Tuition Prices Are Less Transparent Than Ever: Regulators Should Pull Back the Curtain

College tuition prices are out of control. Since 1983, sticker prices have increased by 914%, rising at an average rate of 5.5% a year—far faster than any other household expense over the same period. Private four-year colleges are driving this trend, with average tuition and fees rising from $5,093 in 1983 to $43,350 in 2024.

This dramatic increase does not even capture the whole picture. Add additional expenses such as housing and food, and the total cost of attending these institutions comes to nearly $60,000 per year. One wonders how anyone can afford to attend private colleges at such exorbitant rates. The truth is, they can’t. Or, more precisely, they don’t.

A 2024 College Board report reveals a shocking reality. Though the sticker price for private four-year institutions increased by 27% from 2006 to 2024, the average tuition students actually pay has decreased by 15%. This gap has been filled by a steady increase in grant aid. The average grant aid awarded per student has increased by 74% over that same period. This results in the average student at a four-year private college paying only 38% of the sticker price. In 2006, that number was 56%. Sticker prices have increasingly become so disconnected from actual prices that it is hardly fair to call them “prices.” After all, a price is an amount of money expected in return for something else, and universities certainly do not expect to receive sticker prices.

Interestingly, this effect has not been seen at public institutions, where prices have hardly changed since 2006. This may be because state politicians have political motivations to keep in-state tuition low and do not respond to market forces the same way as private institutions. If a state legislator proposed raising tuition to the level of private universities, their political future would likely be bleak.

Why the difference? Why do sticker prices continue to rise at four-year private institutions while students are paying fewer real dollars? The answer may lie in how increased tuition affects students’ perceptions. A student looking at a university with a $25,000 price tag may feel that they are paying a steep price for their education, but one who gets a $30,000 scholarship to attend a university with a $55,000 price tag may feel lucky to have received such a generous offer.

Put differently, tuition increases are a bargaining tactic in schools’ negotiations with students. Private universities set a price they do not expect to receive, then “give aid” to students to bring down the unpayable cost, leaving students wondering if the offer they receive is genuinely a good deal.

The information asymmetry between universities and students on these issues is enormous. The Department of Education has tried to address the issue by requiring all universities to publish net price calculators, but these tools are often cumbersome, inaccurate, or unhelpful, and may not include merit aid in their formulas. Additionally, these calculators require students to input all of their family’s financial information just to receive an estimate. This prevents students from quickly comparing many different schools’ prices. Perhaps most significantly, they do not show applicants what other students at the university actually pay. Even if a student gets prices from the net calculators of every school they wish to attend, they still have no idea if those prices are “good” or are lowball offers that should be negotiated.

This opacity of tuition has consequences beyond the price negotiation process. A 2025 survey found that a majority of Americans overestimate the cost of attending college. Sticker shock caused by exorbitant prices can deter some students from applying at all, and tuition increases can significantly reduce an institution’s ethnic diversity. Some applicants never pursue higher education because of a false perception of cost deliberately created by universities.

The American Bar Association (ABA) has dealt with this same problem at the law school level, and done it well. They require law schools to publish a yearly report detailing how many students paid full price, as well as how many received less-than-half-tuition, more-than-half-tuition, full-tuition, and more-than-full-tuition scholarships. For example, at the University of Florida College of Law, 22% of students receive a more-than-full-tuition scholarship, 13% receive a full-tuition scholarship, and only 12% pay full price. The ABA also requires law schools to disclose their classes’ 25^th-, 50^th-, and 75^th-percentile LSAT scores and GPAs. This disclosure allows students to negotiate with law schools on equal terms. If an applicant to the University of Florida College of Law with an LSAT score and GPA above the school’s 75^th percentile receives a half-tuition offer, they can negotiate knowing that their peers with similar scores are typically receiving full-tuition offers or even stipends to attend. A net price calculator does not provide this level of knowledge, especially if it does not account for academic merit.

Congress and the Department of Education should require all undergraduate institutions seeking federal loan dollars to make a yearly report disclosing similar financial aid and academic class profile statistics. Ideally, this would include financial aid offers broken down more granularly than the ABA requires of law schools. Merit aid should be separated from need-based aid. Recipients of merit-based aid should be broken down by offer amount decile, including average standardized test scores and GPAs. Need-based aid should be broken down by family income.

This level of disclosure would put students on equal footing with universities in scholarship negotiations. If universities are going to list fake tuition prices, then regulators should pull back the curtain for students.