Blog Post | May 9, 2016

Debt Figure Included on the College Shopping Sheet Makes Some Colleges Look More Affordable than They Are

We’re big advocates of providing students and families with tools and information to help them decide where to go to college and how to pay for it, and the Obama Administration deserves credit for making huge progress in this area. They created the College Scorecard, released new college-level data, and encouraged schools to use its voluntary “Shopping Sheet” format for financial aid award letters. Without the Shopping Sheet, college financial aid packages can be incredibly difficult to decipher and compare. It serves the same purpose as the standard window sticker required on all new cars since the 1950s—to provide key information in a consistent format so consumers can more easily understand their options.

Unfortunately, the Shopping Sheet and College Scorecard currently display different cumulative debt figures, such that the same institution can appear to be a low debt school on the Shopping Sheet and a high debt school on the College Scorecard.  While the College Scorecard shows the median debt of program completers only, the Shopping Sheet displays the median debt of all students entering repayment, regardless of whether they completed their program.* Including non-completers in the median debt calculation will often produce lower debt figures because non-completers borrow for a shorter period of time, sometimes only a semester or two before leaving a program. This is especially true for colleges where many students borrow but fail to graduate. As a result, the debt figure included on the Shopping Sheet inadvertently makes colleges with low completion rates (and high borrowing rates) look much more affordable than they actually are. This makes it harder for students to determine where they are likely to graduate without burdensome debt.

The College Shopping Sheet Should Show Median Debt Among Completers, Just Like the College Scorecard

The table below demonstrates just how different the debt figures for the same school can be when you include all students entering repayment versus only program completers, particularly at colleges with low graduation rates.** For example, the median debt of completers at Ashford University is nearly three times higher than the median debt figure of all students who borrowed ($32,813 versus $11,190). This difference can be explained by the fact that 79 percent of students drop out of Ashford before they accumulate as much debt as those who complete their program. A similar difference is also evident at the University of Phoenix-Online, where 80 percent of students do not complete their program.

Differences in Median Debt Calculations
The problem is compounded when you compare schools with low and high graduation rates. To illustrate the potential magnitude of the impact of completion rates on median debt, we looked at median debt figures for Ashford University (where just 21 percent of students graduate) and Stanford University (where 95 percent of students graduate). While the typical Stanford graduate has 63 percent less debt than the typical Ashford graduate ($12,224 versus $32,813), the median debt among all students for the two schools is nearly identical ($11,190 versus $11,500).  Similarly, students at University of Phoenix-Online Campus and Florida State University have nearly identical median debt figures when non-completers are included. But the schools have dramatically different graduation rates (20 percent versus 76 percent), and graduates of the University of Phoenix-Online Campus typically have 67 percent more debt than graduates of Florida State University ($35,500 versus $21,250).

Students shopping for schools based on affordability are aiming to graduate with a degree, and should be informed about the debt they can expect when they accomplish that goal.  We’ve previously called attention to the problems with combining the debt levels of completers and dropouts (e.g., here and here), and we praised the Department last year for putting the median debt at graduation on the College Scorecard. We’re disappointed that the Department did not put median debt at graduation on the Shopping Sheet as well this year. Given the Department’s efforts to highlight colleges that do a good job of graduating students, it is particularly surprising that the Shopping Sheet uses a debt metric that makes colleges with high borrowing rates and low completion rates look more affordable than they are. We hope the next version of the Shopping Sheet will show debt for completers only, so students and families will know how much debt they can expect to have at graduation from different colleges.

* In addition, Shopping Sheet figures reflect one year of data, i.e., median cumulative federal student loan debt for undergraduates entering repayment in 2013-14, while Scorecard figures represents the same metric for those entering repayment in 2012-13 and in 2013-14 (pooled).

** Calculations by TICAS on data from U.S. Department of Education, College Scorecard.  Graduation rates shown here measure the share of first-time, full-time students who started in 2006-07 and 2007-08 who completed their programs within 150% of normal time by 2013-14. Median debt figures represent cumulative federal student loans borrowed for undergraduate education among borrowers who entered repayment in 2012-13 and 2013-14.