NPR’s Planet Money podcast recently exposed one of the strangest yet most important point about college tuition costs today. Although college tuition has increased by gargantuan amounts in the last couple decades, this doesn’t take into account what people are actually paying.
The list price of college has definitely gone up, as Mitt Romney and Barack Obama have been talking about in their campaigns. But this doesn’t mean people are actually spending that much on it. The average sticker price of a private college is $28,500 for the current school year. What the average person pays? $12,970. That’s essentially the same as the $12,650 students paid in inflation-adjusted dollars in 2000-2oo1.
The difference between the “sticker price” and the actual cost comes from financial aid, grants, scholarships, etc – usually from the colleges/universities themselves. So what’s the deal? Pretty simple, when you think about it. You go to a store and see two seemingly similar sweaters, both priced at $30 – except one has been marked down from $50. They both look the same so you might as well take the one that was marked down, right? You assume you’re getting a $50 quality sweater for the same price as the other. Similarly, if a college is insanely expensive you think that that price is a signaling of quality of sorts. Further, giving prospective students huge grants or aid after they get in is a sneaky way to “recruit” students by convincing them that they are truly wanted at the institution.
This means that college tuition payment is fairly progressive. Those that can pay $50,000 a year are paying it. And, sometimes, those with very little money are paying close to nothing. The price of college is still a barrier financially for many, but the amount of aid given definitely needs to be taken into consideration.
I still think American colleges feature way too many frills and is too expensive nonetheless, but at least the amount paid isn’t skyrocketing as much as we think it is.