Issue Briefs

College Cost

The rising cost of a college degree is a popular discussion topic on Capitol Hill, in the media, and on the presidential campaign trail.  

Independent colleges and universities are taking steps to expand educational opportunities to all students, while maintaining academic quality and institutional mission.  

Recently, lawmakers have focused on promoting increased institutional “skin in the game” and enhanced risk-sharing provisions, as a means to discourage colleges from raising tuition. Others have suggested providing institutional aid to all public colleges.  It is likely that these ideas will be thoroughly debated as Congress turns to the reauthorization of the Higher Education Act.

College cost was a major theme of the 2016 presidential election, with the greatest attention on the Democratic side through varying proposals for free public college. President Trump has said he will reconsider the tax-exempt status of colleges and universities with large endowments that do not take steps to lower the cost of college. He also cited administrative bloat, as a driver of college costs, as something that institutions need to address.

About

Paying for college is a concern for all families, but especially for low- and middle-income families. Colleges are trying to address this issue in a number of ways, including dramatic increases in the institutional funds allocated for student aid, and innovative cost-saving efforts, such as consortia purchasing arrangements.  

Due to these efforts, the average net price at private colleges has remained stable for the past decade.  In addition, because students at private colleges graduate faster than their peers at public universities, they are more likely to avoid extra years of tuition and begin their careers earlier. 
 

History

College affordability has long been the subject of federal policy debates.  Although it has been de-bunked, the so-called Bennett Hypothesis consistently makes its way into policy discussions and media coverage.  The hypothesis is named after former Education Secretary William Bennett, who promoted the notion in the 1980s that student aid allegedly gives colleges and universities “license” to increase tuition.  

Past federal policy debates have included failed attempts to impose price controls, along with some more successful efforts to increase transparency. The Higher Education Opportunity Act, for example, included several provisions related to college prices that have gone into effect over the past several years.  Briefly, these provisions include:  

  • Posting of net price calculators on institutional websites.
  • Publication of “College Affordability and Transparency Lists”  
    • These lists are aimed at highlighting institutions with the highest published and net prices, and the highest rates of increases. Institutions with the highest rates of price increases over a three-year period are required to submit reports to the Secretary of Education.  
  • Inclusion of net price information for each institution on the Department of Education’s College Navigator site.  An institution’s average net price, as well as a break-out of net price by five income categories, is posted on the site.
  • Prepare for meetings with your Senators and Representative by familiarizing yourself with the key cost drivers in your institutional budget, and any affordability initiatives you have taken.  Also, be familiar with your institutional breakdown of aid sources. Nearly two-thirds of all student aid awarded at private, nonprofit colleges comes directly from institutional resources (College Board – 2014).
  • In meetings with your Senators and Representative, explain how the pricing policies of your institution attract and retain low- and middle-income students.

In the News

NAICU Washington Updates