The topic of college affordability has been in the spotlight recently, and with good reason. The price of college has increased 45 percent over the last decade, at the same time that household income has dropped by 7 percent. One of the fundamental problems confronting colleges and families is a tuition-pricing model that no longer works.

Last month, Rosemont College in suburban Philadelphia announced it will reduce its tuition by 43 percent next year. In making that decision, Rosemont joined a small group of colleges across the nation that have reset their tuition in recent years.

For many of these colleges, the step has been driven by reasons largely practical: Research reveals that more than half of families eliminate a college from their search based on tuition price alone. It stands to reason that lowering the price will ensure that a college remains on the list of price-sensitive families.

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But for Rosemont, the overriding reason for resetting our tuition transcended practicality. This current college tuition model is badly broken and serves no one well.

At the core of the issue is this little-understood fact: The tuition that colleges publish is nothing more than an artificial sticker price that most students do not pay. Instead, colleges offer students discounts in the form of grants and scholarships that bring the sticker price down. On top of that, this game gets played with mostly artificial money.

The average cost of tuition at a private, four-year college is now $31,320, according to a recent study by the National Association of College and University Business Officers. But the average discount from that published price is a whopping 48 percent. And nearly 90 percent of first-year college students pay a discounted tuition price.

Tuition continues to rise at most colleges, not just because of inflation, but in order to cover increasingly high discounts. Discounts, in the form of grants and scholarships, are used to attract students to attend a particular college. And, with the exception of endorsed scholarships, none of it involves real money.

How did we get here? Until the 1980s, the practice of discounting tuition was largely reserved for students in need. For families who earned less, financial aid from a college or university helped students afford higher education.

But then colleges discovered discounting could be used for another legitimate reason — to help institutions shape their classes. A need for a tuba player to round out a college’s marching band could often be solved by “sweetening the pot” with a $1,000 scholarship. That worked well until the following year, when the four other colleges that also needed that tuba player decided to up the ante and offer $2,000 to musically gifted students. And so the merit-aid cycle began, leading us to a state that some have referred to as “an arms race.”

What most people do not understand is this “high price, high discount” model does not, for the most part, involve real money. The tuition sticker price keeps climbing — but primarily in order to allow colleges to increase the discounts they can offer to coveted students.

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The result is an ever-escalating and eventually unsustainable cycle.

After several years of research and soul-searching, Rosemont decided that we will no longer play this game. Even though 80 percent of our institutional aid goes to students in need (the highest is 86 percent merit aid), we, too, had become trapped in this model of ever-rising tuition and discounts.

Instead, going forward, we will publish our true cost of tuition. We ran multiple financial scenarios until we found the tuition price that removed us from the game. Moving from a “high price, high discount” model to a “low price, low discount” model means that the grants and scholarships offered as discounts will decline in proportion to the new price. Financial aid will still be available to students who qualify, but many will find that they won’t need as much to “close the gap” to $18,500 than they did when tuition was over $32,000.

In addition, we did more than reduce the published price; we reduced the actual cost of a Rosemont education so that every student will pay less next year than they did this year. This step promises to restore clarity to a system that has become increasingly complex and confusing. It will benefit all of us. Families will know, at the outset, what the actual cost of tuition will be. And we, as educators, will be freed up from fielding months of anxious calls about financial aid in order to talk about what really matters — the rich educational and life experience that awaits a new student at Rosemont.

We expect that more colleges will follow in Rosemont’s footsteps. While the decision to move to a true-tuition model may not be the right one for every school, we hope that it is one that stimulates conversation on other campuses and around family dinner tables across the nation.

(c)2015 The Philadelphia Inquirer

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