That higher education is facing a moment of crisis is widely understood. A perfect storm of conditions—a lack of confidence in voices of authority, incivility in discourse, the economic fragility of students and families, and a craving for immediate return on investment—has fostered a cynicism in the public that has persuaded many that a college degree is simply no longer worth it.
Worse, we in higher ed have been complicit in reinforcing that conclusion through the opaque high-tuition/high-discount pricing model that is nearly ubiquitous in private higher education. We are undermining the real value of higher education and dissuading many of those who could benefit most from even applying to college. This is a collective failure of mission and an abandonment of the moral high ground colleges and universities used to occupy—a high ground we need to reclaim.
The high-tuition/high-discount model was initially designed to make higher education more affordable to low-income students. A portion of the tuition dollars paid by some students offsets the tuition that couldn’t be paid by those needier students. For a while, this system worked: there were enough students willing to pay close to the full price that their tuition dollars could help pay for the education of their needier peers.
Then it became an arms race. Competing for the same shrinking pool of students, many colleges found themselves in a self-destructive cycle in which we fought for students by offering bigger and bigger discounts to more and more admitted students—including to families who may not need them. Eventually, most of the “scholarships” stopped being backed by real dollars and stopped funding anything related to the educational experience; they became “coupons” designed to make tuition more affordable. We incentivized matriculation (read: bought students) with these coupons to generate at least some revenue from each student we enroll.
Tuition discount rates are now at an all-time high. Private colleges cut, on average, 56.2 percent of tuition for first-time undergraduate students, meaning that colleges, on average, forgo $56.20 for every $100 they charge students for tuition. And that number is much higher for those institutions that have depended heavily on the discounting arms race to bring students to campus over the last 20-plus years.
Most private colleges are losing or have lost the ability to “buy” students, no matter how steep the discount. As tuition discount rates creep steadily upward, colleges find themselves discounting far beyond even the national average. At the current pace, colleges could find themselves needing to charge almost $100,000 a year with an 80 to 90 percent discount rate in a decade. Such projections enter the realm of the absurd as discount rates approach 100 percent.
This is a fiscal challenge for individual colleges, but the real harm is to higher education as a whole.
The “average” private college charges about $40,000 a year in tuition and fees, but it’s unreasonable to suggest that it actually costs that much to educate a student at the average private college. There are some wealthy, highly selective private colleges with much higher than average tuition that might spend that much (or more), but they are few in number, and their exclusivity places them so far from the average that they can hardly be considered representative. Tuition discounting is so embedded in the business model for the rest of us that we budget on the expected net revenue after the discount has been written off. But shouldn’t we have an obligation to be transparent about college costs? We are very good at shining a light on the positive outcomes of the college experience and the degree that is earned, both economic and otherwise. Shouldn’t we be equally attentive in shining a light on what it actually costs to have that experience and earn that degree?
High tuition prices—often a significant fraction of a family’s annual income—create cynicism about the real value of higher education. The price tags have gotten so gaudy that many families are simply having a difficult time embracing the notion that college is worth spending that much every year for four years. We know that many students and their families look first at the published tuition price when making their college decisions and won’t even consider private colleges if they appear too expensive. Sallie Mae and Ipsos’s annual “How America Pays for College” study finds that 60 percent of families have eliminated colleges they’re considering applying to due to high cost. This is true for an even higher proportion of low-income families. The very students and families who stand to benefit the most from the kind of relational, supportive education offered at smaller private colleges are not even considering us.
If the debate about the value of higher education was a rational one, there would be no debate. Time and again, in study after study, real data support the conclusion that the lifetime economic benefits that come with a college degree are worth it. And that would be true even if students were actually paying the full sticker price! But the emotional investment we have in our children’s success, the anxiety that accompanies economic uncertainty and the media preoccupation with the horror-story outliers like the student who took on $100,000 in debt to be a kindergarten teacher makes it virtually impossible to win the argument that college is worth the price. And yet, we keep hammering away at the notion that we cost $40K or $50K or more.
For institutions like mine—Bridgewater College, a 1,500-student campus in the rural Shenandoah Valley of Virginia—the strategy of growing the discount to grow enrollment stopped working almost a decade ago. It is an exercise in rapidly diminishing returns. Our nation’s most elite colleges can probably still win the high-price, high-value argument. Their brand recognition might make those price tags worth it.
But for many students, especially in our post-pandemic, economically fragile, skeptical world, most colleges are a commodity, not a brand. And since very few of us attended elite institutions, it’s nonsensical to claim that the only path to success runs through them. I’m not claiming that everyone needs a college degree to be successful, but I believe that almost everyone’s life can be better and fuller if a college degree is part of their experience.
We offer a great education—and transformative value—that is accessible to many. In this regard Bridgewater College is not alone. But if we want to win the argument about the value of higher education, we have to be transparent about the actual cost. No more gimmicks and games with tuition prices. It’s time to reclaim the mission of higher education and the moral high ground that we have surrendered. It’s time to get real.