More fisking of the misdirection in contemporary financial aid policy and reporting. Didn’t get enough here? See below.

So far, two classes of college freshmen have been admitted under the financial aid guidelines at the 28 schools. Schapiro and other school officials can’t say exactly how much more aid these students have received; however, ”we’re definitely more generous,” Schapiro said. ”Certainly at my college, Williams, and others, [financial aid] is much higher. The packages are better.” There are no special financial aid applications for these schools, he added.

Isn’t that just swell? Williams and the other elite members of the 568 club are giving financial aid packages that are “better” than those given by other schools and better than those they gave in the past. Why, dear reader, would that be? Have Morty and his cohorts suddenly felt guilty about the way that they have been shafting students in previous decades? Were Hank Payne and Frank Oakley greedy monsters who refused to provide adequate financial aid? Have we been lied to for all the years that Williams has claimed to be “need-blind”?

Of course not. The competition for students has increased. Williams (and other schools) are simply responding to that increased competition. Back in the day, Williams (working in cahoots with other elite schools) could just screw over some of my classmates by saying:

Williams is going to cost you 10k. Take out some loans. Here is the paperwork. Wish that you could get a similar education without incurring such debt? Thinking about being a teacher? Tough! Not only is the cost to you 10k, but — what a coincidence? — the cost at Amherst, Swathmore, Dartmouth and every other place you applied is the same.

Fortunately, those days are long gone. Or are they?

The guidelines used by the 28 member schools have ”increased the eligibility of students to receive financial aid,” agreed Kathryn Osmond, director of student financial services at Wellesley College.

In previous rants, I have suggested that collusion is one of the purposes of the 568-istas. They want to raise the amount of money (mainly by improving the ratio of grants to loans) that they award (to avoid losing students to non-568 schools) while avoiding intra-568 competition. What we have here is a rebirth of the Overlap Group. Time to call the friendly anti-trust lawyers in the Department of Justice.

While more financial aid is a plus for students and families, an agreement among these schools to have approximately the same standards for deciding who gets financial aid — and how much — may be more important, administrators say. While critics worry that the new approach may reduce competition, the colleges in the group respond that they can still package financial aid differently from one another. They can, for example, offer merit scholarships or a more favorable ratio of grants to loans. But they all use the same underlying needs analysis.

Why are “critics” so rarely quoted in these articles. Hint to reporters: I am a critic. Quote me.

It may be true that the Colleges “can” offer different ratios of loans and grants. But will they? Do I need to quote Adam Smith again?

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

It would be interesting to gather data on the different ratios of loans versus grants that Williams gave out to the class of 2009. I don’t think that the data is public. This would make for an interesting Record article. I would bet that there are some students at Williams with a fair amount of loans and no grants living in the same entry as students with lots of grants and no loans.

”The philosophy is to be more transparent about how we give aid,” Shapiro said, ”so people don’t say, ‘Why did Williams give me this and Yale give me that?’ We wanted to be more upfront about what the methodology was.”

There are many words to describe the 568 Group: “transparent” and “upfront” are not among them. I have asked the group to provide a copy of the manual that financial aid officers use to determine awards. It refused to do so. How is this “transparent” and “upfront”? The motivation, of course, for failing to post this information on its website is that it does not want people to understand its methodology lest they game the system. This is a reasonable fear. But don’t pretend to be transparent when you’re not.

Even worse, the group has gotten less transparent over time. It used to acknowledge the existence of the manual on its homepage, but require a password to see it. Now, it has hidden the very existence of the manual.

”Students are now free to decide which college they want to attend on the basis of the academic program, not which college offers the most generous financial aid package,” Osmond added.

Wouldn’t want that filthy lucre influencing the decisions of our innocent 18 year olds! Here’s an idea: Let’s pass a law whereby the pay for all college bureaucrats (like Osmond) should be set at $15,000. Then — happy day! — they would be free to decide which college they “want to attend work for on the basis of the academic program, not which college offers the most generous financial aid package pay.”

”When families get calculations of their need from different schools that are wildly different, it tends to undermine their confidence in the system,” said Michael McPherson, former president of Macalester College in St. Paul.

So true! Wouldn’t want to undermine the “confidence” that the suckers parents have in the system. Now McPherson (my thesis advisor back in the day) knows very well that what parents really care about is the bill. While it is of some theoretical interest whether or not Amherst has assessed their “need” at $20,000 while Williams has it at $15,000, what matters is the size of the check the parents need to write.

Again, in my calmer moments, I am ready to believe that there is some benefit to form standardization, that a single form to fill out would, like the Common Application, make everyone’s life easier.

But I still believe that the “confidence” that most families have in the financial aid system should be undermined because it is too high. Families don’t know the truth. And, the poorer and less sophisticated the family, the less likely they are to understand how the system works. Families like the Schapiros know the real deal.

The system is corrupt or, at the very least, it is so riven by the central conflict between a student’s desire to save money and a college’s need to raise revenue that the pretty-picture window-dressing that folks like McPherson and Schapiro engage in make the process indistinguishable from corruption.

On the other hand, the colleges want to make sure that both parents — whether or not they’re still married to each other — are contributing as much as they can to their children’s education. ”We’ve agreed to pursue the noncustodial parent as well as the custodial parent,” said Joe Paul Case, director of financial aid at Amherst College. ”The feds don’t do this.”

How special! How are 568-istas going to determine which “noncustodial” parents are willing to pay and which aren’t? Do they expect a father who moved out 16 years ago to contribute the same amount as one who left 6 months ago? How are they going to get financial information on noncustodial parents? What will they do when the applicant reports that this parent refuses to send in his tax returns?

Again, the point is simple. It is impossible for Williams to determine, with any meaningful degree of precision, how much a student “can” pay. The interests of Williams and its applicants are in conflict. More grants to students mean fewer dollars in the endowment. The best way to ensure fairness is to force colleges to compete for students just as students already compete for colleges. The 568 Presidents Group slows this process down, it encoruages collusion and aids price discrimination. It deceives families about the reality of the process by refusing to disclose the methodology that it uses.

Schapiro and McPherson are good men and accomplished economists. They were my teachers 20 years ago. But by pretending that the 568 Group helps students when, in fact, it is helps colleges, they mislead the least informed families in our society about something that is very clear to the elite.

Just ask the Schapiros.

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