US universities promise more clarity on student aid offers

As tuition discounting hits record rates, nation’s higher education leaders feel need to end confusion over their net prices before lawmakers try to do it

November 29, 2022
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US universities are promising to make clearer to students their actual costs, agreeing through their nationwide leadership associations to create a single standard for understanding and comparing net prices and financial aid offers.

Ten of the nation’s biggest higher education associations have formed a task force on the matter, with plans to produce a set of “common principles, standards and definitions by early spring”.

By uniting the major US higher education groups, added Justin Draeger, the president of the National Association of Student Financial Aid Administrators and a leading organiser of the effort, “we can move this from the important-non-urgent to the important-urgent category, and really make a dent in hopefully helping students and families make wise choices about how they pay for college”.

The problem stems from the growing tendency among US colleges and universities – especially smaller private institutions – to boost their revenues by regularly increasing their listed tuition rates and then offering substantial discounts to individual students based on their ability to pay.

The practice reached a record level last academic year, according to the latest annual assessment by the National Association of College and University Business Officers, when private non-profit US institutions set all-time high average tuition discount rates of 54 per cent among first-time full-time students and 49 per cent among all undergraduates.

Altogether, more than 82 per cent of undergraduates at the 359 private campuses surveyed by Nacubo received some kind of tuition “aid” from their institution, the association found.

The practice of tuition discounting, however, happens to some degree across all sectors, Mr Draeger said, along with “bad examples” of how information on discounting is delivered to students and their families in a meaningful way.

It doesn’t seem to be a wilful problem, Mr Draeger said, since institutions always fix “shortcomings” in their aid-related communications to students when his association, Nasfaa, points them out.

But the creation of the 10-association grouping – including the American Council on Education, the Association of American Universities, the Association of Public and Land-grant Universities and the National Association of Independent Colleges and Universities – hopefully will make clear to campus leaders the importance of prioritising the problem on an ongoing basis, he said.

Part of the concern motivating the effort, Mr Draeger said, is that if US higher education doesn’t solve the problem of students struggling to understand their net cost of education, lawmakers might try to do it instead.

Already, he said, members of Congress from both parties have put forth bills on the topic. While well intentioned, he said, such political efforts could create bureaucratic requirements that end up making the situation worse.

“Waiting for legislation is sort of a gamble,” Mr Draeger said. “This is something we can proactively do together in the higher ed industry, so let’s do it.”

The task force created by the 10 participating associations, dubbed the Paying for College Transparency Initiative, is beginning its work with no set idea of what greater synchronisation of data on aid offers might look like, including whether it might recommend finding a corporate partner to pull together and present the necessary information to students, he said.

The work also begins with no immediate notions of whether the aid information should be broken down by academic field of study or reflect anticipated future career earnings, although such options seem possible, Mr Draeger said. “I think they’ll certainly look at that,” he said.

The group also is aware, he said, of the legal barriers to coordinating among institutions on pricing. “We’re certainly going to be paying pretty close attention to that, and steering clear of anything that would be deemed antitrust or anti-competitive,” he said.

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