Why is paying for college so complicated?

Saving and paying for college is an endurance test, a forced march on an often 50-year parade, with strange numerical codes and meaningless letters marking a route that Waze can't map.

Start a 529 college savings plan at age zero or earlier for your child, born or not yet. When children reach the teenage years, check with colleges net price calculators (NPC) to see how much financial help they could get.

Then fill out the FAFSA, which stands for “Free Application for Federal Student Aid,” and determine your student aid index (SAI). The primary FAFSA output used to be known as the EFC, or “Expected Family Contribution,” but a recent legislative effort aimed at “simplification” replaced one acronym with another.

Admitted to a great school? Good, but the grant money it provides is based on that SAI or other data or the numbers formed in some other way CSS profile, outbreak is probably not enough to make college affordable. So you could file a federal application PLUS loan for parents, which can take 25 years to pay back.

As the abbreviations pile up, parents may feel the urge to step back and ask a perfectly reasonable question: Why does it have to be this way?

The complexity comes from countless well-intentioned people – inside and outside government – ​​who have made incremental improvements over the past decades to expand access to higher education. Because it's a university degree can add a lot of a person's lifetime income and wealth if he or she has completed college and not incurred too much debt, it is good public policy to try to make it more affordable for more people.

But as income inequality increases and college costs rise, each new group of freshmen needs more and more help. More advisors, programs, regulations, and aid almost inevitably lead to conflicting advice, new regulations, strange loopholes, and bad actors.

“We don't have anything that even remotely resembles a coherent system of higher education in this country,” he said Brian Rosenbergpresident emeritus of Macalester College and visiting professor at the Harvard Graduate School of Education.

To wit: Unlike many countries in the world, the United States lacks large, easily accessible national public universities. Instead, states developed their own flagship schools and regional offshoots, and the extent to which they subsidize their residents waxes and wanes as political considerations shift and the economy falters.

So while Americans have many choices — including community colleges where almost anyone can enroll — they are not necessarily affordable. One big reason (though not the only one): “As more people wanted to go, it became more expensive because states weren't willing to put up enough money to let everyone do so,” said Sandy Bauma higher education economist and a non-resident senior fellow at the Urban Institute.

Private colleges came first in the United States in the 17th century, and as they grew they had to invent and refine financial aid. Some donated their generosity to a small number of low-income students who could afford nothing, while many others used the tuition of wealthy students to cross-subsidize those with lower incomes.

That helped, but not enough. An extensive menu of federal aid emerged, including loans for both parents and students; money for the campus jobs; and downright grants for low-income and other students.

States developed their own loan and grant programs. They also all created 529 savings plans (often two plans per state) and tax breaks of different species to let people use it.

As tuition rose, people had trouble paying their loans. The federal response was pervasive: forgiving debt in bankruptcy became more difficult, while forgiving debt by working in the public service or keeping your income low became easier.

Easier on paper, at least. The Department of Education has hired third-party loan servicers to collect the debts and counsel the confused young adults who called in the millions. The administrators spent a lot bad advicesuch as telling people they had to keep making loan payments during the early years of the pandemic to remain eligible for the Public Service Loan Forgiveness Program.

Direct subsidies from the federal government – ​​the money that families do not have to pay back – have never existed particularly generous. That left most schools struggling to assess applicants' ability to pay the extra amounts – and to guess their willingness to do so.

To measure ability to pay, many of the more expensive schools required that second form, the CSS Profile, which asked for information on things like the equity in a family's home if they had one.

Complicated? Certainly. Aggravating? Maybe. But the schools at least strive for fairness when figuring out, for example, whether home equity is an asset a family should tap for college.

“Two families with the same income, one renting and the other owning, are not equally prosperous,” Ms. Baum said. Schools would then charge a portion of their home's equity each year — or nothing at all if they could afford to meet a family's financial needs without asking them to tap it.

As list prices rose, a smaller number of families with the means to pay that full price (or the capacity to borrow) were willing to do so. Now all but about 35 of the schools that reject the highest percentage of applications—and are thus largely shielded from the laws of supply and demand—must offer financial incentives to at least some of the affluent admitted students to keep them coming.

Schools call this “merit aid” – presidential grants, academic scholarships and the like. Maybe you get nothing at all, or maybe you get more than $100,000 over four years, but you often don't know what it will be until you pay an application fee and wait months for an admissions offer — and a quote.

“I don't think colleges are incentivized to make aid easier,” said Mr. Rosenberg, who has worked at three colleges that offer many of them. “The reason they don't want to do that is simply because it sounds dirty. 'We give money to students who don't need it' because if they choose to come, it will benefit their bottom line.

But he can hardly blame them, since without this education a school might not be able to attract enough students. People like expensive things, so a private university could keep the list price at $70,000 and then reduce it by an average of 50 percent. If it can get a student to say yes with an offer of $15,000 for aid, that $55,000 is $20,000 better than the average of $35,000.

Although no one needs to know that. “What sounds much better is: 'We give scholarships to great students,'” says Mr. Rosenberg, the author of “Whatever it is, I'm against it: resistance to change in higher education.”

It's not just private colleges that are causing these problems, either. Word on the street is the quagmire – multi-step applications, lots of debt – and many students who could benefit most from college never bother to apply. “Low-income students can in principle already go to a community college for free,” he says Bet Akers, senior fellow at the American Enterprise Institute. “In this way, complexity becomes the barrier.”

Without some form of federal regulation or new laws, opaque pricing and steep discounts will continue to exist. And yet, existing state law encourages student bidding. The University of Alabama, for example, has proven adept at using merit aid to lure out-of-state students at net prices that still work well for the school. Eventually, the Illinois legislature got tired of that created a new program to prevent the brightest teens from taking their talents to Tuscaloosa.

However, when schools come together to bring more order to pricing procedures, other branches of the federal government can step in to stop this. During an infamous meeting in 2013 mused a group of private university presidents about a voluntary laying down of arms on the basis of merit, so that there would not be so much undercutting. The Ministry of Justice got wind of it and letters sent to attendees asking them to preserve all documents for an antitrust investigation. No one went to jail or anything for this, but such discussions no longer take place in big rooms with a lot of people in them.

Reasonable proposals are not heard in Congress, or they remain stuck in various committees for years. For example, there is no universal net price calculator. a proposed law which allows people to enter their details once and get results for each languishing school.

Applicants who do go to college often receive so-called award letters – term sheets, basically, explaining the awards. Over the years they have added more than one 100 different terms for unsubsidized federal student loans, without legislation or regulation that would standardize communications. “Being understandable instead of incomprehensible would be a good thing,” he said Catherine Bond Hillthe former president of Vassar College and director of Ithaka S+R, a consulting firm.

Any attempt to simplify things – and stop scaring people off – is welcome. But for Mr. Rosenberg, the efforts may also be insufficient. Complexity, after all, results from tens of millions of people trying to pay for hundreds of different types of degrees from thousands of schools – for-profit and not-for-profit, religious and secular, state and private. The selection is all American and there is no reason to reduce the menu much.

However, studying could be cheaper, and that could solve many problems. “If the cost of producing education continues to rise, you are chasing a rabbit you will never catch,” Mr. Rosenberg said. “Making it cheaper is the only way it becomes more accessible.”

Ron Lieber is the Your Money columnist for The New York Times and the author, most recently, of “The price you pay for college.”