For the typical family, college is one of life’s big-ticket purchases. But figuring out how much it will cost can be difficult. Finding out a particular college’s sticker price is easy, but the amount a particular family will actually pay is revealed only after students are admitted and receive their financial-aid awards. Even then the numbers can be confusing.
Recently the federal government has required colleges to post net-price calculators on their Web sites, estimating personalized prices. It has encouraged them to use a standard “Financial Aid Shopping Sheet” to display students’ actual out-of-pocket costs. Whether these efforts to promote transparency are making much of a difference is not yet clear.
But either way, they have a glaring limitation: They all focus on what students will have to fork over for a single year of college when, presumably, they plan to complete an entire degree. “We talk about net price,” says Sundar Kumarasamy, vice president for enrollment management and marketing at the University of Dayton, “but we don’t talk about four-year net price.”
It’s not just one year’s price times four. Tuition and fees will probably go up. Students’ level of aid can change because of their financial circumstances or grades—or because their state runs out of money in its grant program, or the federal government changes a policy, or the college has front-loaded its grant aid. College administrators know all of that; the average family probably does not.
That uncertainty makes it especially hard to know how much a student is likely to borrow. In many cases, students and their parents are scraping things together one year at a time—a mistake encouraged by the way colleges communicate with them. “The lack of sophistication about how you are going to pay for college is breathtaking,” says David W. Strauss, a principal with the Art & Science group, a consulting firm. What if students were told upfront how much they would have to pay for their entire degree?
That possibility has captured Mr. Kumarasamy’s imagination. He would like to be able to tell prospective students at Dayton exactly what their tuition—which he would like to make one number, doing away with fees—and institutional aid will be for four years of enrollment. Providing that information, he thinks, could spark an important conversation with families about how much a degree will really cost them—and how important on-time graduation is to their pocketbooks.
A handful of colleges offer students a level sticker price for all four years. George Washington University keeps tuition constant for up to five years and also promises students that it won’t cut the aid it provides.
Mr. Kumarasamy wants to actually lay out four years of prices for students and use that sum to help them think through what coming to Dayton would mean. The message, he says, would be: “This is not your freshman package. This is your graduation plan.”
Even that, however, wouldn’t quite tell students exactly what they would pay for four years. State and federal financial aid could still change. If states and the federal government made their aid more predictable, promising students that the amounts wouldn’t drop over four years, it would provide a real service to students—and might help spur colleges to follow their lead.
“The lack of sophistication about how you are going to pay for college is breathtaking.”
For colleges, committing to a four-year tuition-and-aid level would certainly require more-careful planning. They are, after all, subject to unpredictable changes in state support, endowment performance, and costs. Even so, “you can argue it’s important enough to the market to plan ahead,” says Mr. Strauss, “for the college to just suck it up.”
Colleges would almost certainly have to charge more than they otherwise would for the first couple of years. That would mean explaining to prospective students why the first-year price was higher than those of competitors, says Kathy Kurz, vice president of the higher-education-consulting firm Scannell & Kurz. Such information might intimidate students who weren’t sure they were cut out for college.
Mr. Kumarasamy doesn’t believe that any of those problems are insurmountable. Dayton’s governing board will discuss his idea as part of a broader conversation this month about how the university can promote affordability and transparency.
A four-year price, he says, would help educate students no matter where they end up enrolling. It wouldn’t magically make college affordable, but it would help students think more clearly about a decision that carries real financial consequences.
