College discounting does students a disservice

Stefanie Botelho's picture

As nearly everyone’s aware, the price of tuition at a private college in the United States has gone up and up and up. The average list price at a private college today is over $30,000 a year; at one college in four it’s more than $40,000. (College Board Trends in College Pricing 2013) Most people don’t realize, however, that most students don’t pay nearly that amount because, on average, almost half of that tuition is being paid by the institution in the form of student aid. Eighty nine percent of entering freshman receive some financial aid/tuition discount from their institution; yet at any one institution the range in aid can be from $0 to the full price of tuition. (NACUBO Tuition Discounting Study: 2013 )

This significant amount of tuition discounting, the wide variation in the amount of aid granted and the uncertainty around the true price results in an imperfect market for higher education and does a disservice to students, their families and American higher education in general. Because buyers can’t know what they will actually pay until the acceptance letter arrives, many students don’t apply to schools that they should consider and others apply to schools that they can’t afford assuming that they will get all the aid they need only to find out that they can’t afford them once accepted. In this last year, 26 percent of students who were accepted at their first choice school didn’t attend it because they were not offered aid and 40 percent said not being able to afford their first choice school was a very important consideration in their not enrolling at that school.(The American Freshman National Norms: 2013)

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