Why “Sticker Price” is Misleading

September 19, 2019

With college tuition prices spiraling out of control, most families heavily consider “sticker price” when comparing prospective schools.  However, Paul Tough of the New York Times Magazine reports that 89% of students at private four-year colleges receive some form of financial aid— meaning that very few families pay sticker.  In fact, the average student paid 50% of the sticker price in 2018.

Exorbitant “sticker prices” are synonymous with prestigious colleges— take the staggering price of  $71, 785 for a year at Columbia, for example. Now consider that the average Columbia student pays $22, 973.  Meanwhile, the average low-income student at Columbia (from a family earning $50,000 or less) faces an annual bill of $6,000, and is far less likely to graduate with debt than his or her low income counterparts at less-prestigious universities.

Low Income Students

While it might be hard to argue that any undergraduate education is worth upwards of $300,000 (and most people are not paying that much), the benefits of an elite education, especially for low-income students, are particularly transformative:

  • While, 60 percent of the wealthiest students complete their studies and graduate, only about 16 percent of low-income college students graduate, according to the National Center for Education Statistics. However, low income students at elite colleges (which tend to have already higher graduation rates) graduate at almost the same rate as affluent students and end up earning almost as much on average as affluent students who attend the same college.
  • There are 29 colleges with graduation rates over 90% for Black and Latina students.  Here are the top ten: Brown University, Pomona College, Harvard University, University of Notre Dame, Skidmore College, Scripps College, Davidson College, Emory University, Stanford University, Wesleyan University.
  • Prestigious colleges not only offer comprehensive financial aid packages, but also offer low income students peer mentoring, transition programs, and supportive advising at a higher rate than less selective institutions.

What do these stats mean?

In short, for low income students, the more prestigious the school the better,  in terms of student outcomes and comprehensive financial aid. This is why a strategic investment to overcome barriers like the SAT is an essential way to ensure that underprivileged students qualify for admission at the schools with the best financial aid and student outcomes.  This is exactly the goal of our SmartyScholars Fund.

It’s hard to wonder why colleges keep raising their sticker price if it doesn’t translate to increased revenue, but Tough’s findings certainly suggest that sticker price isn’t telling the full story.  Most families are not paying more for college, with “discount rates” rising just as quickly as tuition prices.  The implications of this for all students, but particularly for students from disadvantaged backgrounds, is that they should largely disregard sticker price when making decisions about where to apply.

You May Also Like…


Submit a Comment

Your email address will not be published.