The Role of the Net Price Calculator in the College Choice

THE ROLE OF THE NET PRICE CALCULATOR IN THE COLLEGE CHOICE

PROCESS: A MIXED METHODS CASE STUDY OF A HIGH-COST

PRIVATE UNIVERSITY IN THE MIDWEST

A dissertation submitted

Melanie K.Weaver

Benedictine University

in partial fulfillment

of the requirements for the degree of

Doctor of Education

Higher Education and Organizational Change

This dissertation has been accepted for the faculty

of Benedictine University

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Dissertation Committee Director Date

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Dissertation Committee Chair Date

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Dissertation Committee ReaderDate

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Program Director, FacultyDate

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FacultyDate

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Dean, College of Education and Health ServicesDate

ACKNOWLEDGEMENTS

There are so many people I wish to thank for their continued support, guidance, and encouragement over the last four years. I am very grateful to Dr. Jan Perney, my director, for all of the time he spent guiding me through the dissertation process. His expertise and support were invaluable and truly appreciated. I also thank my committee chair,Dr. Tamara Korenman, and committee member,Dr. Lawrence Lesick, for the time they spent reviewing drafts and offering feedback and suggestions. I could not have completed this project without the support and guidance of my director and committee members.

I gratefully acknowledge the many individuals at my university who offered encouragement and support as I made my journey through the doctoral program. I am indebted to my past and present supervisors, co-workers, and staff members for their understanding and willingness to support my goal of obtaining this degree.

I hold heartfelt appreciation for my family for their love and encouragement. I am deeply grateful for my husband, William, and my children, Aeris and Anden, who were patient through the many hours I invested to reach this goal and who have supported me unconditionally. I also sincerely appreciate my parents who have always believed in me and encouraged me to pursue my dreams. I offer special thanks to my sister Megan who has always been there to listen and offer support and to my niece Myahrissa for continually believing in me.

Finally,I thank my friend Linda, who I met during our first class in the doctoral program. I truly could not have made it through all of this without her friendship. Even though we live hundreds of miles apart, she was always a phone call away when I needed words of encouragement or a reminder that I was capable of completing this task.

TABLE OF CONTENTS

ACKNOWLEDGEMENTS...... iii

LIST OF TABLES...... x

LIST OF FIGURES...... xii

ABSTRACT...... xiii

CHAPTER ONE: INTRODUCTION...... 1

Federal NPC Mandate...... 2

Statement of the Problem...... 4

Conceptual Framework...... 5

Rationale for the Study...... 7

Purpose of the Study...... 8

Research Questions and Hypotheses...... 9

Quantitative Research Questions and Hypotheses...... 9

Qualitative Research Questions...... 10

Justification for a MixedMethods Approach to the Study...... 11

Organization of the Study...... 12

CHAPTER TWO: REVIEW OF THE LITERATURE...... 13

History of Federal Government Involvement in Higher Education...... 14

Recent Initiatives of the Federal Government...... 16

Spellings Commission...... 16

Higher Education Opportunity Act of 2008...... 17

Net Price Calculator (NPC)...... 18

Financial Aid Shopping Sheet...... 18

College Affordability and Transparency Center...... 19

College Choice Models...... 19

Early College Choice Models...... 19

Contemporary College Choice Models...... 21

Chapman’s model of college choice...... 21

Hossler and Gallagher’s model of college choice...... 21

Pitre, Johnson, and Pitre’s model of college choice...... 23

Perna’s model of college choice...... 23

Factors That Influence College Choice...... 26

Academic Success...... 26

Race and Ethnicity...... 28

Parents and Family...... 31

Family characteristics...... 32

Parent education...... 33

Parent wealth...... 34

Parent influence...... 37

Distance From Home...... 39

Gender...... 40

Cost and Financial Aid...... 41

Cost concerns...... 41

Understanding of college costs...... 44

Financial aid...... 45

Student Choice for a Private College...... 47

Existing NPC Research...... 48

Summary...... 49

CHAPTER THREE: METHODOLOGY...... 51

Setting and Participant Sample of the Study...... 52

Data Sources...... 55

Quantitative Data...... 55

Qualitative Data...... 56

Data Collection...... 58

Quantitative Data...... 58

Qualitative Data...... 59

Data Analysis...... 60

Quantitative Data Analysis...... 60

Qualitative Data Analysis...... 62

Positionality of the Researcher...... 62

Limitations...... 63

CHAPTER FOUR: PRESENTATION OF THE DATA...... 64

Quantitative Data Collection...... 65

Quantitative Descriptive Statistics...... 66

Quantitative Data Analysis...... 68

Research Question One...... 68

Research Question Two...... 70

Research Question Three...... 72

Qualitative Data Collection...... 77

Qualitative Descriptive Statistics...... 80

Qualitative Data Analysis...... 81

NPC Used to Narrow Choice...... 81

Concerns About Accuracy...... 83

Surprising Results...... 83

Factors Beyond Price...... 84

Athletics...... 84

Location...... 85

Academic Major...... 86

Limited Parental Involvement in the Decision...... 86

Incorrect Factors...... 87

Summary of Quantitative and Qualitative Findings...... 88

CHAPTER FIVE: SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS..90

Summary of the Findings...... 90

Findings and Interpretations...... 92

Discussion of the Quantitative Results...... 92

Discussion of the Qualitative Results...... 97

Integration of the Quantitative and Qualitative Findings...... 103

Relationship of the Findings to the Study’s Conceptual Model...... 105

Limitations...... 108

Implications for Practice...... 109

Recommendations for Future Research...... 112

Conclusions...... 113

REFERENCES...... 115

APPENDIX A: Interview Questions...... 124

APPENDIX B: Informed Consent Form...... 126

LIST OF TABLES

TablePage

1. Comparison of Institutional Characteristics...... 53

2. Comparison of Undergraduate Student Characteristics...... 54

3. Characteristics of Each Student to be Interviewed...... 57

4. Comparison of Demographics for Self-Identified Users and All NPC Users....61

5. Descriptive Statistics for the Continuous Variables...... 67

6. Frequencies for the Non-Continuous Variables...... 68

7. Crosstabulation Between Application to All-American University and

Use of the NPC...... 69

8. Crosstabulation Between Enrollment at All-American University and

Use of the NPC...... 70

9. Crosstabulation Between Application to All-American University and

Use of the NPC as a First Contact With the University...... 71

10. Crosstabulation Between Enrollment at All-American University and

Use of the NPC as a First Contact With the University...... 72

11. Standardized Canonical Discriminant Function Coefficients to Predict

Application to the University...... 74

12. Classification Results to Predict Application at the University...... 74

13. Standardized Canonical Discriminant Function Coefficients to Predict

Enrollment at the University...... 76

14. Classification Results to Predict Enrollment at the University...... 76

15. Characteristics and Size of Each Subgroup...... 78

16. Demographic Characteristics of Student Interviewees...... 81

17. Relationships Between Quantitative Data, Qualitative Data, and Suggestions for

Practice...... 110

LIST OF FIGURES

FigurePage

1. Perna’s (2006a) model of student college choice...... 6

2. Timeline for qualitative data collection and analysis...... 60

ABSTRACT

This study employed a mixedmethods approach to research the role of the federally mandated net price calculator (NPC) in the college choice process. Quantitative data containing student-submitted entries from one university’s NPC were analyzed to answer research questions regarding the timing and significance of NPC use on application and enrollment at the university. Following the quantitative data analysis, student users of the NPC were interviewed and responses analyzed using qualitative methods to answer research questions related to perceptions of NPC results, reasons for NPC use, and the role of the NPC in college choice. Findings from the quantitative analysis demonstrated that very few students used the NPC tool. Of those students who did use the tool, those who used the NPC as an initial contact with the university were less likely to subsequently apply and enroll than students who used the NPC later in the inquiry process. The quantitative analysis also found that students with a higher GPA, students living in-state, students from a household with multiple family members, and those with a lower parent AGI were more likely to apply. Students with a higher GPA and those living in-state were more likely to enroll. Findings from the qualitative analysis revealed six themes and three sub-themes including: (a) use of the NPC to narrow college choice; (b) concerns about accuracy of the tool; (c) surprise at the results of the NPC; (d) limited parental involvement; (e) use of inaccurate information; and (f) factors beyond price which include the subthemes of athletics, location, and academic major.

CHAPTER ONE

INTRODUCTION

All-American University, a fictitious name for the university at which this study was conducted, is a small, private university in the Midwest. Since the Great Recession, the University has struggled to recruit students because of cost. A survey of 2014 admission applicants who did not enroll at All-American indicated that high cost was the greatest influence for 45% of the students. Students cited concerns about their parent’s ability to pay and rising tuition as major affordability concerns. The price sensitivity of All-American admission applicants is likely a factor of the type of student that All-American typically attracts. Over 80% of All-American’s enrolled students reside in the state. Many of these students come from families with modest incomes and resources. The median family income of All-American students is just over $90,000. In addition, fewer than half of All-American students come from a household where both parents have completed college.

Because cost is a significant concern for many prospective students at All-American, enrollment staff members continually highlight the value of the University to prospective students to encourage enrollment. An excellent job placement rate and internship opportunities for students are attractive to many families and often help to ease student concerns about cost. All-American knows that a conversation about value must often go with a conversation about cost so as to encourage studentapplication and enrollment. A presentation of cost without a conversation about value concerns the enrollment management team at All-American and leaves the team wondering how the net price calculator (NPC) affects application and enrollment at the University.

In order to comply with federal regulations, All-American developed a NPC and provided the link on the school’s website, but personnel are concerned that this tool will deter families from learning about the benefits of All-American. While the NPC provides families with an estimate of thenet price (sticker price minus financial aid), All-American fears that families are deterred from further investigating the Universityafter using the NPC. The NPC does not give admission and financial aid counselors atAll-American an opportunity to have a value conversation with a family. The focus is only on cost, one of All-American’s least attractive qualities to a student. Thus, enrollment staff members at All-American University need more information about the true impact of the NPC on recruiting efforts. Is it helpful or harmful in the admissions process?

Federal NPC Mandate

Within the past decade, the call for consumer information in higher education has been ever increasing. New federal mandates have been issued; tools have been created; and reports have been published. The Spelling’s Commission publication, A Test of Leadership: Charting the Future of U.S. Higher Education, recommended “a robust culture of accountability and transparency throughout higher education” (U.S. Department of Education, 2006, p.20). The commission made six overall recommendations for new regulations including one for transparency and accountability for the costs of college, something that was quickly becoming a national concern. The NPC mandate by the federal government was born from this desire to provide students and their families with information about college costs.

In the Higher Education Opportunity Act of 2008 (HEOA), a reauthorization of the Higher Education Act of 1965, a requirement was added that any postsecondary institution receiving Title IV assistance must post a NPC on its websiteto give prospective full-time freshman students an “average yearly price” for attending the college (U.S. Department of Education, 2008, p.32). The government’s goal in this regulation was to help students understand the “true cost” of college, all costs the student would encounter minus what financial aid could be offered from all sources including from the institution, state government, and federal government. All institutions were required to post their NPCs by October 2011.

The HEOA mandate offered a federal template for colleges to use but allowed an alternative option for collegesto develop their own NPC or purchase a NPC product from a thirdparty. Fear arose at many colleges that the federal calculator template was too general and that net price estimates could be considerably flawed for many families because the federal template used overall averages. For this reason, many colleges have spent considerable financial resources to provide the required NPC, with many paying as much as $20,000 annually(Flegenheimer, 2012). Although colleges have spent this money, little is known about the impact of the NPC product on recruiting students.

While much research exists on the college decision process and how cost information influences college search and decision making, very little research exists on the use of the NPC and the impact of the NPC on the college decision process. Only a handful of reports exist, and most of these are from 2012 or earlier. The lack of research is likely due to the NPC mandate being less than three years old, but the impact of the lack of research is profound. This can be seen in the inconsistent ways colleges are posting the NPC, promoting it, and using the data produced from it.

Statement of the Problem

Even though many collegeshave invested in elaborate and complex third-party NPCs,it is still unknown how the NPC affects student and family perceptions of cost. Colleges need more information about the impact of the NPC on application and enrollment.

Current research indicates that students and their families will often eliminate a school based on sticker price alone. National surveys of prospective college students show that over half of them have eliminated a college based on priceand before any financial aid is calculated (Hesel & Meade, 2012; Hesel & Williams, 2010). Encouraginguse of the NPC might decrease this percentage, but recent research indicates that if a student is disappointed in the level of financial aid offered, the effect on enrollment is very negative (DesJardins, Ahlburg, & McCall, 2006).

This confusion over whether the NPC hurts or helps student recruitment has caused many colleges to avoid promoting their NPC. Some colleges have even tried to “bury” the calculator on their websites to make it difficult to find. News articles with titles such as “Good Luck Finding a Net Price Calculator” (O’Shaughnessy, 2011) and “How to Find ‘Hidden’ Net Price Calculators” clearly show this trend (The Princeton Review, 2012). Cheng (2012) reported that many NPCs were not easy to find on school sites, and close to a third of the 50 schools reviewed reported links to the Department of Education that would not help a family find the NPC. In a survey conducted by the Noel-Levitz (2013) firm, over 60% of students reported that they had not used a NPC because they had not found one.

These actions have been interpreted by many to mean that colleges do not wish to be transparent and do not want families to know about cost; however, for most colleges,this is not accurate. Many private colleges believe that students and families should understand costs and be able to plan for college, but fear that NPC data may be misunderstood and deter a student from further exploring the institution. NPCs do not present the value of a college beyond cost, such as job placement rates, and they do not showcase the academic programs a college offers. In addition, NPCs use data entered by families. If these data are entered incorrectly, or are not accurate, then an incorrect financial aid estimate is presented to the student. This misinformation may cause students to cross a prospective college off of their search lists.

More information is also needed to help identify the kind of students and families who are using the NPC. Is it more affluent families? Are low-income and minority students using the NPCs? The federal government’s intention with the mandate was to provide open access and information to all students, but research is needed to determine if all populations are using the NPC as intended.

Conceptual Framework

This research study on the NPC is shaped by Perna’s (2006a) model of college choice. The model developed by Perna (2006a) states that student college choice is a process of the student evaluating the costs and benefits ofa college related to the student’s academic abilities and the resources available to the student. Further affecting the student’s college choice are layers of influence from a student’s habitus, school, and community as well as influences from institutions of higher education, the economy, and public policies. A visual representation of Perna’s (2006a) model is shown in Figure 1.

Figure 1. Perna’s (2006a) model of student college choice.

Perna’s model demonstrates the complexity of college choice when a student is deciding to enroll at All-American. As indicated previously in this chapter, many students at All-American University are sensitive to cost. University survey data indicate that students weigh the cost of All-American along with its perceived benefits, such as job-placement rate, hands-on learning, and opportunities to work one-on-one with faculty. These survey resultsfit with the cost and benefit analysis central to Perna’s model and also links to the third layer of institutional characteristics. In addition, school location has proven to be influential because most students who enroll and attend All-American University reside within the state.

Data from All-American also show that socioeconomic status is important in student college choice. Students who feel their parents cannot afford to pay for an education at All-American, or have little family support, will often choose a different university to attend. There is also evidence that public policy, in Perna’s fourth layer, does affect a prospective student’s college choice of All-American. Federal and state policies that have created additional financial aid opportunities for students have influenced students’decisions to enroll at All-American. For example, new policies for veteran benefits increased enrollment of veterans and their dependents at the university, and policies that created new financial aid awards for certain academic majors were also influential.