Danielle Allen is a political theorist at Harvard University and a contributing columnist for The Post. She is a former trustee at both Amherst College and Princeton University.
If Congress wanted to make an actual difference regarding the rising cost of college, and to give universities and colleges a fighting chance to solve this problem, it would strip from the Higher Education Act the requirement that colleges publish a “tuition” number. The figure is as good as useless now.
Colleges should instead publish five numbers: how much they spend each year on educating each student; the range a family is expected to contribute to that expense, from zero to a maximum; how much a family contributes on average; the range of what a college itself will contribute for each student; and how much the college contributes on average to the total expense for each student.
Why is the concept of tuition as good as useless? Let me count the ways.
1. At Ivy Leagues and top liberal arts colleges, whose tuition announcements get lots of attention, the tuition is only a “sticker price.” The majority of families whose children attend these elite schools pay less, as determined by their level of financial need. Increases to tuition matter only for the full-payers. For those on financial aid, changes to aid policies, not to tuition, are what matter. These policies get little public attention or transparency. How often do our major newspapers publish stories on how colleges define need?
2. At elite colleges and universities, the actual cost of educating any given student for a year is greater than the “sticker price.” For the 2014-2015 school year, Amherst College calculated a cost per student of $95,600. For 2012-2013, Princeton put the number at $92,000. In the Ivies and top liberal arts colleges today, a reasonable estimate would put that number in the territory of $100,000, whereas the “sticker price” clocks in at about $65,000. At research universities, it is especially hard to calculate the annual cost, or investment, per student, because these institutions do so many things in addition to educating undergraduates. But such calculations can be done at liberal arts colleges, and their cost-per-student figures would offer a baseline for a conversation about what we should be investing in students and how we should be paying for it. Such a baseline would be much better than a “tuition” number that provides no useful information other than how much the well-off are asked to pay.
3. Tuition decisions made by elite colleges and universities are actually decisions about whom to subsidize. The lower the sticker price, the more the well-to-do are being subsidized for an education that costs well above the sticker price. The higher the sticker price, the more the subsidy is shifted to the less well-off. Over a decade-plus of work in administration in higher education, I’ve paid attention to how these subsidies have shifted. At one leading liberal arts college, in the early 1980s, all families were being subsidized for about 50 percent of the actual cost of educating their students. That subsidy has increased to 100 percent for the worst off and fallen to about 30 percent for the well-off. The elite colleges and universities are asking full-paying families to increase their contribution so that the colleges and universities can spread their institutional contribution as far as possible. Decisions about how to set “tuition” are having impacts that are the reverse of what our instincts tell us about what a higher or lower number means. A price that goes up is good for the worst off. A price that goes down is bad for them.
4. The first three points apply only to the very well-endowed colleges and universities. They top the rankings tables partly because they can invest more in educating each student they admit. But their tuition sticker prices, which are more redistributive the higher they go, set the terms of the conversation for everyone else. Their high sticker prices give public universities cover, I believe, for raising their own sticker prices. But public universities are not similarly able to discount that price through substantial financial aid packages. In 2014, the University of Virginia, for instance, had to walk away from a much-lauded effort to extend its financial aid offerings. The higher the sticker price rises at the wealthy privates, the more the publics can charge and still appear to be a bargain in comparison. Paradoxically, the redistributive effort at the privates may well have helped erode the public-good commitment to funding public universities.
If you feel confused by now, then you have just experienced a small taste of what conversations about tuition setting are like in higher ed. Which is why, if Congress wants to solve this problem, it should scrap outdated language in the Higher Education Act that is distorting the decision-making at colleges as they try to consider how much to invest in each student annually, how much each family should be asked to contribute to that investment, and how much the college or university should itself commit to contributing, whether from its endowment or, in the case of the publics, public coffers. Those are the concepts, and the parsimonious sets of words, that we should be using to discuss this topic.
Economists talk about the ratio of signals to noise. Efficiency requires that the meaningful signals in a communication far outweigh any accompanying noise. “Tuition” is almost all noise, no signal. Or, we might say, it is sound and fury, signifying next to nothing.
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