1952: How Colleges Quietly Discount Tuition and What Families Need to Know

Summary

Podcast Summary: So Money with Farnoosh Torabi

Episode 1952: How Colleges Quietly Discount Tuition and What Families Need to Know
Guest: Ron Lieber, NYT Money Columnist and Author
Air Date: March 4, 2026

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Episode Overview

This episode examines the often-misunderstood system of college tuition pricing, how colleges quietly discount tuition through merit aid and other means, and what families need to understand in order to make sound, emotionally-informed decisions about paying for college. Award-winning financial strategist Farnoosh Torabi sits down with Ron Lieber, long-time New York Times Your Money columnist and author of The Price You Pay for College, to discuss the realities of college pricing, emotional drivers behind big financial decisions, and actionable strategies for families navigating the college selection process.

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Key Discussion Points & Insights

1. The Real Question: What Should You Pay for College?

• Traditional Focus: Most families obsess over how to save or pay for college, but rarely ask themselves what they should pay.
• Lieber’s Insight: "It was a new personal finance question... they were asking a value question. Instead of how to save or how to pay, they were asking what to pay." — Ron Lieber [10:42]
• This reframing leads families to consider not just finances, but values, trade-offs, and emotional realities.

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2. The Emotional Drivers: Fear, Guilt, and Snobbery

• Three Key Emotions:
  • Fear (of children falling down the social ladder)
  • Guilt (not saving enough or not being able to pay for what you want)
  • Snobbery (belief that more expensive/private/Ivies are always better)
• Quote: "The three that I see coming up most often are fear, guilt, and snobbery." – Ron Lieber [11:58]
• Families must confront these emotions to make better decisions and open themselves up to a broader set of collegiate options.
• Takeaway: Avoid letting these feelings push you into unaffordable or unwise financial decisions.

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3. Busting the Sticker Price Myth

• Elite School Sticker Shock: Widely held belief that "all schools now cost $100,000 a year."
• Reality: Only 25-50 elite schools approach that price; the majority of undergraduates pay far less.
  • "90 some percent of American undergraduates are not paying full price." – Ron Lieber [24:23]
  • Even at 'expensive' schools, 40%+ receive some form of aid.
  • State universities' four-year cost is typically $100k–$150k for in-state, up to $300k for out-of-state students. [24:34]
• Families should look beyond "sticker price" and understand what net price (after aid) really means.

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4. How Merit Aid Rewrote the Rules

• What Is Merit Aid?: Scholarships based not on financial need but on academic, extracurricular, or other qualifications.
• History & Spread: Widespread adoption in the last 20–25 years as schools competed for better students.
  • Originated in Ohio: Schools began offering aid to academically strong applicants to improve student body quality [27:54].
  • "Every private undergraduate institution that doesn't have the market power to command full price has to start throwing money at kids." – Ron Lieber [29:42]
• Now: All but 30–40 US colleges offer some form of merit aid.

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5. Understanding and Leveraging the Award Letter

• Award Letter = Pricing Sheet: When accepted, students receive a financial offer, which is often negotiable.
• Offers Aren't Always Final: Especially in communities where full payment is common, initial offers may be low intentionally.
  • "There is room after you get that first offer to ask for more. But you've got to do it in the right way." – Ron Lieber [32:11]
• Negotiation Tactics: Don’t call it a negotiation with schools. Approach with humility, present achievements, compare offers, and make a reasoned request for reassessment [34:56].

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6. Timing & Strategy: When and How to Advocate for Aid

• Application Timing: Early decision can limit leverage; waiting until all offers are received can maximize options [34:56].
• Strategic Communications: Know which schools compete, compare aid offers, and advocate by highlighting reasons and financial realities—without conveying entitlement [36:57].

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7. The Role of Guidance Counselors & Info Gaps

• School Capabilities: Most high school counselors, especially in public schools, lack the bandwidth or specialized knowledge to guide families through merit aid nuances.
• Parental Responsibility: Families need to educate themselves and not wait for professional guidance to surface. Lieber’s course addresses this gap directly.

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8. Practical Next Steps for Families

• Start with Honest Conversations: Examine personal and family history, emotions, and goals before money talks with your kids [13:15].
• Do Your Research: Use tools like the College Scorecard to compare outcomes, financial structures, and discount rates.
• Don’t Be Afraid to Ask: Even late in the application cycle, it’s possible to seek adjustments that can save significant money.
  • "In an hour or two of work ... I've gotten six figure changes in people's packages." — Ron Lieber [43:00]
• Explore All Options: Don’t get stuck on the idea that prestige or price equals value; hundreds of quality schools exist with varying levels of aid.

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Notable Quotes & Memorable Moments

• On Family Conversations:
  “What is it about your past emotionally that's informing your feelings about the process now as you try to plot your future for your kid?...I make no judgments about how anybody comes out on any of it. But I do make judgments about families that refuse to have the conversation because they're scared.” — Ron Lieber [13:15]

• On Merit Aid Tactics:
  “You can just make a reasoned case to the school that is offering less money...This is why I think I deserve more...is it possible that we...made a mistake here...?” — Ron Lieber [34:56]

• On Entitlement:
  “Don’t approach this with an attitude of entitlement or even if you feel a sense of entitlement... These are human beings you’re talking to, even if it is an algorithm that quoted the initial price.” — Ron Lieber [37:19]

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Timestamps for Important Segments

• 02:36 – First offer is not the final offer; opportunities for more aid.
• 05:33–07:16 – What emotional drivers do families need to face?
• 10:42 – How Lieber redefined the college value question.
• 13:15–14:30 – Practical strategies for confronting emotional legacies and pressures.
• 24:23–27:43 – The truth about sticker prices, discount prevalence, and types of aid.
• 27:54–31:56 – The history and expansion of merit aid.
• 34:29–36:57 – How and when to politely, strategically request (not "negotiate") more aid.
• 39:47–43:00 – Gaps in counselor knowledge, Lieber’s online course, and when to take action.
• 43:21–45:09 – What to do if you start the aid process late.

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Resources Mentioned

• Ron Lieber’s Online Course: meritaidcourse.com
• Book: The Price You Pay for College by Ron Lieber
• Book: The Opposite of Spoiled by Ron Lieber
• Tool: College Scorecard

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Closing

Ron Lieber stresses the importance of shifting from panic-driven, sticker-price decision-making to a thoughtful, empowered approach grounded in family values, self-awareness, and strategic action. With most families eligible for substantial tuition discounts, the single most powerful move is to ask—thoughtfully and respectfully—while managing the emotional dimensions inherent in this major life decision.

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This summary excludes advertisements and sponsor content to focus solely on episode substance.

Transcript

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[Farnoosh Tarabi]

money episode 1952 how colleges quietly discount tuition and what families need to know.

[Tommy John Narrator]

You're listening to so Money with award winning money guru Farnoosh Torabby. Each day get a 30 minute dose of financial inspiration from the world's top business minds, authors, influencers and from farnish yourself. Looking for ways to save on gas or double your double coupons. Sorry, you're in the wrong place. Seeking profound ways to live a richer, happier life. Welcome to so Money.

[Ron Lieber]

Once you get in, the offer of admission usually includes what's known as an award letter, which is basically just a pricing sheet telling you what they expect you to pay. And it is often the case that these institutions will make a first offer that is not the final offer. And if you happen to come from a community where their data suggests that lots of people have been willing to pay the full price in the past, they may lowball you on purpose. And so there is room after you get that first offer to ask for more. But you've got to do it in the right way.

[Farnoosh Tarabi]

Welcome to SEW Money, everybody. I'm Farnoosh Tarabi. We're talking about the cost of college today, a phrase I often hear for my friends with college bound kids. Farnoosh all schools cost 100 grand a year now. And yeah, if you're scrolling through the sticker prices of certain elite schools, it can feel that way. The numbers are eye watering. Four years at some colleges can approach $400,000. But here is the truth that sticker price is often not the real in fact, what many families don't realize is that the college pricing system in America is less like shopping for a product and more like navigating a complicated marketplace that's full of discounts, incentives, and strategic offers. Most schools have some form of hidden discount built into the system, and many families never learn how to access it. But our guest today has spent years pulling back the curtain on how all of this works and is here with some secrets. Ron Lieber has been the youe Money columnist for the New York Times since 2008. He's the author of two Instant New York Times bestsellers, including the Price you pay for College, an entirely new roadmap for the biggest financial decision your family will ever make, as well as the opposite of spoiled raising kids who are grounded, generous, and smart about money. He's also recently launched an online course that's focused specifically on what's called merit aid. The course helps families understand how scholarships that are not based on financial need are quietly reshaping the cost of college. In our conversation, Ron explains something that really reframes the entire college decision. For years, personal financial advice around college has focused on how to save for college or how to pay for college. But Ron argues that the more important question is one most families never really stop to ask. And it's what should we actually pay for college? Because when you step back, the decision isn't just financial, it's emotional. Ron talks about the three feelings that often drive us to make this decision

fear, guilt, and, yeah, a little bit of snobbery.

Or a lot of it, depending fear that our kids might fall down the social ladder, guilt that we didn't save enough, and this persistent belief that more expensive or more prestigious has got to mean better. And those emotions, he says, can push families towards decisions that cost far more than they should. We also get into why the college sticker price is often misleading, how merit aid really works and why most schools now offer it, how colleges quietly compete for students with discounts, and how families can advocate for more aid. Here's Ron Lieber.

RON Lieber, welcome back to so money. It's great to see you.

[Ron Lieber]

Thank you for having me. Yet again.

[Farnoosh Tarabi]

Yes, one of our favorite topics, definitely your favorite topic of late, affording college. I gotta say, so many of my friends right now with seniors in high school and the palpitations going on right now with the acceptance letters coming in on the one hand, acceptance letters on the other hand, where's the aid? And that's the intersection where we're going to start our conversation. First, though, just to give folks some background, you've worked at the New York Times for almost two decades and you've covered personal finance throughout so many different topics, banking, consumer protection, real estate, credit, college savings. And affordability, though, has become a bit of a a passion for you. And you've really gone deep into this. You've got a course we're going to talk about that. Tell us how this sort of began, how you realized that there was a lot of gaps that needed to be filled for families as they were looking at the affordability picture.

[Ron Lieber]

Sure. So there was a macro thing that happened with kind of me personally and my career, kind of a realization that I had. And then there was something very important that readers taught me that I had not been able to figure out for myself. So part one is I did a lot of work early in my time at the New York Times with a writer, financial planner, speaker named Carl Richards. And one of the things that Carl talks about again and again, he has this equation that says money equals feelings. And that cemented for me the fact that as much as the basics of personal finance may seem self evident and relatively simple, so much of the execution depends on getting a handle on our emotions. Right. Our emotions can lead us astray in any number of areas when it comes to our money. And as part and parcel of that, in trying to sort of embrace that philosophy and be feelings forward in my writing for the New York Times and in my books, I realized that the thing that I was best at was a sort of Venn diagram of where, number one, something is really expensive, right? High list price. Number two, the pricing and the discounting was opaque. And then number three, there were all of these really big feelings involved in the decision that could potentially cause you problems. Buying a house is one of those, but sending your kids to college is definitely one of those. $400,000 list price for four years in some places now, very complicated discounting scheme, whether it's need based aid or merit scholarships. And then down here you've got these parents who want to launch kids into the stratosphere and we all want our kids to do better than we did and all of that, right? So those feelings can cause problems. So that's the stuff that I feel like I'm good at. On the college front. I was hearing from all of these readers of the New York Times who said to me, various versions of this, look, Ron, you've written a lot here about how to save for college and 529 plans, and those are pretty straightforward. Now the rules have changed, but the plans are much better than they used to be. You've written a lot about how to pay for college or how not to pay for college. Don't take on too much debt. The federal student loan system is a mess. I've been writing about that for 15 years. What they said to me is that we're now in a situation where our State University costs $100,000 for four years or up to 150 now these days. But we've got these other schools that want $400,000 from us. Maybe they are the same schools that we went to. But can you explain to me with big data or AI or something, right, like why the school over here is $250,000 better than our flagship state university? Look, where's the proof? And what I realized was that was a new personal finance question, right? We don't get very many of those and it was a pretty big one. But the second thing I realized was that they were asking a value question. Instead of how to save or how to pay, they were asking what to pay. And that's how I started going down this road in earnest, trying to answer that question.

[Farnoosh Tarabi]

Yeah, and you say few people, few parents, families actually do ask the what should we actually pay for college instead? It's okay, have I saved enough? This is me, like, checking, refreshing the 529 balance every so often just to be like, okay, where are we at? Can we afford books? Freshman year, like, we thought we were on track. And now in recent years, we've doubled our monthly contribution to the 529. Because I feel like by the time my kids go to school and we've got another, I would say so my son's in sixth grade, so another six years for him, seven years. And my daughter's a little bit younger. And who knows? I won't look back and regret investing in the 529. But part of me is going to wonder if I even if I'll have enough. That's another show in that Venn diagram. Let's focus on the emotions. Let's. Because I think, and I think you would agree that's the first thing you want to address. Although it's not like a one and done. But what are some of the questions that you think families should really sit with as they approach the college decision process? And one I think I love one of your questions, which was like, why, if we have an attachment to college and we have an attachment to elite schools, specifically, what is that about? Because that can really get you down a certain path. A very expensive one.

[Ron Lieber]

Yeah. So, you know, because I believe in a feelings forward approach to this, you have to start with the feelings first. And the three that I see coming up most often are fear, guilt, and snobbery. There's fear of our kid falling down the social class ladder maybe we've scrambled up. My wife comes from a Holocaust survivor family. Right. Three quarters of the family was literally exterminated. They come to the United States and they make good. Right. And you want to do right by those ancestors who did so much for you. And you want to make sure your kid is able to achieve whatever it is that you've achieved and more. Right. And do whatever you can, whatever you must, because it feels like an obligation to make sure that's possible. So you want to create a kind of concrete floor through which they cannot fall through if they slip a couple long rungs while they're scrambling up the ladder there. Right. Guilt. We don't earn enough. We haven't saved enough. We lack the ability to pay in full. Or maybe we lack the willingness to do, but we have not yet acknowledged that or confronted it. And then there's snobbery.

[Farnoosh Tarabi]

Right.

[Ron Lieber]

Private is better than public. More expensive is better than less expensive. Ivy walls are better than concrete blocks, all sorts of that stuff. And there's a whole series of questions that parents can ask one another. And you want to do it with your spouse if you're married, you want to try to do it with your ex if you can. If you're flying solo on Venture, you want to Find a good friend or maybe a financial advisor who will really interrogate you. What is it about your past, if anything? But for most people, there's something. What is it about your past that informs this very important present discussion you're having? And it should really go on for years as you think about this. What is it about your past emotionally that's informing your feelings about the process now as you try to plot your future for your kid? And that conversation is going to be different in almost every family. I make no judgments about how anybody comes out on any of it. But I do make judgments about families that refuse to have the conversation because they're scared. Right. You need to get over it. You need to have it. You need to have it sooner rather than later. And then you need to have it with your kids.

[Farnoosh Tarabi]

And I guess in one example, if there is a family, if there's a parent who's like, I grew up, I went to an Ivy League, and maybe this was a culture in our family, but I don't have. I cannot afford that for my child, at least not the sticker price. And yet I'm stuck. I'm resistant to any other way unpacking that. What's the upside of that for this person?

[Ron Lieber]

Potentially the upside of the most expensive

[Farnoosh Tarabi]

school, or to come to terms with that and realize this is something that is not. It didn't just this feeling that I had didn't just arrive out of nowhere, that there's a history, a long history of pressure from my family to have a certain kind of education, to. To do higher ed in a certain way, a certain brand name. And I can't. I can't let this endure. I can't pass the torch with my kid because I've got student loan debt or I'm.

I'm struggling or whatever it is.

It's expensive even if you're not struggling. It's hard to make this cost. And then. So the reconciliation of that.

What have you seen on the other

side of that could be a positive for. For someone like that?

[Ron Lieber]

Sure. So I would name a. I can think of three or four things right off the bat. Right. First of all, you are not going to go into debt to finance your child or your children's undergraduate education. There are all sorts of people at all sorts of school and this data is out there. And something like the college scorecard. If you want to see some catalog of mistakes that at least some parents have made who borrow $100,000 or more from the federal government for their child's undergraduate Education. Now there's a new law that's going to cap the ability to borrow from the government, but people will still be able to yank money from their home equity if they have that or take out private loans, right? So number one, you're not going to get yourself into a whole bunch of debt. Number two, trade offs. Everything in personal finance is a trade off. So if you're not spending 200 or 300 or $400,000 for your child's undergraduate education, maybe you can retire early or earlier, or maybe you can retire at all, or maybe you will have money in reserve in case you need to help an aging parent with nursing homes or a younger child who may have any number of issues that require out of pocket spending. No debt, but you've got money that you can use for other things. Number three, if you make this decision as of older kid or only kids, seventh or eighth grade, maybe some of the pressure is off. Hey kid, we may have gone to an Ivy League school or a school that costs $400,000 or Caltech or whatever, but we do not expect you to do that, right? It is much harder to do that than it used to be. And also it's much more expensive. And the fact of the matter is that we really don't think it's a great idea for our family to spend that much, right? So maybe that takes some pressure off the kid or allows the kid to pursue interests that don't necessarily line you up for the best chance of achieving those 1 in 25 odds of getting into Stanford, right? So some of the pressure's off. And then also it gives you the license, really it's a necessity to go look for and look at undergraduate institutions that are different than the one that the parent or parents looked at or went to. And it turns out there are hundreds of great places to go be an undergraduate. Some of them are a little smaller, some of them are maybe a little more specialized. But at those places, if your kid happens to be at the sort of tippy top of academic prowess or the best violinist Instead of the 288th best violinist, they're going to get a lot more attention. Maybe they find the mentor or mentors that allow them to achieve the same professional level of success as you have or surpass it because they have found that grown up or grown ups who will pay attention to them because they're not 250 shining violin stars at the institution. Maybe there's only 25 or 2 or 5, right? So that's just for starters. There are lots of other reasons, but that's some of the freedom that painless can buy you potentially.

[Farnoosh Tarabi]

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[Farnoosh Tarabi]

Yes, and also knowing that you're doing the what is more self aligned with you as opposed to carrying this whatever this cultural weight has been and trying to continue that legacy at any cost. Yeah, I think that is a huge weight off you you. Let's talk about the big misconception about the list price. I'm a bit removed from this at this point in terms of like really knowing what's under the hood of list prices for college. But friends tell me, can you believe this? Emery's a hundred thousand. Everything's a hundred thousand dollars a year now. And I'll ask very naively, is there anything that's less? Okay, is there like a nice like $25,000 a year sticker price school that's just off the on the Sticker and they'll say, no, I don't think so. Have you really done the re? I don't know. So you tell us like what is really the truth about the cost of college out there as far as what the sticker price is and what families end up paying.

[Ron Lieber]

So let's discuss and interrogate this everything business, right? Everything costs a hundred thousand dollars. You know what those people in Montclair, New Jersey are talking about when they say everything?

[Farnoosh Tarabi]

It's Tulane and Northeastern.

[Ron Lieber]

It's only those schools that matter, you know, the elite instit. What are we talking about there? I don't know. They're probably, oh, I would say somewhere between 25 and 50 schools that are going to approach $100,000 a year at the list price in the next handful of years. Many of those schools are already there, right. I wrote about Vanderbilt a couple years ago. They were the first to touch it. So yeah, they're out there right now. Well, at just about all those schools, at least 40% of people are getting financial aid. And we'll talk about that more in a second. Everywhere, $100,000. No, there's no flagship state university or any other university that's charging more than about $150,000 for four years of an undergraduate education. And if you're an out of state student at those places, I don't think there are any that charge much more than $300,000 for four, four years. Right. But the fact of the matter is that 90 some percent of American undergraduates are not paying full price. Now at Tulane and Embry, it might be 50 or even 60% of the students who are paying full price. Those people are out there and some of them are from Mount Claire or Park Slope or any number of affluent neighborhoods. Right. So how is this discounting happen? It's two main ways. Right. There is the need based financial aid of old, right. Which is what I received back in the day. From 1998, 1989 to 1993, you fill out the FAFSA, you fill out this thing called the CSS profile at a couple hundred schools. And those forms are designed to assess your ability to pay. And that's based mostly on your income, but also on your assets. And at the CSS profile schools, it is possible, though not always the case, that your home equity will be a part of that equation. Home equity, not a part of the FAFSA equation. So that's, that's need based aid. Then there's this merit aid system that runs in parallel with the need Based system. Merit scholarships didn't really come into widespread popularity until 15, 20, 25 years ago. It was more prevalent in some places than others. Private first, then public later. But we've basically arrived at a point in the United States where all but, but 30 or 40 undergraduate institutions offer some form of merit scholarship. And often that is based on not what you have in terms of money, but what you've done, right? Ea test scores, extracurricular activities that may be of note or of interest to particular institution, depending on its needs that year. Now it gets very complicated and somewhat unpredictable, but that the basics of how it works. And at all sorts of really great institutions, nearly everybody gets a discount.

[Farnoosh Tarabi]

I'm just curious what the history of this is. You said it didn't really exist maybe decades ago. Was there a point in time when more schools started offering this and what happened?

[Ron Lieber]

Yeah, the best story to tell about this is about what happened in Ohio starting in the the mid to late 1990s and then for several years after that. There was one school in particular that kind of pushed the first domino over. And the basic outline goes like this, right? Imagine you are an institution that used to be higher up the food chain, but for a variety of reasons in the marketplace, better students decided to go elsewhere. And you ended up with a whole bunch of, a bunch of hard partying kids that didn't care so much about academics. Now imagine your faculty gets annoyed by this. And you don't want your faculty to be unhappy. You don't want them to leave for other places. And your alumni are unhappy, right? Because your alumni are hiring interns, they're hiring entry level people. You want alumni to hire interns and entry level people. And the alumni are saying to you, what is with these hard partying lugheads who you're sending to us who don't have very good discipline. So school had a problem and they basically decided that the quickest way to solve it was to go out and buy better students in the marketplace. So what does that mean? I think most of us have this sort of vague sense that when you take the psat, you get bombarded with all sorts of mail from a million colleges, many of which you might have never heard of. The way that this school decided to work that system was that they bought the names and home addresses, and now you can buy email addresses, text and mobile phone numbers from the institution that administers the PSAT. And they said, hey, we want people from within 500 miles of where our college is, and we want ones that have a GPA or SAT ACT score that's 20% better than our current average. And then sent mail to all those folks and said, hey, we have our eye on you. We have identified you as somebody with really great academic credentials. We want you here. Here's an application. We've already filled it out for you. You can apply for free, no fee. And if you get in, we'll offer you a $5,000 presidential scholarship for each year that you attend. And that worked for a couple dozen students the first year. And a couple dozen was just enough for the competing schools down the road to realize that they were losing more one on one bake offs to school wives than they had before. And so then all of a sudden the College of Woosters and the Denisons in Ohio have to start offering these merit scholarships as well. If you can't beat them, you got to join them, right? You got a match, maybe start offering more. And then what happens up the road is that Kenyon College is starting to lose kids. Kenyon gets in the game and then Case Western does up in Cleveland, and pretty soon Oberlin, which was arguably at the top of the food chain in Ohio, at least for many students. Oberlin capitulates as well. And this, the dominoes fall across the nation until every private school, every private undergraduate institution that doesn't have the market power to command full price has to start throwing money at kids, usually the ones who are better students than average. Eventually the public universities that want to acquire, who want to attract more out of state students, see this and they're like, hey, we can play that game too. And if you've got a cooperative state legislature that doesn't mind, you can go at it really aggressively. This was the University of Alabama model. And if you live up in the north and wonder how or why so many kids started getting interested, interested in the University of Alabama and then other schools in the south, it was because Alabama totally cracked the code on this. And before too long, more than half of their students were from out of state and they did it by buying them away from the north with merit aid.

[Farnoosh Tarabi]

Wow. Does the buying happen before or after you apply? And for families that don't get the merit aid, is there a window that expires to ask for it? Can you. How do you. Let's get into the negotiation and the asking.

[Ron Lieber]

You have used the word negotiation, which I encourage people to never utter in the presence of these schools. You can imagine being an administrator at these institutions, whether it's on the admissions side or the financial aid side. You did not get into this business to feel like some kind of used car salesperson. And while it may think may make sense to treat it as a negotiation, you don't want to describe it that way. Okay, we can describe it like that here.

[Farnoosh Tarabi]

Okay.

Okay.

[Ron Lieber]

But we shouldn't talk about it that way with the schools. Often, but not always, when the schools pitch you, whether it's through the mail or maybe they come to your school for a visit or maybe see them at a college fair, they will talk about the merit aid and the merit scholarships that they offer. And sometimes they will be specific and explicit. Right. Sometimes the mail will say you qualify for no less than $18,000 a year off the top or whatever. Sometimes they will say on their website, look, here's a chart of test scores, and here's a chart of different GPAs. And just figure out where you sit on the grid. And that's what you'll get at a minimum. And then others, usually the more rejective schools, the schools that don't accept very many people, will just keep you entirely in the dark about what sort of mechanisms they're using behind the scenes to sort that out. So that's what happens ahead of time. Now, once you get in, the offer of admission usually includes what's known as an award letter, which is basically just a pricing sheet telling you what they expect you to pay. And it is often the case that these institutions will make a first offer that is not the final offer. And if you happen to come from a community where their data suggests that lots of people have been willing to pay the full price in the past, they may lowball you on purpose. And so there is room after you get that first offer to ask for more. But you've got to do it in

[Farnoosh Tarabi]

the right way, and you teach us in your course. So I don't expect you to give us the full script, but can you tell us a little bit about. We're not using the negotiation word, but you do say how to put the colleges against each other, because the colleges, as you mentioned, compete. But knowing which colleges are competing against each other is the trick. So that's something that you teach. Can you give us a little bit about that and then tell us about your program?

[Ron Lieber]

Sure. So think about it this way, right? A lot of people apply early decision or early action, which means you get an offer earlier on in the process, and many people take that offer. When you take that offer early, you have lost leverage. If you wait until the end, until March or April, when all of the schools have reported in, then hopefully you've got some choices. And if you are in a situation where schools that are competitive with one another and your school counselor should be able to help with that. If they can't, there are other tools you can use to figure out or make an educated guess about whether the two schools that you're most interested in and actually compete with one another, you can just make a reason to case to the school that is offering less money. Hey, this is why I think I deserve more. Here are some things that I've done since you last heard from me when I applied that kind of add to my resume or give me additional skills that will make me useful to you because you want to describe the assets that you're bringing to the institution and then you can say, this other school down the road offered me more. I'd actually like to go to your school. My parents may have some trouble here coming up with thousands of dollars extra or I may not be able to do it where I live via summer earnings. Is it possible that we right that our family made a mistake here in giving our information to you that caused us to get less money? Because if not, we would love to find a way to make this work and can we have a conversation conversation about it? Right. So it's not that they did something wrong. Right. That their formula that they didn't work, that they didn't see you for what or who you actually are. Right. You're coming to them with some humility, but making a reasoned request that'll help everybody win here. And you can't win if you don't play.

[Farnoosh Tarabi]

That's smart. That's really smart. Yeah, because I was reading that these folks who work in the universities, they don't to your point, they don't see themselves as quote unquote salespeople. They're academics. So giving that framing is really important as going into the conversation.

[Ron Lieber]

Yeah, they hate this whole thing, right? They hate it almost as much as

[Farnoosh Tarabi]

you love making money though. Let's be honest, they don't.

[Ron Lieber]

Yeah, but look, none of them are responsible for the system as it is. The system emerged the way that it did, you know, a generation ago or 10 or 20 or 25 years ago, because a whole bunch of well meaning people who were trying to do right by their institutions and attempting to do right by students made a whole bunch of small decisions that in toto, in the marketplace caused things to change to what we have now. And without legislation and a variety of other changes, it isn't going to change. All that dramatically anytime soon. And so they are doing the best that they can, but they don't like it at all. All you are doing the best you can, but you don't like it at all. So try to have some sympathy, if not empathy for the spot that those folks are in as well. And the other thing I try to remind people is that, all right, so Your household has 200, $250,000 in income and you really can't afford to pay a hundred thousand dollars a year, but you can afford to pay maybe at least a little bit more than your state university would cost. Cue the chorus of small violins, right? You. And it is a problem. And even if it isn't a high class problem, it's an upper middle class problem, right? Keep in mind that the people who you are talking to, they might earn less than you do. So don't approach this with an attitude of entitlement or even if you feel a sense of entitlement, if you feel like you've been lowballed, don't let that seep through. These are human beings that you're talking to, even if it is an algorithm that quoted the initial price.

[Farnoosh Tarabi]

Tell us what inspired you to start your course. You have a full time job at the New York Times. You're also an author and you've now provided this course. It's@merit aidcourse.com where it's you teaching everybody basically everything you've uncovered through your reporting up to date. How to navigate the Merit aid specifically piece of this, which I think, I think, I bet you so many people still have no idea that this is even an area of possibility for them. And in fact, you say you could save up to $25,000 a year on college with this through just some simple

questioning and reaching out.

Tell us about the program.

[Ron Lieber]

Yeah. So as with many things, and as with the original idea to focus so much on this reporting, this was readers knocking on my door and saying, saying, hey, you have underestimated our needs here and are under providing for us. Can you please fix that? So in the same way that I hadn't figured out that what I should be writing about in the New York Times was what to pay for college and not to write so much about how to pay or how to save. When I took the what to pay for college notion and turned it into a book, after the book came out, I heard from a whole bunch of readers who were like, like, hey, this Merid Aid stuff, you gave it 10 pages in the book and that was helpful. But I have 10 more questions and here they are. Can you please answer them for me and take a whole hour just for my email and answer them? And it turns out that they were all really good questions and I felt like I could provide way more information when it became clear that people wanted it. It just hadn't been clear to me that there was that much demand for detail. The other reason why there was like a sort of gap in the marketplace that I felt like I could fill was that college counselors in high school have a terrible time with this money stuff for a whole bunch of reasons. Right? First of all, shout out to all of the public school guidance counselors who have a couple of hundred students that they're dealing with at any given time. It's hard enough for them to just coordinate all of the paperwork and administrative caca and the colleges wanting to visit the school schools. They can't be expected. We do not expect them to be one on one financial counselors. They just don't have the bandwidth. And even at the private schools where the caseload is less, they may not have the knowledge of how the merit aid system works. There's a lot of people at those schools who know a fair bit about need based aid, but merit aid is another matter entirely. And there's a fair amount of kind of black boxy stuff that goes on here. And then there's something else which all of the counselors struggle with to greater or lesser degrees. They are not trained financial advisors. The college counselors are not trained mental health workers. But we started this conversation with money equals feelings, right? And so if you're a college counselor and you don't feel like you can sit down with the family and say, hey, let's start with how much money you have, right? And then second question, how do you feel about all that money? And how do you feel about spending $400,000 dollars? Let's have that conversation in front of your kid right now in the room, even though you may not have thought of any of those. No.

[Sponsor Narrator]

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[Ron Lieber]

It's like they can't do that or they don't feel like they have the license. But my job is asking inconvenient questions, often emotional ones. Doing it out loud in public, because I've granted myself the license to do that for a living. And until somebody makes me stop, I'm going to keep asking the pointed questions because there aren't that many other people doing it. And I feel like I can help people get to the right answer.

[Farnoosh Tarabi]

Yeah, it's so needed. And to Be clear, even if you are starting this process senior year, like you now, we're into the spring, but let's say in the fall your child's going to be a senior. And it's not too late to learn this, right? It's it. The sweet spot is probably before you apply. Before you apply. But even if it's just a few months before you apply, it's okay.

[Ron Lieber]

Okay, totally. It is most helpful here if you can pick schools to visit, if you're able to visit and to pick schools to apply to that are most likely to give you the kind of discount that will make it affordable and even comfortable for your family. But let's say you miss the whole memo, right? And it's February or March and all of a sudden you're getting offers of merit aid from schools and you're not even quite sure what that or how to assess whether it is an appropriate, respectable and reasonable amount, you could still go down the hole for a week or two and get ready to have some conversations with schools come April that could potentially save you tens of thousands of dollars. I know this because friends and family hit me up each spring with whatever is happening with them. And in an hour or two of work, I gotta tell you, and like this is the point where somebody says not to boast, but I'm boasting here, Farnish, I've gotten six figure changes in people's packages, right? Let's be clear here, right? These list prices are inflated. They're not quite the absurd rack rates posted like on the back of the hotel door. You know where they say standard price for this room is $1,299? No, it isn't. Actually. That's what you'll pay for college graduation week weekend if you try and stay at a hotel close to campus. Look, there are people paying the rack rate at some of these schools and at some schools a lot of people are paying it, but that doesn't mean that you have to. And I'm trying to help people pay a more reasonable amount for a place that will really make a difference for them.

[Farnoosh Tarabi]

Awesome. I might be one of those phone calls in a few years. I'm just saying. But you got my number.

I do.

And you referenced your last book. It's called the price you pay for college. An entirely new roadmap for the biggest financial decision your family will ever make. We had you on for that, so I'm going to link that in our show notes. I also always will remember and I should probably revisit it now the opposite of spoiled. Your book on how to not raise spoiled rotten kids. Yeah. It's still a problem. The book has aged well.

[Ron Lieber]

Thank you. Yeah. I'm heartened by the fact that people still remember it and still use it. I was in Hawaii speaking at a school there about some of the college students stuff and there was a guy who came to dinner afterwards who had younger kids and he brought his copy of that book for me to sign and it just warmed my heart. There's a continuum right between those books. Right. Because if you learn to have complicated, emotion laden conversations with your kid or kids about money and they learn about how to think about saving and spending ever larger amounts, they and you and the family together will be ready by 14 or 15 or 16 to start having conversations about this super big number and how you are going to begin to tackle the shopping process and the spending process as a unit. Right. If you haven't had big money conversations before senior year of high school, you will find this difficult, although not impossible. But if you started the money conversations when your kid is four or five or six, they're going to be more ready. And I think you are are too.

[Farnoosh Tarabi]

Yeah. Ron Lieber, always a pleasure. Thanks for coming by.

[Ron Lieber]

My pleasure. Thanks for having me.

[Farnoosh Tarabi]

Thanks so much to Ron Lieber for joining us. You can learn more about his course at merit aid course.com I'll see you back here on Friday for AskFarnouche and I hope your day is so Money.

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