How Do Colleges Set Tuition?

Of all the rituals associated with college, one that takes place mainly behind closed doors is the process of deciding the annual tuition. Though it may seem to some people paying the bill that this consists of a bow-tied version of Montgomery Burns picking a number between three and 10 out of a hat and raising the price by that much each year, in fact it involves many people from several departments analyzing, over several months, a range of data from both internal and external sources.

The graphic below illustrates this process. One illuminating fact that emerged in researching it is that although increases in “tuition” grab the bulk of the headlines around the cost of college, the price students pay to attend college sometimes goes down on average, year-over-year. In the academic year now ending, the average tuition for in-state students at public universities was $8,893, according to the College Board, but the price paid was just over a third of that—$3,120. Nonetheless, for the approximately one-third of students who pay the published tuition, the cost of college has outpaced that of other goods and services economy-wide—and expenses such as food and housing, which aren’t always covered by financial aid, continue to rise for everyone.

W. Kent Barnds, the vice president of enrollment at Augustana College in Rock Island, Ill., says that one thing changing schools’ calculations of where to set tuition is the net price calculator all schools were required to place on their websites in 2011. “We used to admit students and say, ‘See if you can afford it!’ ” he said. “Now we’re pressured to give real information—better information—earlier in the process.”

That’s in line with the other big change Barnds has seen during his many years in higher education. “We’re no longer budgeting to what we think we need. We’re far more sensitive to a family’s ability to pay,” he said. That may seem like news to many struggling to pay college bills (or pay back college loans). Yet for (the small, nonrandom sample of) Augustana College, Barnds said, “the actual out-of-pocket cost to students has been going down year-over-year, or holding steady, in contrast with the increase in the tuition and overall cost of living.”

Design by Julie Teninbaum

TakePart’s parent company, Participant Media, is collaborating with Samuel Goldwyn Films on the distribution of the documentary Ivory Tower.