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Harvard EdCast: The Actual Cost of College

Helping families get past the sticker shock and discover what they might actually pay for college.
The Actual Cost of College

When many people see the college price tag, they believe it's financially out of reach. But Wellesley College Professor Phillip Levine, who studies college affordability, says that people often don't realize there's a difference between the price of college and the true amount a family might actually pay. Through the development of — an online tool that helps families uncover the actual cost — he hopes more students will achieve their college dreams. Levine spoke recently at the PIER Public Seminar Series at the Center for Education Policy Research at Harvard University.


Phillip LevineJill Anderson: I'm Jill Anderson. This is the Harvard EdCast. Phillip Levine knows there's sticker shock when we see the price tag of college. He's an economist at Wellesley College, he studies college affordability and how it impacts where and whether students choose to go. To better help students and their families make an informed decision about college, he created My Intuition, an online calculator that helps project the actual cost of college after financial aid.

How much do sticker prices really matter when it comes to applying for college?

Phillip Levine: The sticker price of college is a useful number for a very small fraction of the population. Now, at a school like Harvard or something, I don't know what the sticker price is at Harvard at the moment, but it's in the vicinity of $70,000. And this is true of many private colleges in the United States. You've got to be making $250,000 or so a year before that's actually the amount that you'll face, that that's the price you'll have to pay. Pretty much for everybody with finances below that, which is most of the country, the $70,000, that scary sticker price is not the number you would be paying. It could be considerably less than that.

Jill Anderson: Why do you think it's so difficult to separate real cost from actual cost of college?

Phillip Levine: The financial aid process is just so incredibly complicated. It presents such a large barrier for people. It's virtually impossible to really know how much college is going to cost you in advance. The only number that's readily identifiable, that if you're on the webpage, it's like, "Oh, there's a number. It's $70,000." Which is easy, but it's also wrong for most people. And so it's not surprising that people are confused. It's critical that we find better ways to communicate what college would really cost your family for a particular student, what's it going to cost you to actually come to college? Because it could be way less than that.

Jill Anderson: And I wonder if we really see a lot of colleges doing that type of marketing and communications about what this is really going to cost you. It doesn't seem like there's a lot of that publicly out there.

Phillip Levine: For a long time, the general communications approach from colleges and universities is they have some webpage, if you go to, there's a webpage like that at most colleges and universities. And there'll be all this information about it's definitely more affordable than you think. Take our word for it.

Well, people don't want to take your word for it, they want to know, like, "What's this really going to cost me? Here's my financial circumstances, just give me an idea. Are we talking $10,000 or are we talking $70,000? Because those are two very different numbers." And if it's 10 or $15,000, at an early stage in the process, whatever, that's not that big of a difference. That $70,000 is just so daunting that we need to find ways to be able to get people past that hurdle. So, I actually have started my own nonprofit corporation. It's called My Intuition.

Jill Anderson: Right.

Phillip Levine: It's available at and at many participating colleges' websites, including Harvard. If you go to My Intuition and click on a school and enter just a handful of pieces of financial information, things that you can likely answer off the top of your head, or at least approximate off the top of your head, you will get a personalized estimate that says, for you, what is a particular college likely to cost. We're available at 66 colleges and universities nationwide at the moment, and growing.

Jill Anderson: There's so many tools out there to help people navigate the expensive college. But that process, applying for college, applying for financial aid is convoluted, especially if you're a first generation student and you don't have some sort of precedence in your family of how to do this or someone guiding you through that process.

Phillip Levine: Even if you do.

Jill Anderson:  Many of these tools are just not intuitive. What makes My Intuition different from some of these other tools?

Phillip Levine: I think it's interesting to know how I personally got involved in this, because I'm an economics professor, I spent a lot of time thinking about social policy and using statistical analysis. But financial aid was never a topic that I actually studied in my work. This was personal for me. My kids got to be college age. I make a good living as a professor, but I don't make a million dollars a year, and I was interested in financial aid. And I realized very quickly that I couldn't figure out how much college was going to cost me.

Jill Anderson:  Oh, gosh.

Phillip Levine: And I just thought that was wrong. If it's that difficult for me, this has got to be a major problem for a lot of people in the country. This was actually before net price calculators came around. So before net price calculators were invented, I would say that it was essentially impossible to find out the answer to this question.

In 2008, a law was passed so that, beginning in 2011, all colleges were required to provide these things called net price calculators, which were in some sense the right idea. They were intending to do exactly the right thing. They just, it's a government law and there's restrictions and regulations about how it has to operate, and they're not that simple.

So it turns out that, for a lot of people, they start asking you to pull out tax forms. And as soon as they ask you to pull out a tax form, you'd click out of it because that's scary and hard. That's not the right approach. I would say before net price calculators, it was impossible to figure out what college was going to cost. After net price calculators, it's not impossible, it's just really hard.

My Intuition was a attempt to overcome those sorts of hurdles. The entire financial aid system is intended to identify the outliers. Who are the people with really unusual finances? We have to ask 150 questions to figure out what those unusual finances are. Let's get all of that detail and we're going to dig down as deep as we can and we're going to nail down exactly what we think you can afford to pay. That's why financial aid is as complicated as it is.

Most people's financial lives are not that complicated. To be quite honest, neither is mine. And this is how I got to this point. I have a job that pays an income, I have a house, I have some retirement savings, but retirement savings doesn't actually count in the financial aid process. A little bit of money in the bank, not a ton, but some stocks and bonds. And that's it. That's the vast majority of the population, have those things or less. Why not just ask about those things in English? Like how much money did you make last year? Not what was your adjusted gross income? Where you're like, "I don't have any idea what my adjusted gross income is." It's not even obvious I know what that means.

In English, ask people questions that they can answer. What was your total family income last year? Do you have any money in stocks and bonds? How much? If you don't necessarily need to go pull out your Vanguard statement, you have a basic idea of how much you have, stick in the basic idea.

Now, that doesn't provide you with a perfect estimate because, at the end of the day, there are a lot of details that matter. And so, what My Intuition does is it gives you a ballpark estimate. It gives you a range. So, for you, someone with your financial circumstances, here is a good estimate of what you're likely to pay, let's say $15,000. Depending on the specifics, it may be less than that, it might be more than that. We give you a statistic that says 90% of the people with your basic financial circumstances will pay between, let's say, $10,000 and $20,000. So 15,000 is the best estimate for you. It's likely to be in the teens.

Now, at the end of the day, you probably care about those differences. But at the beginning of the process when you're thinking, "Where can I go to college?" And $70,000 is the number that you have in your head is what it really is going to cost, getting you into the teens is a very different story. You can worry about the details later. But from my perspective, the advantage of that approach is it just opens the door. It gets you over a hurdle that you think is insurmountable. I only make $40,000, how could I possibly afford $70,000? Well, of course that's crazy. But no school is going to charge you $70,000. Find out what they're actually going to charge you, at least in the ballpark. It may be $40,000, it may be less than that. It may be $2,000 or $5,000, which is still a struggle. Nobody's saying that coming up with that kind of money is easy for families in those circumstances, but it also wouldn't say that it's an insurmountable hurdle that's the sort of number that I can't possibly figure out how to accomplish that.

The idea that if we can just get you to the point where the response is, "Maybe we can figure out a way to make that happen." That's a really important hurdle. I really want people to be able to get over that hurdle. And that's why I'm doing what I'm doing and that's why I think colleges are adopting it as quickly as they are.

Jill Anderson: So I was going to ask what you've learned from the students and families who've been using. The site's been around for a few years now, more than a few years. And what have you been hearing from those students and families?

Phillip Levine: I'm a professor at Wellesley College and I developed this initially at Wellesley several years ago. But I've been doing it long enough that the students who actually are applying are now my students. It's interesting because I can talk to them about it, and they tell me that they were in a position in their lives where they knew they wanted to go to college. They knew that they wanted to further themselves. And importantly their parents were in the same position. As a parent, you want the best thing that you possibly can get for your kids. The last thing that you want is for someone to tell you it's impossible, that you can't do it.

And I hear these stories from my students, and they tell me that they're so scared in the college search process, thinking, "How am I going to do this?" And then they clicked on a few numbers, got an estimate, and it's a revelation for them. It's a wonderful experience to be able to see a student realize that basically their dreams now can come true.

Jill Anderson: Do you have some new research coming out?

Phillip Levine: So I'm giving this paper at the Graduate School of Education. What My Intuition addresses is a problem that I would label sticker shock. You're responding to the $70,000, "Wow, that's a lot. I can't go." That's sticker shock. So the paper that I'm talking about is a way to detect do we observe students responding to the sticker price itself, not the price that matters for them? What the paper is about is that it addresses experiences of students applying to schools during the great recession, state to public institutions. Public institutions were just devastated by the financial crisis because all the revenue that was coming in from economic activity was drying up. And the states had no money. They cut spending on everything, including public education. There were very dramatic increases in tuition that students had to pay, because if the money wasn't coming from the state, the money's got to come from somewhere. In most states, they just charge students more, a lot more.

What's interesting about that is that, some schools, the label is that they meet full need. So they do a calculation that says, "What do we think you can afford? We're going to charge you what we think you can afford." It doesn't matter what the sticker price is. If $10,000 is the magic number, you pay $10,000. It doesn't matter if the tuition at a public institution is $30,000, $40,000, $50,000 whatever. If you can afford 10, that's what we're charging you.

And in some states, the public institution, flagship institution, meets full need, and in others it doesn't. And what we see is that, even in the states where the flagship meets full need, lower income students responded to the sticker price increase. They responded to the fact that tuition went up in California 32%, they responded by not applying, even though that tuition increase didn't apply to them. So that's an indication that people respond to the sticker price, even if it doesn't matter to them. If that's the only number they know, that's what they respond to. That's exactly what My Intuition is trying to overcome.

It all makes sense that the sticker shock problem occurs, but it's nice to be able to detail that here's an example of sticker prices changing. And students who are unaffected by it respond as if it does matter to them. That's a mistake. That's something we have to be able to find ways to overcome.

Jill Anderson: You can be low income and not necessarily a high achieving student because it's just taking into account your finances.

Phillip Levine: Correct. This is just about finances.

Jill Anderson: It's not looking at scholarships or any of that because that'd be hard to predict.

Phillip Levine: You still have to get accepted. Getting accepted and paying for it can be two different things.

Jill Anderson: So one of the things we see a lot right now among presidential candidates about trying to make college more affordable. In some ways, if you are a low income high achieving student, it already can be, right?

Phillip Levine: In some sense, free college is almost the ultimate marketing mechanism for conveying this information about cost. Free is a good number.

Jill Anderson: Right.

Phillip Levine: People like free, they respond to free. What I think gets lost in this discussion is that, for a lot of students, college already is free, broadly defined. We need ways to better communicate that. Personally, I'm not a huge fan of free college because it's free college for everybody. So if you make over $250,000 a year, it's free for you too. Not obvious to me that makes sense. But at least finding the ability to make college more affordable for lower income households, which may already exist and may just mean doing a better job of communication. That is an incredibly important goal and something that I think that we need to find ways to accomplish.

Jill Anderson: You've mentioned communications being an important part of this.

Phillip Levine: Huge part.

Jill Anderson: How do you think we move forward? What are some ideas to really make a change in this?

Phillip Levine: In terms of the work that I'm doing, I think scale is incredibly important. Right now we're working with 66 colleges and universities, and that's great. There's hundreds of colleges and universities. It's also the case the 66 colleges and universities at the moment tend to be morally higher level institutions that, as you say, if you can't get accepted, you still can't go. Tools like this, the ability to communicate actual prices after factoring in financial aid, to the extent that tools like that become ubiquitous in the marketplace, available to everybody at lots of different types of schools. At that point, the marketing will take care of itself. It needs to reach the level of scale where people just know, if you're interested in learning about college costs, you can go here. And that has to be through word of mouth, through mentoring services, through school guidance counselors, in a lot of different ways as this becomes a larger scale entity that encompasses large numbers of institutions, it has the potential to overcome the communications problem.

Jill Anderson: Phillip Levine is a professor at Wellesley College and the creator of My Intuition, an online tool that helps students and their families determine the actual cost of college after financial aid. I'm Jill Anderson. This is the Harvard EdCast, produced by the Harvard Graduate School of Education. Thanks for listening.

About the Harvard EdCast

The Harvard EdCast is a weekly podcast featuring brief conversations with education leaders and innovative thinkers from across the country and around the world. Hosted by Jill Anderson, the EdCast is a dynamic space for discourse about problems and transformative solutions in education, shining a light on the compelling people, policies, practices, and ideas shaping the field. Find the EdCast on iTunes, Soundcloud, and Stitcher