By Daniel de Vise
The Washington Post
WASHINGTON -- If the $50,000-a-year price of a prestigious private college looks unreal to most families, well, it's not real. At least, not for most students.
The sticker price of private college has soared in the past five years, feeding a common perception that the most expensive schools are beyond the reach of most families. But net price -- the amount the average student actually pays -- has declined.
The higher education marketplace increasingly resembles a mall on the day after Thanksgiving. The published price of a college education has spiraled far above what the average student pays after subtracting grants, tuition discounts and tax benefits.
Published tuition, fees and living expenses at private nonprofit colleges average $35,640 in the 2009-10 academic year, according to the definitive annual report Trends in College Pricing by the nonprofit College Board. But net price averages $21,200. Adjusted for inflation, one has gone up. The other has gone down.
"The price, on the surface, is more than a middle-income family can pay," said Alison Rabil, assistant vice provost and director of financial aid at Duke University. "But we're not asking families to pay that amount."
College finance has grown increasingly complex. The phenomenon of rising sticker price is partly a marketing trick, partly a tool to redistribute the costs of college across income levels.
Tuition and fees have risen by nearly one-third at private nonprofit colleges since fall 2004, or 15 percent in inflation-adjusted dollars. But aid has risen faster.
The difference between sticker price and net price "may be the single most misunderstood fact" in higher education, said David Warren, president of the National Association of Independent Colleges and Universities. "Net tuition is only 45 percent of the advertised tuition. That's a pretty significant difference."
The most selective, well-endowed colleges dispense ever-greater sums of grant aid according to need -- and rising tuition has broadened the definition of need. At the most expensive colleges, the term now applies to families making $200,000 a year.
Net price has declined by a few hundred dollars among private nonprofit colleges in the past five years, in inflation-adjusted dollars, according to the College Board analysis. Net price rose slightly in the 2009-10 academic year because of the economic downturn, as grant aid trailed tuition increases for the first time in several years, according to Sandy Baum, a College Board researcher.
Looking back over a decade instead of just five years, the net price of private college is only modestly higher now -- up 7 percent -- the report shows, even though tuition has swelled.
The net cost of public colleges has risen slightly in recent years because of dwindling state funds.
Most colleges don't advertise net cost, for the same reason hotels don't post their lowest rates on guest room doors. No two students are likely to be paying the same amount. Selective schools don't want to create false hope in aid applicants, and less selective schools don't want to diminish the prestige of a high sticker price.
"It's complicated, because students' unique situations make them eligible for different amounts of aid," said Haley Chitty, spokesman for the National Association of Student Financial Aid Administrators.
To clear the air, the federal government will require every college to post a "net price calculator" on its Web site by August 2011. The calculator must estimate what a particular student will pay to attend the college, based on the family's finances and the school's aid budget.
Several schools, including Yale, Princeton, Amherst and Williams, have net price calculators or aid "estimators" on their Web sites. Estimating net price is comparatively simple at those schools, which have enormous endowments and dispense aid entirely based on a student's need and with fairly predictable results. At less wealthy, less selective schools, aid is often determined case by case.
