We mentioned this before in the quickies, but I thought it might be a good point to have a more focused discussion about. As major conference teams move to provide their student-athletes with additional money every year to cover the gap between scholarships and the actual cost of attendance, we are seeing more and more discussion about the amount of money that will be allocated to cover that gap, and in particular, the fact that the gap is larger at some schools than at others.
Jennifer Smith at the Herald-Leader today has a very interesting article on how this seems to be shaking out. First, let’s summarize a few of the main points:
The amounts to be paid out are determined by a federally-created formula by the U.S. Department of Education. Some of the factors that go into the calculation of the cost of attendance are:
- tuition and fees;
- the cost of room and board (or living expenses for students who do not contract with the school for room and board);
- the cost of books, supplies, transportation, loan fees, and miscellaneous expenses (including a reasonable amount for the documented cost of a personal computer);
- an allowance for child care or other dependent care;
- costs related to a disability; and/or
- reasonable costs for eligible study-abroad programs.
The cost of living (COL) calculation will generally be all the above less what the scholarship pays for, i.e. tuition, room and board, books, fees, etc.
The extra amounts will be paid out with no strings. It can be used for anything the student wants. If he/she prefers to maintain a car, it can go for car expenses. If not, it can go to public transportation expenses, cheeseburgers, movies, tattoos, or whatever.
The point Jen Smith is making, and one that has been made before, is that the amount offered as gap payments, or "stipends," varies enough that it could be used as a tool in recruiting — i.e. saying that, for example, Louisville offers you $700/month in "pocket money" versus the $400/month offered by Kentucky. Despite the relatively tiny amounts of money, it is possible for a young man, barely 18 years old, to find the difference substantial particularly if the schools couch it in terms of percentages: "Tennesse can also offer you 44% more than UK for you to spend on yourself."
I have used the federal database at the National Center for Education Statistics instead of the report Smith refers to in her piece. It gives us the most up-to-date information for the "gap" amounts, although Smith's article clearly indicates these amounts will go up very slightly in Kentucky's case for the 2015-2016 academic year. Also, I’ve just looked at three schools — Kentucky, the Tennessee Volunteers and Louisville Cardinals. There are many examples of even greater variation, but I’m sticking with our primary in-conference and non-conference rivals, since it is their examples that will have the most direct impact on Kentucky:
The amount in question, of course, is the "other" amount there in the fifth column. That represents the estimated living expenses the schools report to the federal government. Unfortunately, this number is highly fungible, and it’s derivation is about as transparent as the Ohio river after a week of heavy rain.
What I mean by this is explained in this article at the Chronicle of Higher Education, which reports thus:
But there are also problems with the total-cost-of-attendance part of the equation, according to Braden J. Hosch, a former director of policy and research for the Connecticut Board of Regents for Higher Education.
Mr. Hosch has found wide inconsistencies in how colleges calculate cost-of-living expenses, especially for students living off campus. There is little federal guidance about how colleges should calculate the cost of living, so they often end up with quite different results. For example, four Connecticut colleges within a two-mile radius had drastically different estimates of the cost of living off campus in 2011-12, ranging from $8,000 per year to more than $20,000.
I know what you are thinking, dear Cardinal-loathing member of the Big Blue Nation — will we find those inconsistencies in Louisville’s case, i.e. compared to, say, Bellarmine or Spalding? The answer is no — all the 4-year degree Louisville colleges report substantially the same number of COL expenses — although to be fair, they are so similar that I strongly suspect they are singing from the same sheet of music.
Also, because I know you are thinking about this as well, Kentucky's very close neighbor Transylvania‘s COL expenses are reported as $2,100, 35% less than Kentucky’s report.
Be that as it may, Kentucky will have to deal with the potential disadvantages associated with walking-around money. This won’t be even a marginal issue for basketball, but when it comes to football, where Kentucky competes with both Louisville and Tennessee directly, it could be a factor.
It’s easy to think that all UK has to do is use the highly obtuse and imprecise method to account for living expenses in Lexington as being higher, despite protestations that they’d have to worry about justifying them. Even though several UK administrators assured Smith that they wouldn’t mess with the calculation, the CHE quote clearly indicates that contra the assertions from UK in Smith’s piece that the federal government actually provides little guidance about how COL should be calculated.
But there are other good reasons not to have a high COL calculation. From Smith's article:
There is no national cap on schools’ cost-of-attendance figures, but in general Barnhart noted that it "behooves a school to keep that number lower for the general student body.
"It’s in a university’s best interest … because as they recruit students for this campus, they don’t want to say the cost of coming here outside of the tuition is way up."
This is exactly right. Raising this number might help football recruiting, and possibly a couple of other sports, but it would make UK look less competitive to students not coming to UK to play athletics (the vast majority of attendees), and possibly reduce enrollment. Obviously, sauce for the goose is sauce for the gander — Kentucky gets to tout it’s lower cost of attendance when recruiting students against Louisville, for example, or against out-of-state students for both Tennessee and Kentucky.
How will the difference in stipends affect Kentucky’s recruiting, particularly football recruiting? It’s hard to say for sure, but it seems likely given human nature that schools with bigger stipends will have some advantage given the same recruiting target. How big that advantage will be will depend on how effective Kentucky can be when it comes to neutralizing it with salesmanship and pointing out its relatively small size.
I suspect it will mostly be an advantage on the margins, particularly with recruits coming from poor family situations. It may not seem fair, but the old saw, "Money talks," even when we are talking about a few hundred dollars a month, has never been more true than it is now. In the end, it seems to me that this is a disadvantage we'll just have to live with.