Pricing College for More Equitable Access and Success

The American higher education industry has been facing a crisis of public trust in recent years, and the COVID-19 pandemic isn’t helping. I started noticing this crisis in little moments since I became a parent six years ago. First, it was the fellow new mom who asked: are we ever going to be able to afford college for our child? This evolved into a growing number of parents concerned about student debt and suddenly curious about coding schools as an alternative. Data support these personal anecdotes. A 2018 Pew Research Center survey shows that most Americans believe higher education is going in the wrong direction and highlights that high tuition costs and lack of workforce-aligned skills are critical reasons for concern. The average family is not aware of the many affordable higher education options because they are hidden in a complex financial aid system.

The high-cost, high-aid higher education pricing model is opaque, inconsistent, and difficult to navigate. Tuition and fees vary significantly across institutions, but on-average, tuition at a public four-year college is equal to about 15 percent of the average family’s income; when you factor in other costs like room and board, the average family must invest a quarter of their income each year to pay for college.

Many students don’t understand — particularly those who are first-generation — that few students pay the “sticker price.” The road to understanding how much they will pay is long, with many twists and turns. It includes navigating the 100+ question Free Application for Federal Student Aid (FAFSA), net price calculators (if they can find them), the labyrinth of state and institutional aid programs, inconsistent financial aid award letters, and, for some, a FAFSA verification process. The students who can afford to will spend hundreds of dollars applying to schools, not even knowing how much they will cost. These challenges multiply for the students and families with no higher education experience.

In an earlier UntappED potential post, Bruce Vandal highlighted how structural barriers get in the way of student success. Higher education’s financial aid and pricing structure is built for institutions and undermines student access and success. In fact, 40 percent of high school graduates skip the process altogether; they choose not to complete the FAFSA even though estimates suggest one-third of them would likely qualify for a federal Pell Grant. The federal government, states, colleges and universities, school districts, and even workforce centers invest significant human and financial capital to help potential students navigate the financial aid system. What would happen if we invested in simplifying the system?

Tennessee is among the states to implement innovations that make college costs more transparent, which is increasing access to college. The Tennessee Promise program, which offers free college to high school graduates, increased Tennessee’s college-going rate from 58 percent to 64 percent in its first year. While many students in Tennessee receive enough financial aid to cover tuition and fees at a public two-year institution, the power of the Tennessee Promise is that it helps students understand costs up-front before going through the complex financial aid process. Across the nation, more than 350 programs make a similar promise to students. Free college programs don’t just provide additional financial aid; they also communicate to students and families that a college education is within reach economically.

We know that free college improves college access and public perception but innovation in the financial aid system should not stop there. To address affordability concerns, we need to pursue new solutions that simplify and make the financial aid process more transparent.

• At the federal level, it’s time to finally simplify the FAFSA and remove the bias from the current verification process, which unfairly targets the lowest-income students. An alternative is to dramatically simplify the Pell grant system and eliminate the need to complete the FAFSA for most students.
• States and systems facing significant budget cuts should use the tuition policy and authority they have to focus on affordability, clearly articulate tuition costs at institutions, and focus state aid on student access and success. They should also ensure state and institutional aid programs align with any federal FAFSA simplification effort.
• Institutions need to communicate their costs more clearly and use financial aid to support equitable access and success. They should also eliminate complexity and unnecessary hurdles in the financial aid system that become barriers to student access and success.
• Higher education leaders need to help students and the public understand why college costs what it does and what kind of value they can expect to receive from their education.

We know more than ever before about both the costs and value of postsecondary education. If we align this system around student access and success and make costs and value transparent, we can create the kind of system that students and families believe in and ultimately support.