Should Colleges Lower Tuition?

Shortly after campuses shut down in March 2020, students from residential colleges began calling for tuition refunds. Petitions and lawsuits argued that students were unable to “receive a full college experience,” with classes online and extracurriculars canceled.

While tuition-refund lawsuits failed to gain much traction, many U.S. colleges committed to lowering tuition for the 2020-21 school year: Some cut tuition by 10-15%, others offered savings of 25% or more — either to all students or to incoming first-years. Other schools dropped planned tuition hikes, freezing 2019-20 rates.

Average college tuition dropped for the first full academic year of the pandemic, but for the upcoming 2022-2023 year, colleges are reversing course. After holding tuition levels down as students and families struggled financially through pandemic shutdowns, college officials say inflation is forcing them to raise rates.

Citing the rising cost of consumer goods, energy, and staffing, many institutions plan to make substantial hikes to tuition, student housing, and meal plans. The steepest of the announced hikes (4.7% at the University of Virginia) are still under the estimated rise in inflation (around 7%).

The temporary tuition relief provided in the early stages of COVID-19 will soon reverse course, underlining the failure of tuition discounts to address the national struggle to pay for college and the root causes of the college affordability crisis.

Students, educators, and policymakers continue to call for major overhauls to the costly U.S. model of higher education, including making college free for all and writing off the roughly $1.7 trillion in federal student debt.

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.

Because colleges already operate on a flexible model, COVID-19 discounts proved feasible 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.

Colleges able to make themselves more affordable could still see a healthy bottom line thanks to corresponding increases in enrollment rates.

One-off tuition discounts may have helped send students to college in 2020. 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.

One of the biggest ideas in education policy — free college — has gained widespread support over recent years. 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.

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. Research highlights the disproportionate impact student loan debt has on Black students and their families, fueling desire for change. While often introduced alongside free-college plans, large-scale student debt forgiveness may actually top the wishlist of progressive education policymakers.

The expanding costs of college take a bite out of education’s return on investment, which is especially harmful to low-income students. 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.

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.

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 transparently affordable for students from lower economic backgrounds.

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.

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.

Some college leaders say that rather than offer broad tuition discounts, colleges should target relief to needy students. 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 expanded online offerings and mental health resources.

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.

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

Immediately prior to the pandemic, expansive proposals for college affordability never had so much support. As a candidate and new president, Joe Biden touted a free college plan in which the government would subsidize the lion’s share of college tuition, with states making up the balance.

As costly emergency measures stacked up, and inflation ballooned, Biden’s free college plan was first reduced to a free community college plan, then dropped from the Build Back Better Plan altogether. Despite popularity among policymakers and U.S. adults, free college has had a hard time in Congress.

Any 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, with a growing number of states moving to make two years of community college free for residents.

Federal free college is off the docket for 2022. Ultimately, students and families could see federal debt forgiveness first. Many already have. Taking a “targeted approach,” the Biden administration has written off $16 billion in student loans, according to the Department of Education, through approving applications to the Total and Permanent Disability (TPD) discharge program and Borrower Defense to Repayment program, and amending the Public Service Loan Forgiveness (PSLF) program.

Despite Biden’s long-standing approval of a Democratic proposal to cancel at least $10,000 of outstanding federal student loans per borrower by executive order, the unilateral move has not come to fruition. Writing off existing debt, however, will only be a short-term boon if the ongoing cost of college isn’t reduced.