There’s often a wide variance between sticker prices and net prices.
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Although the real cost of attending college is on the decline, new data suggests that increasingly outrageous sticker prices are hurting public trust and confidence in higher education.
Interested in more on this topic? Read how enrollment managers plan to solve the pricing-trust problem.
While high published sticker prices—which can range anywhere from $40,000 a year for some public universities to nearly $100,000 for some private colleges—undergird growing public skepticism about a college degree’s return on investment, few students are actually paying that much. Instead, colleges often award substantial financial aid packages, and most students end up paying only a fraction of those listed prices. For example, in 2024 undergraduate students at private colleges received an average discount rate of 52 percent.
Tuition discounting is a popular marketing and enrollment strategy, but it creates confusion for prospective students and their families who are looking for a quality, affordable education. And according to a report the Strada Education Foundation published Tuesday, that confusion also could be contributing to heightened public mistrust in higher education.
“Even for low-cost institutions, the gap between actual cost and perceived affordability means that low net prices and strong returns fail to persuade families lacking confidence in the system,” the report reads. “Greater clarity and predictability around college pricing are among the most effective tools for restoring confidence in higher education.”
That’s the key takeaway from Strada’s survey of 5,501 college and high school students, their parents, prospective adult learners, and the general population. Last fall, researchers asked the sample a series of questions about the value of college and zeroed in on how transparency in the financial aid process influenced their trust in the institution.
On one hand, the findings revealed strong recognition that a college degree creates a path toward a career and financial stability. The overwhelming majority of students, parents and potential adult learners—more than 80 percent in each group—said college is a good or great investment, compared to about 60 percent of the general population; 92 percent of college students said college is “extremely” or “very” important to achieving their future goals.
When deciding where to attend, cost and affordability were cited as the most important considerations for students and their families.
“People think college is very important,” said James Dean Ward, vice president for research at Strada and co-author of the report. “But once we start asking if college is worth the cost, we start to see that optimism rolling back. Part of that is because people are confused.”
But according to the survey, 68 percent of college students reported confusion in trying to calculate the real cost of attendance. Only 32 percent of college students and their parents described the financial aid experience as “straightforward,” with the college making it easy to understand the exact cost of attendance.
And that confusion has implications for how students, prospective students and their families perceive the value of higher education, which is battling political attacks on funding and academic freedom in addition to declining public confidence in the value of a degree.
According to the survey, the more confusing the financial aid process, the more skeptical students, parents and other respondents said they were of institutional motives. Seventy-six percent of respondents said that colleges with a “very confusing” financial aid process “care more about making money than educating students”; only 49 percent said the same about colleges with a “straightforward” process.
“That’s concerning,” Ward said. “We want to make sure that students believe that colleges have their best interest in mind, but this confusion seems to be undercutting that … If we can help address the confusion around pricing and financial aid, perhaps we can be rebuilding trust.”
Much of that is within institutions’ control, and many are trying to address it.
Over the past few years, several colleges and universities have publicized tuition resets, lowering their sticker prices to more closely match the net prices most students are actually paying. The Association of American Universities lists cost transparency among its core principles. And 754 institutions have pledged to improve their aid offer letters to students as part of the College Cost Transparency Initiative.
But how each institution makes that happen is “entirely context-specific,” Ward said.
“A tuition reset or guaranteed cohort pricing, for example, won’t work at every school, but it may at some,” he said. “Institutions can address the confusion. They can counter this narrative that college isn’t worth the price by bringing more transparency and predictability to the pricing and financial aid process.”
Getting colleges on board with price transparency may be easier said than done, said Phillip Levine, an economics professor at Wellesley College, which last year became the first college in the country to break the $100,000-a-year sticker price threshold.
That’s in part because many institutions rely on heavy tuition discounting to attract higher-income students who can pay more tuition.
“Affordability is important to them, too, but so is the quality of what they’re getting,” he said. “There’s messaging in the sticker price and people respond to that … If an institution lowers its sticker price, but all of its competitors still have high sticker prices of $70,000 or $80,000, it sends a signal that maybe they’re better.”
From an economic standpoint, he added, “the incentives don’t line up” for colleges to make their prices more transparent. And even if all of the colleges with opaque pricing did come together and collectively decide to stop publishing such high sticker prices, “that would work, except for the fact that the Department of Justice would then jump on them for collusion.”
