Application fees add to college costs

College money


Tess Vigeland: It's no wonder students are carrying huge debt loads after they graduate. The College Board says the average price of four years at a private university is more than $25,00 -- tuition alone. At a four-year public school it's $6,500.

But the cost of college starts even before the acceptance letters start arriving in the mail. All those essays you write came with a price tag as well: the application fee.

Danielle Karson reports that with competition growing for spots on campus, students are paying multiple times just for the privilege of asking to get in.

Danielle Karson: The sticker price of a college degree has more than doubled in the last 20 years. Application fees, on the other hand, which run between $50 and $70 a pop, have been fairly steady in the last few years. But high schoolers are shelling out plenty as they apply in record numbers to at least half a dozen schools to see where they can get the best deal and education.

Shannon Gundy: The whole college application process has just become so ridiculously competitive.

Shannon Gundy heads the Admissions Office at the University of Maryland, the state's flagship college. The school's $55 application fee is relatively modest. As a result, Gundy says more than 28,000 kids applied this year, 4,000 more than in 2007. And if the fee is still too pricey, no worries...

Gundy: In those cases, we're always very willing to work with students to waive the application fee if it really is a matter of affordability because we don't want that to be the reason students choose not to apply.

About 12 percent of the applicants asked for waivers this year.

Nationwide, applications at four-year colleges went up by more than 750,000 between 2004 and last year, and the Internet encourages that. Dan Hurley is with the American Association of State Colleges and Universities.

Dan Hurley: Ten years ago, it took some work with pen and paper or a typewriter to fill out an application. Nowadays, a high school student can get online and send out multiple applications in a very short amount of time.

College-bound students know the numbers: a lot more of their peers are applying than there are openings. So they crank out those applications. But the University of Maryland's Shannon Gundy says that's not always the best strategy.

Gundy: One of the things that I try to encourage them to do is be realistic about where they think they can afford to go to college, but not to let that be the deterring factor. Students really need to look at colleges that are appropriate for them and apply for financial aid.

Javier Montenegro graduated from the University of Maryland this year and now works as an admissions counselor. He says students can find a way to cover the cost of applying to several schools by researching which ones give aid to apply.

Javier Montenegro: I feel like if students are informed, they can take advantage of them and apply to as many schools as they really want to to kind of keep their options open.

Colleges want to keep those applications flowing. Richard Vedder is with the Center for College Affordability and Productivity. He says every year schools brace themselves for the well-known U.S. News and World Report rankings of the best schools.

Richard Vedder: The one thing that has kept application fees from going through the roof is schools want to be able to brag that they have lots of applicants. That looks good in these college rankings that go out if you can say, "We had a huge number of applicants but we only accepted a smaller percentage of that."

The University of Maryland, for example, rejected 60 percent of this year's applicants. But Vedder says the golden days of an ever-growing student population are over. If tuition costs keep going up, he expects the number of applicants will decline. That will leave colleges with some hard decisions about how to revamp their admissions policies to compete for new students.

In Washington, I'm Danielle Karson for Marketplace Money.

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From the higher education side of the conversation, I observe that the continuing increase of college tuition (disproportionate to other major consumer expenditures)is due in part to the fact that price has become a proxy for quality. To lower prices, or even to increase prices at a lower rate than competitors, can imply a sense of desperation or an impending reduction of services. Unfortunately, the price-proxy dilemma will continue until higher education finds a consistent way to measure value by outcomes rather than by inputs (incoming student profiles and selectivity measures) that largely affect rankings.

There are two main culprits that are causing the cost of college to rise so dramatically. 1. ) The proliferation of for-profit and online schools has created tremendous competition that has resulted in excessive marketing costs. Potential students are going to "informational" websites where they request information, unaware that their information is being "sold" to every college they choose. This process has added about $10k or more to a the cost of a degree. Traditional Universities have had to compete and are using the same "playbook". This leads to reason two 2.) The significant portion of tuition that is covered by federal aid means that this excessive cost of marketing is being passed on to students - through larger loans - and taxpayer - through lareger subsidies. Competition in and of itself is a good thing, but when its indirectly funded by a third party with very few limits (ie federal aid) its spun out of control. Fortunately, schools are starting to figure this out and we are seeing a move away from these lead aggregators and toward traditional media. Schools are now finding that its a lot more efficient to spend money driving leads and application, where the lead or applicant has not contacted more than two or three schools.

We're in this process right now and have not had to pay any application fees. Both schools have made offers like "apply by xx/xx and waive the fee" or "visit the campus by xx/xx and waive the fee".

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