Cost of Attendance Transparency and Tuition Discounting

As part of our work with the Strada Educational Foundation these past couple of years, we developed principles advocating price transparency tied to college costs and financial aid.  The goal, from my perspective, involved attempting to provide greater access and completion opportunities in higher education.  Because to me, as I have been quoted as saying, “access without completion is a waste of time.” 

As part of our Strada work, we advocated for colleges and universities to provide greater clarity tied to their cost of attendance.  Given the continued exponential increase in college sticker prices, this has led families to question the value and ROI of a college education.  This is despite research that shows students with a college degree achieve higher lifetime earnings, secure employment with health care benefits, and experience stronger well-being. They are also more likely to vote, volunteer in their communities, and report job satisfaction.

While college tuition levels vary based on institution type – public or private, in-state or out-of-state residency at public institutions, as well as market position, room charges are often tied to the local real estate market.  One area of higher education costs that tend to fly below the radar, that shouldn’t, is the indirect cost calculation.  This cost measure includes items such as transportation to and from campus, books and supplies, personal/miscellaneous expenses, as well as living expenses. 

In this space, colleges and universities have some degree of discretion in calculating these figures.  Again, given the exponential increases in college costs, some institutions approaching the $100,000 cost of attendance mark on an annual basis are floating the indirect expenses calculation down to control the total cost – keeping it below $100,000.

For example, in 2025, one national private institution listed its transportation cost at under $500 annually despite a majority of new students enrolling from outside the state and region.  In addition, books and supplies were listed at under $700 annually, meaning the cost of books and supplies per semester was under $350 when students take an average of four classes per semester.  At another national private institution, annual personal expenses were listed at approximately $2,000 or $1,000 per semester in one of the highest cost of living cities in the United States.

Looking ahead, to regain a greater level of public trust, it is likely a greater level of federal scrutiny or regulation will likely be needed to ensure items like cost of attendance are developed in a consistent manner across institutions.

Related to college costs, perhaps too the Chivas Regal effect associated with high tuition levels being perceived as a guarantee of a higher quality education will also wear off.  Institutions charging high tuition rates yet discounting tuition by over 50% while awarding financial aid to 100% of admitted students does not constitute an authentic nor transparent approach.  In cases like this, why not simply reduce the cost of attendance by the lowest level of institutional grant awarded to a student?  This would reduce the overall net cost of the institution, something most families are assessing when their students make a college decision.

Finally, I continue to see institutions focused on working to reduce their discount rate while growing enrollment.   While some institutional administrators look at the discount rate purely as a cost or expense, the metric is more a function of the institution’s value proposition and a family’s willingness to invest in the outcomes and ROI of the institution. 

Regaining public trust in higher education involves us doing better in providing up front information on college costs and financial aid.  Some of this involves ensuring clarity in communication within financial aid letters.  Some of this also involves providing financial aid letters at the time of admission.  It also includes ensuring net price calculators accurately report net costs after financial aid while specifically stating student loan amounts and repayment terms. 

Adhering to and adopting the principles we developed at Strada, we can regain public trust and confidence in higher education.