Cost and Financial Aid Increasingly Influence Students’ Choice of College

March 06, 2014

Academic reputation and graduates’ job prospects are still the top reasons students choose which college to attend. But cost and financial aid are increasingly influencing enrollment decisions, according to the annual Freshman Survey, released on Thursday by the Cooperative Institutional Research Program, part of the Higher Education Research Institute at the University of California at Los Angeles.

The largest share of students on record were not at their first-choice college in 2013, having enrolled elsewhere for financial reasons, survey responses showed. Just 57 percent of freshmen at four-year institutions enrolled at their first choice, although 76 percent of students had been admitted there. By comparison, 69 percent of freshmen in 2003 and 72 percent in 1993 were at their first-choice institutions.

Among freshmen who had been accepted by their first-choice institutions but enrolled elsewhere this academic year, 60 percent said their current college’s offer of financial assistance was a very important factor in their decision. A similar share (62 percent) said the cost of their first-choice college was very important; a quarter of students cited a lack of financial aid there.

"Students are becoming savvier shoppers," said Kevin Eagan, interim director of the research program, in part because of the national conversation about rising student-loan debt. They are "searching for the best package," he said, "the best deal."

Campus officials who worry that current tuition-discount rates are unsustainable may not find much relief in this year’s data. Academic reputation and job prospects matter most to students—with 64 percent and 53 percent, respectively, labeling those factors very important in their college choice—but nearly half of freshmen this year said the same of financial aid.

The share of students identifying aid as very important has risen significantly over time, from 19 percent in 1973 to 33 percent in 1993 to 49 percent in 2013.

Likewise, more students are reporting the cost of attendance as very important in their enrollment decisions. This academic year, 46 percent of freshmen said that, a jump from 31 percent in 2004, when the survey began asking the question.

Comparison Shopping

Among students who are the first in their families to go to college, financial factors are even more influential. Fifty-four percent of first-generation students said the cost of attendance was very important in choosing their current college, and more than 60 percent said that of financial aid.

During the recession, several groups polled students or high-school guidance counselors about the influence of financial factors on college plans, finding, for instance, that more students were considering community colleges and other public institutions. This year’s freshman survey shows "college costs and financial aid playing an increasingly decisive role," the research program said in a written statement.

As attention to cost and aid have increased, the program reports, so has the proportion of students submitting more college applications. In 2013, 55 percent of first-time, full-time freshmen said they had applied to more than four colleges, up from 45 percent in 2008.

The report attributes that increase in part to the rise of the Common Application, which more easily allows students to apply to several institutions. Also, the report says, students may perceive greater competition in college admissions.

That competition goes both ways, said Mr. Eagan, as more options help students shop around.

A greater share of students attending four-year public colleges (54 percent) than four-year private colleges (39 percent) said cost had been a very important factor in their choice. But more students at private institutions (65 percent) than public institutions (42 percent) said that of financial aid.

Politics and Health

Researchers advocated more counseling for prospective students, especially those who will be the first in their families to go to college. Outreach by colleges, said Mr. Eagan, is important to help first-generation students understand the financial-aid process and aid awards.

The report calls on colleges to "continue their efforts to simultaneously constrain costs and craft financial-aid packages that adequately address students’ financial needs." Institutions must look for new ways to provide need-based aid to first-generation and low-income students, Mr. Eagan said, especially as those students "tend to be a bit more skeptical of relying so heavily on loans."

Over all, about half of students (51 percent) said they planned to take out loans to help cover educational expenses in their first year. Nearly three-quarters of students (73 percent) were counting on grants, while 78 percent planned to draw on family resources and 62 percent their own savings.

The report, "The American Freshman: National Norms Fall 2013," is based on responses from 165,743 first-time, full-time freshmen at 234 four-year colleges who were surveyed during registration, orientation, or the first few weeks of classes.

Among the report’s other findings:

  • Sixty-nine percent of students reported having used an online instructional website frequently or occasionally to learn something on their own, while 42 percent said they had done so for a high-school class.
  • Just 7 percent of students over all said there was a very good chance they would take an online course, but that proportion was higher (14 percent) among students at historically black colleges.
  • Most students (81 percent) identified tolerating others with different beliefs as a personal strength, but fewer (63 percent) said the same of openness to having their own views challenged.
  • About half of freshman (52 percent) thought affirmative action in college admissions should be abolished.
  • The lowest percentage of students to date say they support denying "undocumented immigrants" access to public education (41 percent in 2013, compared with 56 percent in 1996).