STANFORD, CA - MARCH 09: A person walks past archways during a quiet morning at Stanford University on March 9, 2020 in Stanford, California. Stanford University announced that classes will be held online for the remainder of the winter quarter after a staff member working in a clinic tested positive for the Coronavirus. (Photo by Philip Pacheco/Getty Images)

Editor’s note: Phillip Levine is the Katharine Coman and A. Barton Hepburn professor of economics at Wellesley College and the founder and CEO of the nonprofit MyinTuition Corp., which operates the MyinTuition simplified financial aid calculator. A nonresident fellow at the Brookings Institution, he is the author of a recent report on the cost of college. The views expressed here are his own. Read more opinion on CNN.

CNN  — 

More and more Americans are questioning whether college is worth it. Yet the wage advantage that college graduates receive is also at a decades-long high.

Phillip Levine

Cost must be the problem, many say. Indeed, the “sticker price” of college has almost tripled over the past 40 years, accounting for inflation. How many students can afford $30,000 to attend a public four-year institution, let alone more than $80,000 to attend an elite private institution?

But only students from higher-income families pay that amountMost students receive financial aid and pay less than that, often considerably less. And the amount they pay is actually falling, not rising. Still, lower-income students at most institutions are asked to pay much more than they can afford. That is the problem we need to solve.

College pricing is poorly understood, in part because documenting it is so hard. The most accessible information is the sticker price (formally labeled the “cost of attendance”). It includes tuition, fees, room and board, travel, books and other expenses. The federal government requires institutions to post that number. Yet because of financial aid, only 1 in 6 dependent students attending four-year institutions pay that amount. It would be more appropriately labeled the “maximum cost of attendance.”

What does everyone else pay? How much is their “net price,” defined as the sticker price minus grant-based financial aid that does not need to be repaid? For representative students with lower, middle and higher incomes, how much do they have to pay for college? How have their college costs changed over time? That’s what we want to know. Yet no publicly available data does a good job providing that information.

In recent research, I have constructed data designed do so. One source uses data from institutions that partner with MyinTuition Corp., the nonprofit organization I founded and operate. It provides students and their families a quick, ballpark estimate of their college costs at participating institutions, incorporating financial aid. I focus on 14 highly selective, private institutions for whom my data extend back to 2015-16. Their current average sticker price is $80,000.

At these institutions, college costs differ dramatically by family income (assuming typical asset values). A family whose income is $40,000 today pays an average net price of $5,000. That includes expected loans and student employment. These families face small anticipated out-of-pocket costs. The current net price for these students is 23% lower that it was seven years ago. The drop is attributable to lower loan and student employment expectations. Those values have changed little in nominal terms and have been eroded by inflation.

Some schools also introduced policy changes that helped. For instance, in 2019, Rice University introduced its Rice Investment policy, which provides grants covering all costs for students from families with incomes under $75,000 (among other provisions). Last year, Williams College replaced all loans and work-study funding with grants that do not need to be repaid.

similar analysis for families with incomes of $75,000 and $125,000 also shows that they pay much less than the sticker price today: $17,200 and $32,600, respectively. These amounts also represent declines of 22% and 14%, respectively, since 2015-16. These income cutoffs roughly reflect the 25th, 50th (median) and 75th percentiles of the family income distribution for families with children approaching college age. At these institutions, only families with incomes above, say, $300,000 (again, assuming typical assets) are paying the full sticker price. That price is relevant for a sliver of the population (although a considerably higher percentage of the students at these institutions).

What about other schools? For them, I relied on data from institutions’ “net price calculators.” Colleges are required by law to provide these tools. They also provide students with an estimate of their net price based on their personal financial circumstances. Unfortunately, they are often hard to use and sometimes even hard to find.

My research team and I overcame these difficulties, obtaining estimates for families at the same three income levels at 200 randomly selected institutions, 50 from each of four categories: (1) private, nonprofit colleges with large endowments, (2) other private, nonprofit colleges, (3) public flagship and other “R1” institutions (four-year universities with significant research activity), and (4) other public institutions. We did so in 2018-19 and 2022-23.

The results confirm that college prices fell over the past four years. Across institutions and income levels, the net price is typically 10% to 15% lower now. The sticker price at these institutions also fell 5% to 10% after adjusting for inflation.

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Inflation has considerably affected these trends. As institutions attempt to hold the line on sticker price increases, high inflation has eroded their value. For lower-income students, expected payments in the form of student loans and student employment have not kept pace with inflation.

Yet the price that lower-income students pay is still much too high at most institutions. A student whose family’s income is $40,000 is expected to pay a net price of around $14,000, on average, at public institutions. Along with a maximum federal student loan of $5,500 and a work-study job that adds $2,500 (a typical expectation), that still leaves a bill of $6,000 to be paid. Where is that money supposed to come from?

Private institutions without large endowments are even more unaffordable for lower-income students, expecting them to pay a net price of $22,000 ($14,000 out of pocket). Only highly endowed private institutions (and the institutions used earlier are at the high end of this group) provide net prices that are close to affordable for lower-income families.

This analysis clarifies where the major problem lies in college affordability. To be sure, a college cost of $80,000 is a lot of money, even for a family making $300,000. But the $6,000 cash payment that is expected from a student with family income of $40,000 is likely an insurmountable hurdle. It is a major stumbling block in accomplishing the social mobility that a college education can offer. That is where we should be focusing our attention.