Want to Get a Lower College Tuition? Try Asking.
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What is the main topic discussed in this episode?
Here's your money briefing for Thursday, July 2nd. I'm J.R. Whelan for The Wall Street Journal.
How much has college tuition grown and why does it matter to families?
Over the past three decades, the cost of college tuition has skyrocketed, growing a double or even triple the inflation rate. For many students and families, that puts an education at a top university out of reach, unless they can get a break on expenses. Financial aid is one way of lowering the cost. But what about just asking?
There's this bargaining slash haggling process. It's kind of like when you're buying a car, when you're buying a house. You have one initial offer, then you do a counteroffer, and this can go on for a while.
So who's got the upper hand during the pandemic? And how big a discount could you conceivably get? Our reporter Josh Mitchell will explain after the break.
You can haggle over the cost of lots of things, a car, a house, even hotel rates, but college tuition? Turns out universities often are willing to sit down with students and families to reach an affordable price. Our reporter Josh Mitchell is here to discuss. So Josh, is this something new, being able to negotiate with colleges?
No, this has been going on to some extent for years now, at least since the 80s or 1990s. It's just been happening more and more among families as they become more aware of this process.
So how's the pandemic factoring into this?
Prior to the pandemic, there had already been a shift in leverage from schools to families in terms of this negotiation process. This pandemic has accelerated that trend. There are a couple things going on here. Schools themselves are worried about what enrollment is going to be next fall. Are families going to be too scared to send their children back to campus?
Can you negotiate college costs instead of relying only on financial aid forms?
Will schools be allowed to open their campuses? Number two, how willing are students going to be to travel out of their home states? Some families might be more willing now to have their students attend in-state schools or schools closer to home rather than sending them across the country given this pandemic. Or maybe they'll go to a campus that is not located in an urban area where contagion is higher risk. So on top of that, you have the highest unemployment rate or near the highest unemployment rate since the Great Depression, which means a lot of parents have either lost their jobs, have had their hours scaled back. They've either lost wealth maybe through the stock market that the stock market has recovered a lot of what it lost.
But maybe they have businesses that have been harmed by this. Maybe they're worried that if the student goes to school, what's the labor market going to be like when they come out of school? So they're doing this whole reassessment of the value proposition of college. How much should we pay? Is $70,000 a year in tuition? Does that still make sense in this pandemic-torn world that we're in?
Now, the schools are trying to generate revenue, but it seems like the schools are walking a delicate line and trying to maximize payments from students.
School's number one cost is their personnel. So unless they lay off their workers, which they've laid off some of their workers, but a lot of them are retail workers like cafeteria workers, they have their own expenses that they have to meet. And so if you are a professor that has to deliver a lecture online versus in person, you still have to pay that professor. So schools are trying to figure out how can we continue to pay our bills online. while also meeting the families where they are in terms of their ability to pay.
It's a tough environment right now.
It really varies by school. One family I talked to, the son, his name is Ian, he got a 41% discount off of tuition. So that was about $30,000 in terms of the school that he ended up going to. So I talked to one consultant. What's interesting is that the schools have their consultants that are helping them determine what price they should charge, and then increasingly families are hiring their own consultants that are determining what price they should pay. And so this one consultant I talked to who works with families said that in an average year, you know, about half of her clients get about a three thousand dollar discount after they ask for one.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:05–0:10
2
How much has college tuition grown and why does it matter to families?
0:10–1:53
3
Can you negotiate college costs instead of relying only on financial aid forms?
1:53–7:32
4
How has the pandemic shifted negotiating leverage between schools and families?
7:32–9:43
Speakers
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