In a Washington Post opinion column last week, Danielle Allen was right to say that the tuition number the federal government requires colleges to publish is useless. On most campuses, few students pay that sticker price because of discounts in the form of “scholarships.”
But Allen’s solutions to this problem would largely fail to bring transparency to the tuition bill that confuses most students and parents. While her ideas might work at elite universities that enroll mostly upper middle-class and wealthy students like the two institutions where Allen has served as a trustee (Amherst College and Princeton University), they wouldn’t provide much help to most students and parents struggling to make sense about which colleges provide the best value.
Here are three ways we can fix tuition pricing for the majority of parents and students:
1. Publish tuition information by family income and academic program. Allen’s idea that colleges should release five numbers related to how much they spend on education and how much parents contribute is a good one, but they shouldn’t be based on averages, as she suggested.
Such averages are skewed at many schools based on the socio-economic status of their student body. The federal government already requires schools to release the net price — what students pay after financial aid is factored in — and to display that net price by income bracket. You can find those numbers on College Navigator and the College Scorecard.
But the averages listed are useless unless you know how many students the college enrolls in each income bracket. A recent report from the Education Trust found that half the universities with endowments above $500 million rank in the bottom 5 percent of schools when it comes to enrolling students on Pell Grants (most Pell recipients have family incomes below $40,000).
The College Scorecard can make it seem to students and parents that a particular school is generous with financial aid to families of a certain income level, but you would never know if it just has a handful of such students. Schools should be required to release more detailed information about the economic background of their students so families can make better sense of the averages Allen suggests they publish. (This number is actually buried in federal data, but so much so that few people see it).
And because many schools discount tuition based on academic program — they give bigger price breaks to boost enrollments in some majors, for instance — colleges should also share tuition prices by major.
2. Release a four-year tuition figure. Let’s face it, the United States doesn’t suffer from a widespread college access problem; it suffers from a completion problem. Nearly 70 percent of high school graduates go right on to college the following fall, but just about half graduate in four years.
There are many reasons students don’t graduate on time or at all. Financial issues play a large role in many cases. No one plans to go to college just for one year, so there’s no reason colleges should just release tuition for one year. Just like institutions have invested in advising in recent years to help students better plan their four years through college, they should do the same on the financial side.
Right now, colleges don’t set their tuition prices for the following academic year until the spring, just weeks before students need to decide where to enroll or if they’ll return for another year. Some colleges front-load their financial aid, so first-year students get better packages in the hope that they will like the campus so much they’ll return for their sophomore year no matter the price.
The time has come to make tuition and financial aid more predictable for students and parents by guaranteeing a four-year price up front and all in (including fees and living expenses), as well as aid packages that will remain consistent so long as family circumstances don’t change.
3. Build a new pricing model for the 21st century. The current tuition discounting model that much of higher education follows was built in the 1970s, for a different type of student and certainly for an economy in which a family’s income was better able to handle college costs out-of-pocket each year.
Today, 20 percent of families pay 100 percent or more of their annual income to cover the net price of college, according to an analysis by Robert Kelchen, an assistant professor of higher education at Seton Hall University. In 1996, just 10 percent did. So even with discounts, college is out of the financial reach for one in five families.
We need new ideas in pricing college. We need to eliminate the tuition-discounting model that confuses families and makes the sticker price a useless figure.
One model likely won’t replace the current scheme, but there are plenty of ideas floating around, from a subscription model that allows students to pay a lower price up front and pay a subscription for access to courses throughout their lifetime to differential tuition that charges students for the real cost of their degrees so that English majors in large lecture classes won’t have to subsidize biology students in small labs.
College is perhaps the largest investment we’ll make in our lifetimes. If we hope to get more students into — and through — college, we need to give them more insight into what they are paying before they begin the journey.