The Hidden College Cost of Differential Tuition
Are you going to be charged more for college tuition than you anticipated? Differential tuition, also known as tiered tuition, is a hidden college cost that affects undergraduates at colleges and universities across the country.
Many students, according to a new study, are being charged more than the published sticker price for choosing particular academic majors or simply for being an upperclassman. It’s possible that some students are being dinged with a higher bill for enrolling in a university’s honors college.
“Differential tuition can make a big difference in terms of cost; it can be several thousand dollars more,” said Gregory C. Wolniak, director of the Center for Research on Higher Education Outcomes at New York University (NYU). Wolniak is a co-author of the study along with academics at Arizona State University and the University of Louisville.
The study, Unmasking College Costs: Challenges in the Era of Differential Tuition Practices, was presented at the American Educational Research Association (AERA) Conference in May 2017. Differential tuition has become more common over the last two to three decades.
Consequences for Charging Students More
With the cost of pursuing a bachelor’s degree already a financial struggle for many families, charging extra for some students can impose an even greater burden.
“When you start thinking about students and families making a massive investment decision, I often return to the notion that we would never expect somebody to take out a mortgage to finance a home or even an automobile without completely understanding the details, so why would we would expect student and families to do this?” Wolniak asked.
What the Study Discovered
The researchers examined prices at all 143 public research universities. This type of study is routinely large and represents the most distinguished public universities in the states. The academics found that 86 universities (60% of the pool) charged students different prices based primarily on their major and their year in college.
The researchers set out to determine the average price differential, but found it too difficult to determine. At some universities, however, the tuition prices can vary by 40% or more.
At the University of Illinois, the base tuition for the 2015-2016 school year was $12,036 for state residents, but state students majoring in business, chemistry, life sciences and engineering faced a base tuition of $17,040.
An upperclassman majoring in social work at Temple University would face a tuition charge of $15,398, while the same student majoring in art would pay $21,168. At the University of Iowa, undergraduate tuition for residents ranged from $8,104 to $10,414.
The researchers' own experiences demonstrate how difficult it can be for families to pinpoint price differences. The three lead researchers on the study trained graduate students to spot pricing differences by examining materials on university websites. Amazingly, only 44% of the time did the graduate students agree that price differentials were evident.
What to Do
Published college prices are expensive enough without having to absorb unforeseen fees. Knowing that universities can charge higher base prices for some undergraduates, here are some actions you can take:
Look for Tiered Pricing
The researchers started their research with the state flagships and land-grant universities first, because they had pricing data going back to the early 1990s. They are now investigating the pricing policies of other public universities, which tend to be less selective, regional institutions.
The academics are expecting to find the same type of results. “I would be surprised if we don’t find something very similar with around 50-60% implementing differential tuition practices,” Wolniak said. In addition, the NYU professor observed that private colleges are also using differential tuition.
Understand Pricing of Majors
At some universities, more expensive majors such as engineering, the sciences and nursing carry a greater price tag. Governors in some states, however, including Kentucky and Florida, have proposed plans to charge more for bachelor’s degrees that they perceive as having less value in the workforce such as the arts and humanities.
Read the Fine Print
"Sometimes, universities hide their differential pricing on their websites," Wolniak warned. "The majority of times, the information is located on the financial aid and bursar office websites, sometimes the pricing information is displayed on the website of specific colleges within a university."
“As dull as this recommendation is, if there is an asterisk on a table, read the table notes,” Wolniak advised. “Read the list of bulleted points.” If there is a PDF attachment on a university’s website devoted to student costs, download and read it.
At the University of South Carolina, the researchers noted the tiered pricing practice was shared in the 57th of 105 footnotes accompanying a detailed tuition table. The University of Kentucky included this information in a 68-page PDF file that was not easily located.
Universities haven’t adopted the same terminology for these extra charges. Beyond differential tuition, look for descriptors such as program fees, major fees, tiered pricing, additional fees or enrichment fees.
State research universities in the Rocky Mountains, Plains and the Great Lakes are more likely to maintain tiered tuition pricing. The public universities in the Southeast and West are the least likely to adopt this practice.
Net Price Calculator Flaws
Net price calculators are designed to provide a family with a personalized estimate of what a specific institution will cost them. Colleges are federally required to maintain a net price calculator on their websites for prospective students.
After sharing information about the student, as well as household financial figures, the tool calculates what the net price of the university would be after grants and scholarships are deducted. This is your net price.
Wolniak said, "It’s unlikely that tiered pricing is built into these calculators so the generated estimates could be too low."
Look for Price Differences
Understand this practice can extend to room and board costs, too. You probably know there are different meal options for students based on the number of meals a student wishes. The dorm costs, however, also can vary as colleges and universities have tried to outdo themselves with more expensive, fancy dorms that appeal to prospective students.
Contact the University
If you are puzzled or can’t find the pricing information you need, contact the admission office and ask.
Lynn O’Shaughnessy is a best-selling author, speaker and journalist. Her book, The College Solution: A Guide for Everyone Looking for the Right School at the Right Price, is available on Amazon.com.