Buried Treasure in the U.S. News Rankings

The U.S. News & World Reports annual ranking of colleges and universities, "Americas Best Colleges 2008," was published last week with typical fanfare. High school students and their parents likely flipped immediately to the "top schools" ranking, where they foundgasp!that Princeton University earned the top spot for the eighth consecutive year! And the same exact schools as last year continue to fill the top 12 slots.

What many potential college applicants may not have noticed, and what we believe would be immensely more useful to them, is the treasure trove of data on financial aid and student debt that is included in the report. The magazine publishes information on financial aid packages offered at schools, such as the average need-based grants and loans that students receive and the average percent of a student's financial need that the colleges meet.

That isnt to say that college quality is less important than cost. Theres no question that applicants should consider the quality of various institutions before applying. But credible data on college quality is hard to come by. And there are few people who believe (and a lot of evidence disputing the notion) that the U.S. News "top schools" ranking has anything to do with actual quality of schools. Most agree that the rankings have much more to do with the size of a school's endowment and its reputation, which in many cases may be outdated.

And of course money matters a lotspecifically, how much a school actually costs (i.e. it's net cost after financial aid is taken into account) and what form financial aid comes in (i.e. grants versus loans). Often people are so focused on the superficial aspects of colleges that they forget to consider how much debt they are going to leave with four or more years later. Who really cares that 31% of alumni give money back to Georgetown University? It's not completely unimportant. But isn't it more important to know that Georgetown promises to meet 100% of your financial need?

The U.S. News financial aid table is actually somewhat deceiving, because it lists schools by those that "award the most (and least) need-based aid." While its great that George Washington University has the highest average aid package in the country at $33,809, this isnt because the university is particularly generousits because it's the most expensive school in the country, with an annual tuition of more than $39,000 and total cost that exceeds $50,000 per year.

Whats more interesting than the relative size of aid packages is the ratio of grants to loans in the average package. Also quite useful is a table ranking the average amount of debt with which students graduate.

This data can be particularly helpful when comparing similar schools. For example, lets look at two universities that have comparable ranks on the U.S. News list: New York University and Lehigh University. Both NYU and Lehigh rank in the low 30s on quality and charge around $35,000 in tuition per year.

Lehigh meets 96% of students' financial need, with the average student receiving five times more grant aid than loan aid$21,794 in grants compared to $4,367 in loans. Lehigh's endowment of $975 million supports the school's financial aid program, among other activities.

In contrast, NYU meets only 66% of students' financial need, and has a much lower average grant to loan ratiowith the average student receiving $14,207 in grants and $5,149 in loans. In other words, students who choose NYU over Lehigh are very likely to shoulder a heavier debt load. In fact, NYU ranks number three on the "most debt" ranking, with graduates leaving school with an average debt of $34,417. You'd think a school like NYU with a $1.75 billion endowmentone of the largest in the countrycould do better.

While we're disappointed with NYU, our main point is that there is a lot of very valuable information in the US News report. Just dont get too caught up in the crazy hype of the "top schools" ranking. Flip to the financial aid data, and make sure that your dream school isn't going to smother you with excessive debt.