Survey by Forbes Reveals Students College Choices Increasingly Influenced by Affordability

As student debt in the United States continues to soar, reaching a staggering $1.6 trillion (second only to mortgage debt), the affordability of higher education is under increasing scrutiny.

A recent survey of high school seniors registered on the Niche.com college search and review site reveals a growing price sensitivity among prospective students and their parents. The survey, completed by 24,000 seniors, highlights the impact of a college's published price on the likelihood of students applying or inquiring about that institution.

According to the survey, 89% of current high school seniors express concern about a school's published price affecting their application decision, a significant increase from 76% among last year's seniors. The growing price sensitivity is particularly pronounced, with 59% of those who consider themselves price-sensitive stating they would not consider a school that costs more than $40,000 per year in total. This raises concerns for private colleges, which, on average, charged $41,540 in tuition alone for the 2023-24 academic year, according to the College Board.

While the listed tuition price is rarely what students pay, as colleges typically offer financial aid packages to reduce the actual cost, the survey underscores the importance of the initial sticker price in shaping student perceptions. Private colleges often utilize a combination of high sticker prices and significant financial aid to make education more accessible. However, the opaque pricing structure can be a deterrent for prospective students, especially those without access to robust college advising.

The Opaque Pricing Structure and the Sticker Price Dilemma

Private colleges commonly deflect attention from the sticker price and emphasize net price calculators, allowing applicants to estimate actual out-of-pocket costs. However, the sticker price, readily available through a quick internet search, remains a significant factor in shaping initial perceptions. The challenge lies in the lack of awareness about how private colleges structure their pricing and offer financial aid.

Bob Massa, principal and co-founder of Enrollment Intelligence Now, a college consulting firm, emphasizes the significance of the list price, particularly for students in under-resourced high schools where college advising may be limited. The survey indicates that 48% of respondents prefer to obtain information from school or college counselors, emphasizing the need for clear communication about the average net price.

Massa suggests a proactive approach by colleges, advocating for the promotion of net price through marketing campaigns directed at prospective students. Addressing the fear associated with the list price, Massa recommends a campaign emphasizing, "You can afford X University," based on the net price paid by different student groups.

Tuition Resets: An Alternative Approach

In response to the growing price sensitivity, some private colleges have taken bold steps by implementing tuition resets. These resets involve a public reduction of the sticker price, accompanied by a corresponding adjustment in financial aid packages. Bridgewater College in Virginia, for instance, cut its tuition by 62%, from $40,300 to $15,000, aiming to attract students who may have deemed the institution too expensive.

David W. Bushman, president of Bridgewater College, articulates the original intent behind tuition discounting: making higher education accessible to low-income students. However, over time, this practice has contributed to escalating tuition prices, potentially discouraging the very students the system was designed to help. Tuition resets, while a viable strategy for some institutions, may not be suitable for all. The decision often hinges on the composition of the student body, particularly the number of full-paying students who receive no institutional financial aid support.

Looking Ahead: The Need for Transparent Communication and Affordability

As the landscape of college affordability evolves, there is a pressing need for transparent communication about net prices and financial aid structures. The survey results underscore the importance of addressing the initial sticker price concerns among prospective students. By embracing proactive strategies, colleges can bridge the gap between perception and reality, ensuring that students make informed decisions based on their actual out-of-pocket costs.

While tuition resets offer an alternative approach for some institutions, their suitability depends on factors such as the enrollment profile and financial aid distribution. Ultimately, the affordability of higher education remains a critical consideration for students and their families, necessitating a multifaceted approach to address the complexities of pricing structures, financial aid, and the evolving expectations of prospective students in an increasingly price-sensitive era.