The Price Transparency Imperative: Rebuilding Confidence in Higher Education
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Summary
While the general public's confidence in higher education has eroded in recent years, students and families strongly believe in the importance and value of college. However, they are significantly less certain it is worth the cost. Significant confusion about the financial aid process accompanies their cost concerns, as only one-third of students and parents find it to be straightforward. Confusion about financial aid is linked to greater skepticism that they are being charged a fair price and less confidence that colleges and universities care more about educating students than making money.
Greater clarity and predictability around college pricing are two of the most effective tools for restoring confidence in higher education. Addressing concerns about costs, student debt, and an overly complex pricing system can help restore confidence in the value and fairness of higher education.
This report shows that a large part of the uneasiness students and families feel stems from an inability to determine whether postsecondary education is actually affordable. And while providing more clarity and greater transparency will help address some of the confusion, rebuilding trust may also require significant structural reforms around price modeling, financial aid packaging, and communications. Based on research with more than 5,000 students, parents, adult learners, and members of the public, this report explores both the current climate and the potential for new approaches to pricing and transparency about the cost of college.
Key findings
The vast majority, between 70 and 90 percent, of respondents who were considering college or were currently attending/had a child currently attending said that a college education was extremely or very important. For the general population, just over half (58 percent) thought college was extremely or very important.
Out of a list of 16 options derived from focus groups (including quality, career preparation, and commitment to students), respondents were asked for their top considerations when deciding where to pursue a college education for them or their child. Cost and affordability were the most commonly selected considerations, followed by career and job preparation.
Conceptualizing and understanding college costs remains a difficult task. Without guidance, students and families do not appear able to construct a coherent prediction of the cost of college.
A correlation found that the more confused students are about financial aid and price, the more skeptical they are of college motivations. Fewer than half of all survey populations said they completely or very much trust public four-year colleges to charge students a fair price. Respondents were even less likely to think private institutions charge a fair price. Confidence decreased when confusion increased.
Roughly two-thirds of respondents prioritized cost transparency, four-year price guarantees, four-year financial aid guarantees, and a single, all-in price for the year when identifying solutions, with cost transparency being the most commonly selected solution across all survey populations.
Highlights from the report
The overwhelming majority of students, parents, and potential adult learners believe college is a good or great investment. The general population is less confident, but more than 60 percent still believe it is a good or great investment. Current high school and college students, in particular, think a college education is both important and a good investment, highlighting their optimism that higher education is likely to pay off and help them achieve future goals.
Despite cost being the most commonly selected consideration when choosing a college, respondents did not universally agree college is worth the costs. Between about 60 and 70 percent of students and families thought it was absolutely or very much worth the cost, and less than half of the general public responded the same way. We saw that, despite its relative importance for achieving future goals, cost considerations may erode positive views of higher education and are an important factor in the public’s perception of the value of higher education.
To establish a shared foundation for how institutions, policymakers, and the higher education community thinks about pricing practices and enrollment management, an advisory group created the Principles of Enrollment Management designed to reflect the realities institutions face today.
Recommendations
Although pricing and transparency improvements will look different at every institution, this research points to common principles that can inform leaders as they work to build trust and strengthen their relationships with students and families. Among the recommendations:
Simplify and clarify prices.
Using standardized language across institutions, focusing on the net price students will pay, timing the presentation of aid and net prices with admissions offers, and publicly displaying how aid is calculated are all actions that allow students and families to compare costs across institutions and make more informed choices.
Increase predictability.
Students and parents responded positively to guaranteed prices and financial aid offers, as well as single “all-in” prices so they have certainty about what college will cost.
Measure and communicate outcomes alongside price.
Students and families prioritize financial security and labor market outcomes as primary drivers of why they pursue an education and what would make college worth the cost. Providing institution- and major-specific employment outcomes and graduate school acceptance rates would further inform individuals as they make choices about investing in a college education.
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