What Happens When a College Tells Students What They’ll Pay for All 4 Years?

As a new group of families laments each year, college is unlike any other purchase. One of its unusual — and frustrating — features is that students learn the bottom-line price of each institution mere weeks before they must decide where to enroll. Even then, they find out only what they’ll pay for their first year.

That last part is no longer true for students accepted by the University of Dayton. Since 2013, Dayton has sent each admitted student who filed the federal financial-aid application a detailed breakdown of what he or she will spend on tuition after financial aid, along with estimates of room-and-board costs, which vary depending on students’ choices.

Dayton was betting that families’ appreciation of transparency would outweigh their sticker shock. The gamble seems to have paid off. “Parents and students completely love this plan,” says Sundar Kumarasamy, who proposed the idea in his role as vice president for enrollment management and marketing.

The idea of helping students plan how they’ll cover four years of college costs seems to be gaining traction. This year Ohio University rolled out a new pricing model, the OHIO Guarantee, in which tuition, room-and-board options, and fees are fixed for four years.

The university, in Athens, is just a couple of hours from Dayton, and their applicant pools overlap, but the guarantee is not a response to Dayton’s pricing, says Craig Cornell, vice provost for enrollment management. Administrators at Ohio had been discussing the move — which required state legislation to be enacted — for several years, he says.

Meanwhile, at Miami University, also in Ohio, the Board of Trustees is considering a similar program.

At least one college outside the state is trying something similar. Grand View University, in Iowa, gave this year’s freshmen the option of joining the pilot year of its “Financial Empowerment Plan,” which lays out four years of prices and aid. About half of the class signed on, and Grand View plans to offer the plan to all of next year’s new students, though they can opt out.

At Dayton, enough time has passed to give a sense of the benefits and drawbacks of a four-year price. Here’s a rundown:

Retention improves. Some observers assume that in order for Dayton’s pricing plan to work financially, it must be front-loading costs to freshmen, Mr. Kumarasamy says, but that’s not the case. It works, he says, through increasing retention.

Money is not the only thing that keeps students from returning for their sophomore year, but it can certainly play a role. Since offering the four-year price, Dayton has seen retention increase to 91 percent, the first time the university has ever crossed the 90-percent threshold, Mr. Kumarasamy says. Things look even better for domestic students, 93 percent of whom now come back as sophomores. (International students may not participate in the plan.)

Returning students feel left out. Of Dayton’s current students, only freshmen and sophomores are on the plan, Mr. Kumarasamy says. That has made some upperclassmen unhappy, and it has created particularly delicate situations when a student’s younger sibling qualifies. The university did extend one benefit to all students when it changed its pricing: It stopped charging them fees.

Planning might get harder. Most private colleges have kept their tuition increases low in recent years. If that continues, it could present a challenge for Dayton. With a four-year price, the university is locking in what students pay, so it will have to keep raising its sticker price by a large-enough amount to ensure that it gets enough revenue from each cohort. If the gap between Dayton’s sticker price and that of peer institutions grows wider over time, it could dissuade some students from applying, even though they might have ended up paying less at Dayton over four years.

That will be a puzzle for someone at Dayton to figure out, but it won’t be Mr. Kumarasamy. This summer he will start a new job, as vice president for enrollment management at Northeastern University. Would a four-year price work at Northeastern? Not necessarily. Every college is different, he says. But he’s confident that there will be issues of access and affordability to grapple with there, too.

Beckie Supiano writes about college affordability, the job market for new graduates, and professional schools, among other things. Follow her on Twitter @becksup, or drop her a line at beckie.supiano@chronicle.com.