more merit aid money? Sure? So, um,
(20:21):
you know, I like that you phrase that question by
pointing out the history because it gives an opportunity to
sort of tell the story of um, not how it
started exactly, but but how it spread and became so complicated.
So imagine yourself in the state of Ohio in the
early nineties, and there's a whole bunch of really good,
(20:43):
you know, small liberal arts colleges, so many in fact,
that they're really you know, beating the smithereens out of
one another. Uh, you know too in the competition for students,
and also a great public university system there. Right, So
imagine being you know, kind of near the bottom of
that food chain. You know, imagine being oh i oh
Wesleyan University. You've developed a well earned reputation for um,
(21:04):
you know, being a serious party school that is not
particularly serious about other things. Uh. You want to increase
your prestige because a lot of families just won't go
near you, um because you know they think their kids
will end up being alcoholics. Right, So you've got to
do something about this situation. Um, So what you do is,
you know, after this year's crop of kids take the
(21:26):
p s a t s. You start going out and
you buy the names of the kids who have better
p s a t scores and the kids you normally
attract into your applicant of pool, and you send them
a note saying, hey, we've got we've got our eye
on you. We know you're special. If you apply here,
and we'll let you apply here for free with no
application fee. If you apply over here, we'll give you
(21:46):
ten thousand dollars if you come off off the off
the list price. Right, no matter how much money your
family has, no matter how much money your family needs. Right,
So somebody starts going and throwing around, um, five figures
of money when nobody else is doing that, that's going
to have an impact. Right. It worked. It works so
well that competitors had to respond in kind because Dennison
(22:08):
did not like Ohio Wesley and stealing more than its
fair share of students, and Kenyan didn't like Dennison stealing kids,
and um, you know, Kenyan didn't like College of Worcester
doing the same thing either, And then Oberlin got really
annoyed that Kenyan started to do it, and pretty soon
everybody in the state of Ohio is doing this, and
it spreads not quickly but over time. So, right, you
flash forward twenty years or so, and all but the
(22:31):
fifty or sixty most selective colleges and universities, both public
and private. That works a little differently, public and private,
All but the fifty or sixty most selectives in the
country are offering at least some meritid Right, So you
take that enormous list of schools that are doing this,
and those two divide up into segments right, there are
the schools that only offer merit aid to a couple
(22:54):
of dozen people a year. Then their schools that only
offer it to a couple hundred of you know, new
entrants a year. Then it's you know, schools that offer
it to maybe half of the new people who come
in each year. And then there are schools now where
everybody gets a pony, right, where everybody gets a pat
on the head. And the challenge for families is to
(23:14):
figure out ahead of time which kind of school you're
dealing with, what sort of reasonable expectation they ought to have,
you know, for a discount offer, and how to sort
that out. And it is not easy. It's another five
or ten minutes of you know, verbiage to kind of
even begin to explain to people how to sort it out,
(23:36):
all right, So it does kind of beg the question,
how how can people find out what sort of merit
aid they're likely to receive from a college are interested in.
I don't, I don't want to, you know, make you
drawn on for ten minutes necessarily, but that is the
question that people are going to ask, Like, if I'm
interested in particular college, how do I know what sort
of you know, aid to expect. Yeah, so there are
(23:56):
a couple of things that people should know. UM. First
of all, the Net Price Calculator, which all schools are
required to have on their websites somewhere, is a way
to predict what kind, if any, of need based financial
aid you will be offered, so totally worth filling those out.
In some instances, the schools will allow you to input
(24:19):
your g p A and your test scores and will
attempt to predict what kind of merit aid offer you
might get as well. So it's worth checking the Net
Price Calculator to see if it is in fact a
merit aid prediction engine. In most instances it is not,
but sometimes it is, so you know, worth a shot.
So that's number one. Number two, by all means, check
the college's website UM to see if they say, you know,
(24:43):
what percentage of people got merit aid last year, what
sort of characteristics did they have? At some of the
more hard up schools, um Wabash College in Indiana, Lake
Forest in Illinois, the University of Alabama does this as well.
They just tell you straight up in like a grid chard,
you know, if you got a thirty four on your
A C. T. And a three point nine g p A. Um,
(25:04):
you know, this is how much of a discount you'll
be offered. And so that causes a lot of people
who really want to, you know, go to the University
of Alabama to take their S A T S six
times to you know, sort of try to get their
score high enough to get the better deal is you know,
so it has some unintended effects. Uh. Next step, and
this is not the last step, because why should this
be simple work at all? Um? The next step involves
(25:26):
looking for something called the Common Data Set, which most
but not all schools make available. The Common Data Set
contains all of the information that these schools pass on
to ranking organizations like US News and World Report. Um,
it's worth reading the entire Common Data Set if you
are even at all interested in any institution, no matter
(25:46):
how much you are able or willing to pay, because
there's all sorts of terrific data in there. But in
section H two A, H yes, yes, yeah right, it's like, um,
you just like go right to H two A, and
that will give you some information about how much meritide
is being offered to families who have no financial need whatsoever.
(26:08):
So that's a pretty good indicator of what's going on,
you know, is the school offering meridiate to everybody who
has no need or just like you know, ten percent
of the people who have no need? And what are
the characteristics of the people in the class in every
entering class who are are in the top um, you know,
what's their g p A, what's their test scores? That
(26:30):
is information you can get from the common data set.
And so from there you can begin to sort of guess, right,
what is going to happen. This is not the end.
There's at least two more steps, shall we yea, let's
do alright? Two more steps? All right? Um, because this
is so confusing because I have had to prattle on
for so long, not one, not to not three, but
(26:51):
four that I know of for profit entities have started
up just in the last couple of years to try
to provide some predictability um or match making around this.
Uh tuition fit dot com. That was the one that
seemed the most like the coolest idea from from what
I read in your book, like tuition fit seems awesome. Yeah,
(27:12):
so the big idea is like you send in your
you know, award letter to tuition fit it anonymizes everything,
puts it into a database, and then all of a sudden, Um,
you've got some context. Right, So you know, Dennison College
Dennison University in Ohio offers you, uh, you know, twenty
one dollars off and you've got a you know, thirty
(27:33):
two on your on your a C T. Uh. You
can go in there and see, oh, look there's a
there's a student with statistics like mine and and she
got twenty five thousand dollars off. And uh, I'm a boy, right,
so should I be more valuable because Dennison's like female
or like what's going on here? Right? You know the
fact that I play an oboe and and maybe she
(27:55):
doesn't like Z can a matter? It couldn't matter, right,
you know, you know it gives you a little bit
of anecdotal context. You know, it's not like scientifically, but
get yeah, you get to hear from people. It's sort
of like glass door, but for colleges. That's a really
good comparison. It's about like that. And then um, there's
(28:18):
a company called edmund E d M I T. There's
a new one called merit More. And Debbie Schwartz, who
runs the Pain for college one oh one Facebook group,
which is indispensable to my mind for anybody who wants
to geek out on this um. She's got her own
um hustle there where she u has some merit aid
prediction figures that she generates using common data sets and
(28:39):
other tools. Right, so there's like four startups in the area.
And then finally right, I want all of my readers
to act and behave as if we exist in the
world that we wanted to be, and not the world
as it is. So I'm encouraging everybody. I'm trying to
raise an army. Essentially. I think everybody should innocently, but
(28:59):
not so innocently, call these schools each September and say, hey,
I don't have any real way to predict what kind
of merit aid my kid might be offered here, And
you seem to think that I should be willing to
apply without having any idea what the price is. And
that doesn't really make a lot of sense to me.
Doesn't make sense to you, No, I didn't think it
made any sense. Can you give me just a you know,
(29:22):
non binding merit aid preread given my kids you know,
activities and s A T S and g p A
and if they won't do it, if they refused to,
then you might say, oh, that's so interesting because College
of Worcester has been doing that for years and Whitman
College just started doing it a year ago, and you
don't want to do that? Huh? Why? I love I
(29:45):
love that tip, Ron, because it's really it's taken things
into your own hands and saying and kind of asking
for the information when it's not readily available. I think
I think that's like wonderful advice. I mean, exactly, tell
them I sent you and if they won't um, and
if they won't cough up the information, come and tell
me at Ron Liebert dot com and I'll call them up.
(30:07):
I'll call them. I love that. The fifth point here
is is the Ron lieberway, which is this is uh
calling for more transparency when it comes to meritate and marketologies.
I love it. Uh. Well, you know, let's let's talk
about real quickly here, like getting what you pay for.
You know, you spend a lot of time in your
book writing about value. We're all about getting you know,
the most bang for your buck when it comes to
higher education. So like, what should students and parents be
(30:29):
looking for? In a college. And I know you cover
a lot of this in your book, so if you
want to pages dedicated to it, but if you wanted
to pict like a few of your favorites here, I'm
curious to to hear your thoughts here. Well, it starts
with the framing question. Right, Um, you can't have that
conversation before you have defined what college means to you.
And this is not some like existential philosophy one on
(30:50):
one exercise. It's actually a real non rhetorical question because
what I found repeatedly as I ran laps of the
country was that there were a whole bunch of people
out there or you know, flinging hundreds of thousands of
dollars around, that hadn't really stopped to ask themselves like
what is the definition of success here? And how much
is enough? Right? What is college for? Anyway? And it
(31:12):
turns out the colleges for three things we name checked
him before. Right, college is about the intellectual roller coaster ride,
It's about the learning. It's about having your brain broken
apart and then reassembled by an expert practitioner into like
a bigger, better version of what it used to be. Right, So,
college is about the education. Number one. Number two, College
(31:34):
is about the kinship. It's about finding the people you
never could have imagined existing in the world and making
them your best friends who will pick you up on
their shoulders and carry you through life. And it's about
finding the mentors um who will do the same thing.
But maybe they're like dragging you by the neck, you know,
into a bigger and better version of yourself. Right, So
that's number two. Number three is the credential. Maybe it's
(31:56):
a baseline credential that allows you to you know, grasp
hold of the middle class in a way that your
family has not been able to before. Or maybe you're
reaching way up high for like the super name brand
institution where the degree will mean something in an industry
that your family or your community has absolutely no hope
of ever accessing without that degree. Right, So you've got
(32:19):
to know what you're coming for and and once you do,
you can shop for that right Because if you could
care less about learning anything, then it doesn't matter whether
there are graduate students teaching all of the introductory level courses,
because that's not what you're there for. Right, Like, imagine
yourself as the you know, third generation child of a
casket owning manufacturer in Southern Indiana, right, and you're gonna
(32:44):
go to the right So you're gonna go Yeah, so
you're gonna go to the Did you know the Southern
Indianas like the world capital of casket manager. No, no, no,
no way, no way. Back when I was at Fast
Company Magazine in the nineties, I went to visit one
of the casket companies. It was awesome. Um, you can
put that story in the show notes of you will
(33:05):
so right. So, so, you're going to the Kelly School
of Business, flagship State School, Indiana University undergraduate and you
really care about the learning because you're gonna learn what
you need to know on the job right from your parents,
from your grandparents. Right, They're gonna teach you everything that
you need to know. What you really want out of
the Kelly School Business is not the credential, because the
credential doesn't mean much. You just want to build the
(33:27):
best possible network, right. You want a whole bunch of
people who are gonna know you, remember you, and when
they die or their parents die, they're gonna get your casket.
They're gonna call you up. You're going to offer them
the friends and family discount code, and your Family Casket
Company is going to be known because you were in
the most social sorority. You were in the most business
(33:49):
oriented fraternity. You are at the Kelly School of Business
for the kinship and the kinship alone. Right, So that's
a way to shop and I totally approve of that.
Do whatever you want, right, but don't go into the
process without having asked the fundamental question and answered it
about what college is for. I love that. All right, Hey, Ron,
we got a few more super practical questions about uh,
(34:12):
cutting college costs, and we'll get to those right after
this break. All Right, we are back. We're talking with
Ron Lieber and his most recent book, The Price You
Pay for College, And you know, Ron, before the break,
we're talking about financial aid, and now we're going to
(34:34):
kind of dive into some more practical advice to maybe
potentially get the price down on college and real quick.
You know, you mentioned in the first section there the
gap year. You said you mentioned you wrote a book
back in about the gap year. Do you feel that
that's a good idea? Is is a gap here a
good idea for folks to potentially save some money, to
not burn, not waste that first year in college and
(34:55):
then specifically to UH and you're like, now with COVID,
does it make even more sense you know, due to
the pandemic. Yes, yes, one thousand times yes. And if
we're gonna limit it just to you know, kind of
pushing that the answer through a financial prism, like, let
me try and do it that way. So you know,
first the obvious, right, if you can stay in your
(35:18):
house if it's safe to do so, you know, psychologically
and physically, and it's not for every every kid and
every family. Um, if your parents or parents are willing
to let you live there, hopefully rent free, maybe even
continue to provide the food. Right, you can go work
for twelve months and make twenty grand and you know,
put it away and that that's that's one five of
of the cost of college. You know, most flagship state universities.
(35:41):
That's a big deal, right, go do that if you
need the money. Um, you can work for nine months
and you know, save half the money and take the
other half and go have an adventure someplace. Um, these
are things that you can do, and so you know,
it's it's worthwhile for all all sorts of develop developmental
reasons which will leave aside for now. Um, but if
you believe in extracting the most value that you possibly
(36:06):
can from the classroom in particular, people who take gap
years get better grades than those who don't. This has
not been proven with like real PhDs connecting science on
the matter. Right, So, um, you know, if you want
to extract more value from the education, take a gap year,
go to college when you're nineteen, not when you're eighteen. Uh,
there still seems to be the possibility that, you know,
(36:28):
the private colleges and universities in particular will give you
a better deal on financial aid if they don't follow
the you know, the new federal formula if you have
um overlap. Right, So, if you've got a sibling and
you are three years older than your sibling, if you
take a gap year, you're essentially adding one more year
(36:50):
to the potential years of overlap where the two of
your in college. If your sibling does not take a
gap here, Um, so you want to think about that too,
you could literally, you know, create another five figure is
worth of need based aid eligibility for some families if
the privates continue to run their aid formulas the same way. So,
that's a lot of ifs, right, So they're assuming that
(37:10):
we're thinking about it, your younger brother or sister might
also go to the same school, and that's why they're
gonna offer you more money. So just in general, the
way the formula works now, um, and this is what
the facts that proposes to change. But the you know,
private universities may not follow it is that you know,
logic would dictate if you've got two kids in college
at once, you can afford to pay less than if
(37:32):
you only have one kid in college at once. Right,
So if you increase the number of years of overlap,
that increases the number of years that you have those
extra discounts, assuming both colleges are kind of operating with
similar formulas. Gotcha. Yeah, so Ron community college at least
for a couple of years of your college education has
(37:52):
always been a popular suggestion as a way for people
to save money. But you actually say that going that
route could cost you more than it saves. Why is that.
I am not trying to discourage people from going to
community college. I am only trying to make sure that
people are realistic about what actually happens. Right. So the
fact of the matter is that it's a pretty small
(38:14):
percentage of people who started community college with the intent
of getting to for year school, um, you know, and
and graduated a reasonable period of time. It's a small
pretendage to people who actually pull it off. So if
you're doing this as a hack right, as a way
to save money, I'm all for it. But you need
to go in with eyes wide open. And here's what
that means, right. You've got to show up with a
(38:34):
full head esteem. You've got to have an intended destination
in mind, preferably a a you know, major at that school. UM.
You've got to know at the very beginning what classes
you're going to need at the community college. You need
to be first in line to make sure you get
those classes. If you're going to be working for money
on the side, you need to have a job that
(38:55):
you know allows you to to put your your classes,
you know, priority one, right, So you get all your
classes and you're constantly in touch with an advisor at
the community college to make absolutely sure that these classes
are going to transfer to your intended destination. You have
a different advisor at the destination UM in the admissions office,
checking in with you three times a term. To make
(39:18):
sure that nothing's changed, everything's on track, you're gonna get
your credit um and then if you know that you
want to be a computer science major at the intended destination,
you've got to be certain that the chair of that
comp side department is absolutely positively going to improve it,
going to approve your prerequisites, because if you've got to
retake a bunch of stuff, then it takes longer, you're
(39:39):
spending more money and the savings is decreased. So you know,
it's not always simple. That's so smart. Yeah, it kind
of goes back to knowing your why. Like as long
as you can keep in mind what like why it
is that you are going to the community college, and
you keep that forefront of your mind, then yeah, it
could be a great hack. Like you said, uh right,
Is is there a good rule of thumb like for
how many school that families should visit or apply to
(40:03):
in order to make sure that you know they're getting
the getting the best price possible. Yeah, you know, I'm
struggling with this some personally because my daughters in ninth grade.
I don't take much stock in this notion that you're
gonna do damage to your children by talking to them
about college, you know, before their junior year, that it's
like too much, too soon, too much pressure. I mean,
these kids live in the world. They already understand that, um,
(40:26):
you know, college exists, and they're thinking about it and
excited about it. And so you know, I might take
our daughter to you know, see her first school sort
of informally in a couple of weeks actually, um, you know,
in the second half of her first year in high school.
So like yeah, right, Well, it's just you know, it's
it literally pays to to tour these places carefully and
(40:48):
not rush around on a tour in an information session
and in and out in three hours, right, And so
that takes time. Right, It takes money, and it takes
resources too if you're doing it in person, but it
certainly takes time. I'm to like really do the homework
on you know, a couple of dozen places to begin
to think like, huh, you know, big versus small. Maybe
(41:08):
I should go see some places, right, urban versus rural, right,
single sex, non single sex right, small lebal arts you know,
large enormous university, right, So you know, we can take
a year or two to kind of narrow that down
or begin to think about it, and then right, particularly
this year and last year to this was the case.
(41:28):
You know, there there there's a higher probability of like
outsize surprises financially because all the algorithms that the school's
normally use to you know, offer up discounts and you know,
sort people out. Um, they're having trouble predicting how people
are going to behave in the middle of a global pandemic.
No surprise there, right, And so schools that come up
(41:51):
real short in March and able to start to get worried,
you know, they're gonna throw a lot of money around
and they just might throw it at you. And so
you know, the more schools you've apply to, the better
chance you have of having some kind of awesome financial surprise. Nice. Uh,
and all, we got one more question for you, Iron
you talk about independent college counselors Towards the end of
(42:12):
the book, When does it make sense for a family
to hire someone to help them make these big decisions
because obviously your book is like pages long, um, and
it feels like one of these things for a lot
of families that's overwhelming. So yeah, should they be hiring
someone who's in their corner who knows more than they do.
I'm a big believer in pain for professional services UM
(42:34):
when the stakes are high, and the stakes are high. Here,
the thing that I have not solved for that pained
me greatly in the writing of the Price you Pay
for college is that it still doesn't feel to me
like there is a fail safe way to go looking
for an independent college counselor and know for sure just
(42:55):
how smart they are on UM need based ay and
merit aid. Because let's face it, right, you know, if
you're going to hang a shingle as an independent college counselor,
what you want to do is, you know, charges as
much money as you possibly can. But the people who
need financial aid or the people who you know feel
like they need merit aid, they can't afford to pay
(43:16):
you a ten retainer, right, And so it doesn't make
a lot of financial sense for an independent counselor to
focus much on that part of the market. And so
the question that becomes, well, how do I find the
practitioner who is an expert on a family like mind
that earns a hundred seventy two dollars a year is
(43:37):
going to have, you know, some financial need maybe a
private universities, but probably not a ton um but is
super interested in merit aid, Like where is my expert
that really understands that part of the market. And you
know the answer to that question is there aren't actually
all that many of them. Um, I wish there were more.
It's almost like there needs to be a tuition fit
for advisors, like like you know, I mean if there's
(43:59):
some sort of database or something like that where folks
could kind of give their feedback on, you know, with
their profiles as to how much money that they were
able to retain. Yes, exactly right, and so um, there
are four or five associations of independent college counselors, and
one of them has a subgroup of people who are
really interested in this stuff. But I can't even get
(44:20):
that association to make the names of those members public
anywhere on their you know, consumer search page. I tried, Right,
you would think that that like that would be a
resource worth making available and shining a light on, but
but it hasn't worked yet to my great frustration. Well, anyway,
(44:40):
if people want to email me, Um, you know, I
I know a handful of people who who I know
are good and I don't mind throwing some names out.
So you know, I met Ron Lieber dot com. I'm
easy to find, Ron, You're the best. And obviously people
can find you at Ron Lieber dot com. They can
find you in the New York Times, you know, on
on a weekly basis, and they can find your new book,
the price you pay for college, anything else you wanna
(45:02):
tell folks, tell our listeners about you. No, just that
I'm you know, glad to have this out there. I
am here to help. And um my feeling about this
after it was all said and done was hope more
than anything else. You know. I went to a lot
of schools, and I could imagine my daughter. I'm happy
and thriving. It's just about all of them. That's awesome. Yeah,
(45:22):
I'm glad to hear that that even through all of this. Yeah,
you were able to land on hope at the end
of it. So Ron, you rock. Thank you so much
for this, uh this conversation, and we appreciate it. Man,
I was great to be here. Thank you, all right,
Matt Ron Lieber just rocketed up the list my favorite
human beings. What a fun conversation and just enlightening. Um
(45:43):
just he brought so much passion, wisdom, and energy to
this conversation. I honestly wish like our oldest kids, like
my oldest daughter was older, like even older almost, so
I could put some of this to work, like immediately. Yes,
like some of what I learned I want to implement.
I think sometimes when you sit on knowledge like us,
is just like, well, this is good to know now
that like I wish I could put this to use,
you know, like I wantant to start saving myself money
(46:05):
now makes me want to adopt a fourteen year old
do it? Dude? I can implement it, but that would
you know, throw off some other family dynamics. But yeah,
I talked to your wife about that first before I
need one. Um. But yeah, what was your big takeaway
from our convo with Ron? Well? I liked at the
end he we you know, we asked about community college,
and he specifically, you know, made a point to say
(46:26):
that he wasn't against community college in order to save money,
but how a high percentage of folks who go to
community college don't actually end up transferring to a state
or private school. Uh. And he said that if that
is your approach, if that's what you're gonna do, you're
gonna go to your local community college to save some money,
get some of the pro acquisites, some of the base
classes out of the way. You need to make sure
that you have in mind your goal, your end goal.
(46:48):
You need to know your why. And specifically he said
how it's good to have a specific school in mind.
You know, like you're not just going to community college
to save money, so that you don't have to pay
that money to where to what school? You know, like,
have a have a school in mind, even have a
specific degree in mind. There's nothing worse than not having
credits to transfer when you're like, because this is totally
gonna work out, you're paying twice, uh and you're doing
(47:11):
twice to work twice the money. But my gosh, and
and he recommended to specifically be in touch with an
advisor at that target school, be in touch with some
checking within multiple times every semester. Make sure that the
classes you're taking, make sure that the classes you're you're
signing up for for next semester that those are all
going to apply to whatever degree that you're looking to
pursue at that specific school. It's going to give you
(47:31):
so much clarity. Uh. And you're on a path, you're
you're you're on a track, versus just kind of going
to community college and feeling like, all right, let's I'm
gonna lay in somewhere and not totally sure where. But
that has a ton of negative consequences down the road
because things may not line up, those credits may not count. Yeah. Well,
I think my big takeaway from our our conversation here,
let me hear it, was that the average discount at
(47:53):
a private school, it's like it's so big, that's huge, right,
And so I think like that the biggest thing, the
way that translates for or our listeners out there, is
if your kid is excited to go to a school,
don't necessarily let that sticker price make you think that
you can't afford it, because that sticker price doesn't reflect
what most people pay to go to that university. And
(48:14):
I think sometimes people can be like, man, that school
is really expensive, and it is. But um, at the
same time, there are all sorts of merit aid opportunities
for you to go to that school at a greatly
reduced price, and not only merit aid, but the need
based aid as well. But like, I think it's important
just to just to be aware of the fact that
there's a game that you're playing. You know, it's it's
sort of like, I mean, we don't recommend for folks
(48:34):
like everyone to go out there and buy a new car.
Like for some folks that make sense, not for everybody,
But if you go to a dealership, you you have
to know that you're you're playing a game. You know,
like there's a there's a process, there's a dance, and
there's a way to win, and then there's like an
uninformed way to lose exactly. And we do not want
folks to be uninformed and losing when it comes to
you know, what they're spending on their kids college, or
what students are out there, what loans they're taking out
(48:56):
in order to to go to that school. It's so
important and I'm glad that we were able to talk
about that today with Ron. I'm also glad that you
and I we got to share a different type of beer.
This is This isn't a style that we normally have
on the show, but I'm glad we were able to
switch it up. Man. Yeah, So this one was called
Austar cop By Scepter Brewing Arts, and this is a
brewer that's like right around the corner from us. I
haven't actually been to this brewer yet, but I figured
(49:17):
i'd i'd pick up a can at our local bottle shop.
And and this is a Southern oyster rouch beer. I'm
pretty sure rouch beers are smoked beers, and this one
definitely has like a smoked flavor going on. Yeah, what
were your thoughts on this beer? Yeah? So immediately, like
you can't deny the fact that there's smoke going on
in this beer. It's like it's almost like a combination
of Scotch, which certainly has smoky elements to it. Uh
(49:39):
in a in a beer. But these types of beers
are made with malts that is like dried over smoke,
like over an open flame, so it imparts some of
that flavor in the malts. Uh, and you certainly taste
that in this beer. Uh. And I don't know if
all like oyster beers are also rosh beers. I don't
think so. But like an oyster stout before, Uh, it
(50:00):
loved that, Yeah, I think like so traditionally oysters like
they lend themselves I think to like the clarifying process
of the beers. But now I think like literally there
are like oyster flavors that get imparted into the beer,
but it tastes a touch briny. I'm not gonna lie. Yeah. Well,
so the fact that this combines a rosch beer, which
is a like a smoke beer with oyster flavors, it
totally makes me feel like I'm just like slurping down
(50:21):
some oysters that were like roasted over like an open
wood fire. Uh. It definitely makes me think of my
favorite Scotch, which is Talisker, which has a super briny
note to it along with a smoke. This is like
the beer equivalent to Talisker, if there's any Scotch fans
out there who like that type of beer. But I
really enjoyed it. Man, this is not a style we
normally drink, but I'm glad that you and I got
(50:43):
to to share this one today. Yeah, what were your
thoughts on it? Though? Overall, it's definitely a funky style
and it's definitely one I think I've literally had one
other rotch beer before in my life, um, maybe two,
and so yeah, the smoked element of a beer is
is interesting because that's not what you're expecting going into it.
I think a lot of our listeners who are like
craft beer novices, they might not be into the speer. Yeah,
(51:03):
m it might be a little too out there for them,
but unless you really like barbecue. But it's kind of
that earthy, smokey, you brininess to it, and um, you know,
I thought it was like fascinating. It was kind of
funny to get to try something that was completely off
the beaten path on the show today. Absolutely. All right,
Well that's gonna do it for this episode. For folks
that want show notes for this episode, there's a lot
(51:25):
that we're gonna link to and that's up on our
website at how to money dot com. That's right, and Joel,
that's gonna be it for this episode until next time.
Best Friends Out, best Friends Out,
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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