By Josh Kilroy
With the end of the ‘pandemic pause’ and the resumption of student loan payments after more than three years, there is renewed attention on the cost of a college education.
As an advocate for student loan reform, I am frequently frustrated by how college tuition is presented in the media. If you read the reporting on college tuition, you would be forgiven for thinking that college is more expensive today than ever before. For instance, US News & World Report recently stated that over the last twenty years, undergraduate tuition and fees (adjusted for inflation) had increased by 40% at private colleges, 38% for in-state public colleges, and 56% for out-of-state students at public colleges.
Yet the actual picture is more complicated. For the 2006-07 school year, the average “sticker price” for a four-year private college was $44,670, while the actual amount paid was $34,250. For the 2022-23 academic year, the sticker price was $57,570, but the actual amount paid was $32,800 (all figures adjusted for inflation). While, on paper, it seems like college has gotten considerably more expensive, in reality — for many people — it has become a little cheaper.
The published tuition of colleges has become increasingly detached from the actual cost. As Dan Currell noted in a brilliant article, “The Truth About College Costs,” in a recent issue of National Affairs, by the late 1980s and early 1990s most colleges had figured out that exaggerating their tuition fostered the illusion of exclusivity, generating positive press and increased applications. In short, inflating the price of college tuition is a marketing strategy. To hide the fact that most families would not pay Ivy League tuition for less prestigious schools, these colleges increasingly gave large “institutional scholarships” that negated their published costs.
Currell points out that these “institutional scholarships” are not grants, just college administrators quietly dropping their price to meet market demand. They don’t represent an expenditure of any real money. But Currell argues that there are costs to be paid for these deceptions. One, students and their families experience needless anxiety over cost. Two, these fun-house numbers make a reasoned discussion about the student loan crisis much more difficult because we don’t have transparent data.
Finally, because these discounts are not distributed equally, many lower-income families are over-charged by colleges that inflate their tuition. As Josh Mitchell documents in his excellent book The Debt Trap, colleges are well-aware that middle and upper-middle class families are more price-sensitive than lower-income families who are often dealing with college financial aid for the first time. Colleges are thus incentivized to use the confusion they create to attract more affluent families with higher discounts and extract higher tuition from working-class families, who are forced to cover the difference with more student loans.
This is not just a hypothetical scenario. Early last year, a major class lawsuit was filed against seventeen selective colleges for colluding to restrict student financial aid packages, aka the phantom “institutional scholarships.” The University of Chicago (my alma mater) recently became the first of the defendants to settle the case, paying over $13 million while denying any culpability. Other defendants are likely to follow.
It is not the job of reporters to promote the marketing hype of universities. There are plenty of PR experts employed by these schools – let them promote illusions of exclusivity and selectivity. Ridiculously inflated college tuition figures should be challenged and contextualized by reporters. This would bring much-needed clarity about the costs of higher education to students, their families, and the general public.
Here are several steps journalists could take to provide better information for their audience.
One, when referring to a college’s tuition, be sure to mention at the same time the actual average cost paid.
Two, reporters should challenge the idea of the “institutional scholarship.” Currell insists, quite correctly, that the word “scholarship” should refer to an actual dedicated fund of money. A university should not be allowed to paper over the gaps between their claimed revenues and their actual expenses with imaginary money, which is the current practice.
Finally, journalists should report on the actual percentage of students who pay the full tuition. For elite universities, this percentage should be quite high. Presumably tens of thousands of families would pay $70,000 or more (often much more) each year to attend Harvard, Stanford, and other prestigious schools. But there is a growing number of schools where no family pays the stated tuition. Reporters would be providing quite a public service by highlighting this information.
With better reporting on college tuition (and the other associated costs of college), it would be more widely known that college costs are not exploding, that lower-income families are paying a premium, and that seemingly expensive, well-off colleges are, in fact, often struggling to pay their bills. This would allow for a more reasoned, thoughtful discussion about how best to provide students with access to a quality college education and support our institutions of higher education.
Josh Kilroy is a political consultant and the founder of Americans for Fair Debt Relief, a federal political action committee that advocates for student loan reform.