No One Pays the Sticker Price | From the Bell Tower
Net price calculators will enable a more transparent college search
Steven Bell, Associate University Librarian, Temple University, Philadelphia, PA -- Library Journal, 04/08/2010
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If you’ve been to a high school graduation in the last few years, did you catch the scholarship announcement? At some point during the proceedings the principal or some district administrator tells the gathered students, family members, and friends the total amount of scholarship dollars awarded to the new graduates. The figure is typically substantial, well into the millions of dollars, depending on the size of the school, of course.
The dollar figure is always met by a roaring cheer from the audience. “Wow, our children are so smart” exclaim the parents who pride themselves on the vast number of scholarships the graduating class has accumulated. But out in the audience one or two adults are rolling their eyes, knowing full well that the bulk of those scholarships have little to do with smarts. Those few adults usually work in higher education.
Discounts not scholarships
They are called scholarships, but the reality is that they have little to do with the stellar academic or athletic performance that earns the gifted few a full-paid, four-year ride. For the vast majority, their $4000 or $5000 scholarships are simply discounts on the advertised tuition. It’s like going into the car showroom and having the salesperson take $2000 off the sticker price. No one pays the sticker price. Would you call your friends and tell them Chevrolet gave you a scholarship?
Colleges and universities have a carefully chosen discount price. According to a recent Inside Higher Education article, the average discount rate for full-time freshmen increased from 39 percent in fall 2007 to 42 percent in fall 2008, and the average award covered more than half—53.5 percent—of the “sticker price.”
Less costly than they think
Think about that. If your institution’s tuition is $25,000 and the admissions and finance office agree on a 42 percent discount, that means the average student pays only $14,500. That’s still a considerable amount of money, but hardly the outrageous tuition America thinks every student pays.
The discount rate represents the share of tuition and fee revenues colleges use to award institutionally funded aid. The greater a discount a college can give the more competitive it can be in attracting the smart students who will improve the institution’s U.S. News & World Report ranking. Be careful, though. Make the discount too high and the bottom line suffers. This all sounds so confusing. If everyone knows that no one is paying full price (okay, there are a few full payers) then why are we playing this game? Wouldn’t it just be easier to set clear and identifiable tuition rates that accurately reflected the cost of higher education?
Discovering the real cost
That’s exactly the idea behind a forthcoming requirement for higher education institutions to make the “net price”—or the sticker price minus any discounts—more transparent to prospective students and their parents. Reporting for the Washington Post, Daniel De Vise—in his College Inc. blog (a great new find)—shares news about the introduction of the net price calculator. A few higher education institutions already make such a calculator available.
By using one, prospective students and their parents will obtain a more realistic picture of what attending a particular institution will cost. With the current system, the net price is rarely known until late in the admissions cycle. The true cost is in the acceptance letter where the “scholarship” amount is revealed. That’s a problem because many high school students will avoid applying to certain institutions because of the sticker price. If they knew they’d likely pay tens of thousands less than that, imagine how much more productive the college search would be.
That’s what the net price calculator is intended to do, help students to make better, more informed decisions about their college education. If you’d like to experience a net price calculator you can find one here.
Less to cheer about
A core value of academic libraries is the delivery of accurate and balanced information. We academic librarians work hard to understand the precise information our students and faculty need, and take quite seriously our responsibility to get it to them. That makes more ironic the realization that our parent institutions seem to think obscuring information about the real cost of higher education is a good business practice. Questions about tuition typically go to the admissions office, not the reference desk, but I’d like to think that more librarians will make a point to learn about the net price issue and improve their understanding of the complexities of higher education.
It’s hard to imagine a downside to the requirement for net price calculators. I can only think of one: there will be a whole lot less to cheer about at high school graduations. When all students pay a net price, the day of phony scholarships will end and those inflated scholarship totals will go bust.
Steven Bell is Associate University Librarian, Temple University, Philadelphia, PA. For more from Steven visit his blogs, Kept-Up Academic Librarian, ACRLog and Designing Better Libraries or visit his web site.Read more Newswire stories:
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After Appeals Court Decision, Whither Net Neutrality?
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No One Pays the Sticker Price | From the Bell Tower
