Should Colleges Lower Tuition?

Should Colleges Lower Tuition?

December 10, 2020

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Shortly after campuses shut down last spring, students from residential colleges began calling for tuition refunds. Petitions and lawsuits argued that students have been unable to "receive a full college experience," with classes moved online and extracurriculars canceled.

Now, almost half of U.S. colleges face a third term of primarily online education. While tuition-refund lawsuits failed to gain much traction, many U.S. colleges committed to lowering tuition for the 2020-21 school year.

Some colleges cut tuition by 10-15%, while others offered savings of 25% or more — either to all students or just to incoming first-years.

Some colleges cut tuition by 10-15%, while others offered savings of 25% or more — either to all students or just to incoming first-years. Other schools dropped planned tuition hikes, freezing 2019-20 rates. According to U.S. News & World Report, the average college tuition cost at ranked schools across the nation has dropped 4% for in-state public tuition, 5% for private tuition, and 6% for out-of-state public tuition.

Tuition relief could provide a significant boost to students struggling financially due to COVID-19. But like many current and proposed solutions for paying for college, these tuition discounts wouldn't address the root causes of the college affordability crisis.

Increasingly, students, educators, and policymakers are calling for drastic responses to the expense of college, including making college free for all and writing off the roughly $1.7 trillion in student debt.

Pros of Lowering College Tuition

COVID-19 Tuition Cuts Make Sense for Institutions and Students

College tuition schemes are designed to be flexible. Students pay wildly different amounts for the same educational access, based on their state residency status, family income, merit, and other factors. After financial aid and scholarships, most college students pay considerably less than the full sticker price.

Some private colleges are offering big discounts — some to the tune of 25-50%.

Because colleges already operate on a flexible model, COVID-19 discounts may be workable for many schools. In fact, prior to the pandemic, some private colleges were already planning on making tuition less expensive in order to be seen as more approachable by a wider array of students. Now, some private colleges are offering big discounts — some to the tune of 25-50%.

Despite the pandemic's added pressure, some colleges are still in a position to make college more affordable. Decreasing tuition could pay dividends for schools by increasing enrollment rates appreciably. For the millions of students who were forced to rethink college this year, discounts could help them decide to commit to a postsecondary education.

Aside from private colleges, some public colleges with big online programs can also afford to cut tuition rates. Southern New Hampshire University, a residential college that helped pioneer online education, will offer free tuition to incoming first-year students next year.

Lowering Tuition Costs to Zero Increases Student Success

One-off tuition discounts can help send students to college during the pandemic. But bigger moves toward college affordability could be coming. Twin crises — student debt and the educational opportunity gap — make college affordability an increasingly hot political topic.

Free community college could increase college enrollment by 26% and the number of degrees awarded by 20%.

One of the biggest ideas in education policy — free college — has gained widespread support over the past five years. Free two-year and four-year college plans typically show federal and state governments splitting the bill.

Just as the growth of federal student aid encouraged college enrollment and broadened the educational choices of disadvantaged students, free-college plans promise to improve diversity in higher education. A working paper from the Federal Trade Commission projects that free community college would increase enrollment by 26% and increase the number of degrees awarded by 20%.

Debt Forgiveness Affirms College's Value to Low-Income Students

Reducing tuition costs promises to improve college access and graduation rates. But many students and graduates have already taken out big loans to get their degrees. While often introduced alongside free-college plans, large-scale student debt forgiveness may actually top the wishlist of progressive education policymakers.

For one, research indicates that canceling student debt would boost the economy. The expanding costs of college take a bite out of education's return on investment. And the longer it takes to pay the loan off, the bigger the bite.

College debt is also one of the stickiest forms of debt. While it's not true that student debt is impossible to discharge through bankruptcy, Congress has made it difficult to do so.

Cons of Lowering College Tuition

Discount Tuition Model Fails to Serve First-Generation College Students

Colleges use a discount model to price tuition, meaning the sticker price has little relation to what most students and families pay. For this reason, some argue that the college affordability crisis is not as bad as it appears.

Colleges’ intimidating sticker prices can deter prospective applicants.

Financial aid packages and scholarships help bring the actual cost of college down and can even make it free. For example, some students with great financial need are eligible for full-ride Pell Grants.

While the discount model is intended to flex to meet students' needs, it's often not helpful to first-generation college families. For individuals unfamiliar with the complexities of the higher education pricing system, intimidating sticker prices can deter prospective applicants.

As colleges become more serious in their efforts to diversify their student bodies, it will be incumbent on schools to make their pricing models more understandable and affordable for students from lower economic backgrounds.

Discounts Disguise Unreasonably High Costs of College Education

Asking whether colleges should lower tuition raises another question: Why do colleges charge so much in the first place? Offering discounts obscures the real issue of college affordability. In fact, the very availability of discount pricing, financial aid, and student loans have allowed college tuition rates to balloon.

The default rate for the 2004 cohort of college students could reach 40% by 2023.

Colleges have been able to increase their rates without losing students because of the attractive window-dressing supplied by discounts, as well as loans that don't cost anything until after graduation.

According to the most recent data available from the National Center for Education Statistics, the average cumulative loan amount for bachelor's degree-holders is $28,600 for graduates from public institutions, $33,900 for graduates from private nonprofit institutions, and $43,900 for graduates from private for-profit institutions.

Schools raise prices in order to capture additional federal financial aid and to offer more amenities to lure students and climb college ranking lists. Additionally, a lot of money goes toward supporting administrative costs. The number of administrators hired to help faculty has risen sharply in recent decades.

Meanwhile, the default rate on student loans is also on the rise. A 2018 report from The Brookings Institution predicted that the default rate for the 2004 cohort of college students could reach 40% by 2023.

Targeted Relief May Do More Good Than Blanket Discounts

Some college leaders say that rather than offer broad tuition discounts, colleges should target relief to needy students. Not all students and families have felt the economic impacts of COVID-19 equally. Reducing the bills of those who can afford to pay, including well-off international students, could reduce the pot of money colleges have to put toward high-demand services, such as mental health resources.

Many schools continue to invest heavily in technology for online learning.

Additionally, while online education seems less expensive to produce, the upfront cost of getting these programs established can be significant. Many colleges reported increased operating expenses as they quickly ramped up online offerings following the onset of the pandemic.

Since online learning is here to stay, many schools continue to invest heavily in technology to prepare for future terms. And colleges must continue to pay a variety of constant costs — like faculty salaries — that don't change significantly whether classes are offered online or in person.

Targeted relief may allow colleges to help the students who need it the most, while still expanding academic offerings and essential student support services.

The Feasibility of Free College in 2021

Expansive proposals for college affordability have never had so much support. President-elect Joe Biden currently touts a free-college plan in which the government subsidizes the lion's share of college tuition and states make up the balance.

An overarching free-college plan would represent a major shift in U.S. education policy, but one that has been previewed on the state level. About half of all states already offer some form of free college tuition.

A divided Congress may stall calls for free college in 2021, though widespread student debt forgiveness could be on the horizon.

Despite popularity among policymakers and U.S. adults, free college may have a hard time passing a divided Congress. Students and families could see debt forgiveness first. Biden has been vocal in his support of a Democratic proposal to cancel at least $10,000 of outstanding federal student loans per borrower by executive order.

Prominent legal battles over debt held by students who were defrauded by their colleges prove that federal student loans may be legally discharged. Moreover, research that highlights the disproportionate impact student loan debt has on Black students and their families is fueling an increased desire for change. Writing off existing debt will only be a short-term boon, however, if the ongoing cost of college isn't reduced.

Feature Image: Anadolu Agency / Contributor / Anadolu / Getty Images

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