The Hidden Truth of College Tuition

It seems like every day when I see the news, there is something being said about the cost of attending college. From reports of student loan debt equaling more than $1 trillion in the United States to politicians proposing to eliminate college tuition, the cost of college is an increasing concern.

This concern is having an impact on higher education, as enrollments stagnate and worries about student loan debt soar. Higher education institutions need to consider not only what their tuition is actually doing, but what the perception of tuition is having on their enrollments. I want to take a moment to explore what is really happening in the world of college tuition, and offer a few strategies for colleges and universities to stand out from the noise of rising costs.

The Pendulum Is Swinging

Are college costs really rising as fast as we think? Despite popular perception of rapid and excessive inflation of costs, it appears costs are not as bad as we think. According to a report from the College Board, “the inflation-adjusted rate of increase in published tuition and fee prices was lower over the most recent decade, from 2004-05 to 2014-15, than over either of the preceding two decades.”

From 1984-1994, tuition and fees at private, non-profit colleges and universities grew 4.0 percent, compared with 2.2 percent from 2004-2014. That trend was true at public universities as well, with tuition and fees growing 4.4 percent from 1984-1994 and 3.5 percent from 2004-2014.

Not Just Low Inflation, But Actual Deflation

I take it a step further; not only are costs not rising as dramatically as public perception would have you believe but I think, when you analyze the numbers, that we are actually in a state of deflation.

Market forces are working as they are supposed to, with increased supply of education helping to drive prices down. As more colleges are offering online programs, students have more choices about where to attend, helping to increase access to education and make cost an important factor when choosing an institution.

One result of that, then, is discounting. According to the most recent annual survey from the National Association of College and University Business Officer (NACUBO), list price tuition is rarely paid. The average undergraduate student pays a 41.6 percent discount on list price tuition – a percentage that has been rising over the past five years.

If students are paying only 60 percent of the list price, then, it appears that real costs have actually gone down for students. While this gives me hope when I consider that I will have to pay for tuition for all of my kids at once, it does not necessarily bode well for colleges and universities, especially smaller institutions with correspondingly small endowments. These institutions will be expected to offer the same financial aid opportunities as bigger colleges, but may not be able to off-set the costs in the same way. In much the way the middle class feels squeezed by stagnating wages, middle-tier colleges and universities can also feel squeezed by stagnating tuition.

So, What’s the Solution?

I think the biggest problem we are facing today is not actually one of cost (although that is an issue). But for me, I think the biggest issue is perception. People feel college is too expensive, and as more colleges produce more graduates, more people have taken on student loan debt. We’ve all heard the stories of students drowning after graduation, unable to pay their $100,000 loan. Those are not the only story, however; most students have an average of $27,000 of student loan debt. This is nothing to sneeze at, of course, but I do truly believe the ROI of earning your undergraduate degree is such that it is worth that amount of debt.

So I think it’s not so much about changing the cost of college as it is about changing the conversation about the cost of college. Here are three ways I think institutions can start to redirect national attention.

  1. Explain your value. Sure, $27,000 seems like a lot of money, especially to an 18-year-old kid who has only ever earned minimum wage. If your institution can start tracking outcomes, however, and explain that on average, graduates get a job with a certain time frame and earn a certain salary, paying off their student loans in a specified period of time, it won’t feel so overwhelming. Break down the math for them: that $27,000 is a big upfront investment, but if it increases lifetime earning power, it will pay for itself in only a couple of years.
  2. Explain how you are cutting costs in other areas. One of our universities offers “free” downloadable textbooks, while another is offering a flat fee for all textbooks each semester. This perception of savings, which costs almost nothing for the university, can go a long way toward making students feel like they are saving.
  3. Be transparent about costs. The ways most colleges and universities explain their pricing structure is confusing – per credit hour is the most common, with courses being three or four credit hours each. That information also tends to be buried on the university’s website, making potential students feel like there is a reason the institution is hiding it and getting the relationship off on the wrong foot. Be open and transparent about the total cost of earning the degree, allowing students to plan for how they will pay for their education. Consider if the additional fees are necessary, or if they can be waived. I frequently recommend our clients waive the application fee – a small gesture that engenders a lot of goodwill. Some institutions take even more dramatic measures; one of our clients lowered their undergraduate tuition by $10,000 in 2013. This drop in tuition has helped increase enrollments and engender goodwill, as well as raise the profile of a small, private, faith-based college in a crowded regional market.

Higher education is expensive, no question. And there is more institutions can be doing to cut costs, such as tackling bloated infrastructure and utilizing technology to increase efficiency and economies of scale. But there is more to the cost of college than the media would have you believe. While the above listed measures will help, most critically, colleges and universities need to be a part of the conversation. Right now, we hear from a lot of people talking about higher education, but not as much from those on the front lines, especially those who are working in smaller, regional institutions. Higher education brings a lifetime of value – how will you articulate that value to your students?


About Todd Zipper

Todd Zipper serves as the President and Chief Executive Officer at Learning House. He joined Learning House as Executive Vice President and Chief Marketing Officer during the Weld North Holdings LLC acquisition in 2011. In his role, Todd oversees all operations and provides strategic management. Before joining Learning House, Todd co-founded and served as Chief Operating Officer for Education Connection. Todd can be reached at: